UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 26, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-39411

Vital Farms, Inc.

(Exact name of registrant as specified in its charter)

Delaware	27-0496985
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3601 South Congress Avenue Suite C100 Austin, Texas	78704
(Address of principal executive offices)	(Zip Code)

(877) 455-3063

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	VITL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2023, the registrant had 40,847,624 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
	Special Note Regarding Forward-Looking Statements	ii
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
	Signatures	62

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Quarterly Report") contains “forward-looking statements” (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

•our expectations regarding our revenue, expenses and other operating results;

•our ability to acquire new customers and successfully retain existing customers;

•our ability to attract and retain our suppliers, distributors and co-manufacturers;

•our ability to maintain relationships with our existing farm networks or further expand such networks;

•our ability to sustain or increase our profitability;

•our expectations regarding our future growth in the foodservice channel, including commercial and non-commercial foodservice business;

•our ability to procure sufficient high-quality eggs, butter, cream and other raw materials;

•real or perceived quality with our products or other issues that adversely affect our brand and reputation;

•changes in the tastes and preferences of our consumers;

•the financial condition of, and our relationships with, our farmers, suppliers, co-manufacturers, distributors, retailers and foodservice customers, as well as the health of the foodservice industry generally;

•the effects of outbreaks of agricultural diseases, such as avian influenza, or the perception that such outbreaks may occur or regulatory or market responses to such outbreaks generally;

•the ability of our farmers, suppliers and co-manufacturers to comply with food safety, environmental or other laws or regulations;

•the effects of a public health pandemic or contagious disease, such as COVID-19, or fear of such outbreaks, on our supply chain, the demand for our products, and on overall economic conditions and consumer confidence and spending levels;

•the impact of the completed expansion of our Egg Central Station facility or future expansions of our processing capacity on our revenue;

•future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;

•anticipated changes in our product offerings and our ability to innovate to offer successful new products;

•our ability to successfully enter into new product categories;

•the costs and success of our marketing efforts, and our ability to promote our brand;

•our reliance on key personnel and our ability to identify, recruit and retain personnel;

•our ability to effectively manage our growth;

•the potential influence of our focus on a specific public benefit purpose and producing a positive effect for society;

•our environmental, sustainability and governance goals, opportunities and initiatives, as well as the standards and expectations of third parties regarding these matters;

•our ability to compete effectively with existing competitors and new market entrants;

•the impact of adverse economic conditions, including as a result of unfavorable global economic and political conditions, increased interest rates and inflation;

•the sufficiency of our cash to meet our liquidity needs;

ii

•seasonality; and

•the growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. A summary of selected risks associated with our business is set forth at the beginning of the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

iii

PART I – FINANCIAL INFORMATION

VITAL FARMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share amounts)

	March 26, 2023			December 25, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	25,838		$	12,914
Investment securities, available-for-sale		57,233			65,814
Accounts receivable, net		40,199			40,227
Inventories		33,942			26,849
Prepaid expenses and other current assets		5,342			3,810
Total current assets		162,554			149,614
Property, plant and equipment, net		58,772			59,155
Operating lease right-of-use assets		1,549			1,895
Goodwill and other assets		3,904			4,002
Total assets	$	226,779		$	214,666
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	26,586		$	25,972
Accrued liabilities		18,854			18,477
Operating lease liabilities, current		970			1,208
Finance lease liabilities, current		1,596			1,570
Income taxes payable		2,514			425
Total current liabilities		50,520			47,652
Operating lease liabilities, non-current		770			892
Finance lease liabilities, non-current		6,617			7,023
Other liabilities		1,342			767
Total liabilities	$	59,249		$	56,334
Commitments and contingencies (Note 19)		—			—
Stockholders’ equity:
Common stock, $0.0001 par value per share, 310,000,000 shares authorized as of March 26, 2023 and December 25, 2022; 40,839,050 and 40,746,990 shares issued and outstanding as of March 26, 2023 and December 25, 2022, respectively		4			4
Additional paid-in capital		157,343			155,716
Retained earnings		11,309			4,159
Accumulated other comprehensive loss		(1,126	)		(1,547	)
Total stockholders’ equity	$	167,530		$	158,332
Total liabilities and stockholders’ equity	$	226,779		$	214,666

See accompanying notes to the unaudited condensed consolidated financial statements.

1

VITAL FARMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share data)

(Unaudited)

	13-Weeks Ended
	March 26, 2023			March 27, 2022
Net revenue	$	119,172		$	77,058
Cost of goods sold		76,504			55,358
Gross profit		42,668			21,700
Operating expenses:
Selling, general and administrative		23,946			17,624
Shipping and distribution		7,826			8,162
Total operating expenses		31,772			25,786
Income (loss) from operations		10,896			(4,086	)
Other income, net:
Interest expense		(139	)		(8	)
Interest income		340			130
Other (expense) income, net		(1,425	)		49
Total other income, net		(1,224	)		171
Net income (loss) before income taxes		9,672			(3,915	)
Income tax provision (benefit)		2,522			(2,377	)
Net income (loss)		7,150			(1,538	)
Less: Net loss attributable to    noncontrolling interests		—			(2	)
Net income (loss) attributable to Vital Farms, Inc.    common stockholders	$	7,150		$	(1,536	)
Net income (loss) per share attributable to Vital    Farms, Inc. stockholders:
Basic:	$	0.18		$	(0.04	)
Diluted:	$	0.16		$	(0.04	)
Weighted average common shares outstanding:
Basic:		40,764,546			40,532,779
Diluted:		43,398,336			40,532,779

See accompanying notes to the unaudited condensed consolidated financial statements.

2

VITAL FARMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

(Unaudited)

	13-Weeks Ended
	March 26, 2023			March 27, 2022
Net income (loss)	$	7,150		$	(1,538	)
Other comprehensive income (loss), before tax:
Available-for-sale debt securities:
Unrealized net holding gain (loss)		517			(1,075	)
Amounts reclassified for realized losses to earnings		34			50
Available-for-sale debt securities, before tax		551			(1,025	)
Other comprehensive income (loss), before tax		551			(1,025	)
Income tax (expense) benefit related to items of other comprehensive income (loss)		(130	)		242
Other comprehensive income (loss), net of tax		421			(783	)
Comprehensive income (loss)	$	7,571		$	(2,321	)

See accompanying notes to the unaudited condensed consolidated financial statements.

3

VITAL FARMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)

	Common Stock
	Shares		Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balances as of December 25, 2022		40,746,990	$	4	$	155,716	$	4,159	$	(1,547	)	$	158,332
Vesting of restricted stock units		92,060		—		—		—		—			—
Stock-based compensation expense		—		—		1,627		—		—			1,627
Other comprehensive income, net		—		—		—		—		421			421
Net income attributable to Vital Farms, Inc. stockholders		—		—		—		7,150		—			7,150
Balances as of March 26, 2023		40,839,050	$	4	$	157,343	$	11,309	$	(1,126	)	$	167,530

See accompanying notes to the unaudited condensed consolidated financial statements.

4

VITAL FARMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)

	Redeemable Noncontrolling Interest		Common Stock												Total Stockholders’ Equity Attributable
	Amount		Shares		Amount		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			to Vital Farms, Inc. Stockholders			Noncontrolling Interests			Total Stockholders’ Equity
Balances as of December 26, 2021	$	175		40,493,969	$	5	$	149,000	$	2,746		$	(281	)	$	151,470		$	115		$	151,585
Exercise of stock options		—		102,328		—		254		—			—			254			—			254
Stock-based compensation expense		—		—		—		1,296		—			—			1,296			—			1,296
Net loss attributable to noncontrolling interests - stockholders		—		—		—		—		162			—			162			(164	)		(2	)
Other comprehensive loss, net		—		—		—		—		—			(783	)		(783	)		—			(783	)
Net loss attributable to Vital Farms, Inc. stockholders		—		—		—		—		(1,536	)		—			(1,536	)		—			(1,536	)
Balances as of March 27, 2022	$	175		40,596,297	$	5	$	150,550	$	1,372		$	(1,064	)	$	150,863		$	(49	)	$	150,814

See accompanying notes to the unaudited condensed consolidated financial statements.

5

VITAL FARMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	13-Weeks Ended
	March 26, 2023			March 27, 2022
Cash flows from operating activities:
Net income (loss)	$	7,150		$	(1,538	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,693			948
Amortization of right-of-use assets		793			413
Amortization of available-for-sale debt securities		163			321
Stock-based compensation expense		2,241			1,296
Increase (decrease) in inventory provision		120			(29	)
Deferred taxes		445			(2,572	)
Unrealized loss on derivative instruments		1,047			—
Other		19			228
Net change in operating assets and liabilities		(8,268	)		(4,006	)
Net cash provided by (used in) operating activities	$	5,403		$	(4,939	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(1,802	)		(1,686	)
Purchases of available-for-sale debt securities		—			(13,973	)
Maturities and call redemptions of available-for-sale debt securities		8,935			14,254
Proceeds from the sale of property, plant and equipment		1,054			50
Purchases of derivative instruments		(220	)		—
Return of investment in variable interest entity		552			—
Net cash provided by (used in) investing activities	$	8,519		$	(1,355	)
Cash flows from financing activities:
Proceeds from borrowing under revolving line of credit		7,500			—
Repayment of revolving line of credit		(7,500	)		—
Payment of contingent consideration		—			(26	)
Principal payments under finance lease obligations		(384	)		(126	)
Proceeds from exercise of stock options		—			254
Payment of tax withholding obligation on RSU shares withheld		(614	)		—
Net cash (used in) provided by financing activities	$	(998	)	$	102
Net increase (decrease) in cash and cash equivalents		12,924			(6,192	)
Cash and cash equivalents at beginning of the period		12,914			30,966
Cash and cash equivalents at end of the period	$	25,838		$	24,774
Supplemental disclosure of cash flow information:
Cash paid for interest	$	134		$	8
Cash paid for income taxes	$	2		$	7
Supplemental disclosure of non-cash investing and financing    activities:
Purchases of property, plant and equipment included in accounts payable and accrued liabilities	$	891		$	2,147

See accompanying notes to the unaudited condensed consolidated financial statements.

6

VITAL FARMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

Note 1. Nature of the Business and Basis of Presentation

Vital Farms, Inc. (the “Company,” “we,” “us” or “our”) was incorporated in Delaware on June 6, 2013 and is headquartered in Austin, Texas. The Company packages, markets and distributes shell eggs, butter and other products. These products are sold under the trade names Vital Farms and RedHill Farms, primarily to retail and foodservice channels in the United States.

The accompanying unaudited condensed consolidated financial statements as of March 26, 2023 and for the 13-week periods ended March 26, 2023 and March 27, 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto on our Annual Report on Form 10-K for the fiscal year ended December 25, 2022 (the “Annual Report”).

In the opinion of management, the included disclosures are adequate, and the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair statement of our consolidated financial position as of March 26, 2023, consolidated results of operations for the 13-week periods ended March 26, 2023 and March 27, 2022, and consolidated cash flows for the 13-week periods ended March 26, 2023 and March 27, 2022. Such adjustments are of a normal and recurring nature and certain reclassifications of previously reported amounts have been made to conform to the current year presentation. The condensed consolidated balance sheet as of December 25, 2022 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the audited annual financial statements. The condensed consolidated results of operations for the 13-week period ended March 26, 2023 are not necessarily indicative of the consolidated results of operations that may be expected for the fiscal year ending December 31, 2023.

Fiscal Year: The Company’s fiscal year ends on the last Sunday in December and contains either 52 or 53 weeks. In a 52-week fiscal year, each of the Company’s fiscal quarters consist of 13 weeks. The additional week in a 53-week fiscal year is added to the fourth quarter, making such quarter consist of 14 weeks. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The fiscal quarters ended March 26, 2023 and March 27, 2022 both contain operating results for 13 weeks. The fiscal year ending December 31, 2023 will include 53 weeks.

Note 2. Summary of Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the fiscal year ended December 25, 2022, and the notes thereto, which are included in our Annual Report. Other than the adoption of the new accounting pronouncements and standards as further described below, there have been no material changes to the Company’s significant accounting policies during the 13-week period ended March 26, 2023, except for the following.

As of December 26, 2022, the Company has entered into derivative instruments as part of its risk management strategy. Our business operations give rise to certain market risk exposures, mostly due to changes in commodity prices. We use derivative financial instruments to reduce our exposure to commodity price risk. Credit risks associated with derivative contracts are not significant, as the Company minimizes counterparty exposure by dealing with credit-worthy counterparties and collateralized insurers and by utilizing exchange traded instruments and insurance backed commodity settlement contracts. While the Company may be exposed to potential losses due to the credit risk of non-performance by these counterparties, losses are not anticipated. We do not hold derivative instruments for trading purposes. Additionally, the Company’s derivative contracts are short-term in duration, and do not make use of credit-risk-related contingent features.

Derivatives used to manage commodity price risk are not designated for hedge accounting treatment. Therefore, the changes in fair value of these derivatives are recorded as incurred within other income (expense), net in the unaudited condensed consolidated statements of operations. Cash flows related to derivative instruments are considered an investing activity of the Company. Cash settlements we receive represent realized gains on derivative instruments, while cash settlements we pay represent realized losses related to our commodity derivative instruments.

Recently Adopted Accounting Pronouncements

7

The new accounting pronouncements recently adopted by the Company are described in the Company’s audited consolidated financial statements as of and for the fiscal year ended December 25, 2022, and the notes thereto, which are included in our Annual Report. Except as described below, there have been no new accounting pronouncements adopted by the Company during the 13-week period ended March 26, 2023.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, ASU 2020-03 and ASU 2022-02 (collectively, “Topic 326”), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Topic 326 requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The Company adopted ASU 2016-13 on December 26, 2022. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. There was no impact on the Company's unaudited condensed consolidated financial statements at adoption.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted ASU 2019-12 during fiscal year 2022 and there was no material impact on the Company’s consolidated financial statements for the year ended December 25, 2022 or on the unaudited condensed consolidated financial statements presented herein.

Recently Issued Accounting Pronouncements Not Yet Adopted

None.

Note 3. Investment Securities

The following table summarizes the Company’s available-for-sale investment securities as of March 26, 2023:

	Amortized Cost		Unrealized Losses			Fair Value
U.S. corporate bonds and U.S. dollar    denominated foreign bonds	$	57,526	$	(1,458	)	$	56,068
U.S. Treasury		1,176		(11	)		1,165
Total	$	58,702	$	(1,469	)	$	57,233

The following table summarizes the Company’s available-for-sale investment securities as of December 25, 2022:

	Amortized Cost		Unrealized Losses			Fair Value
U.S. corporate bonds and U.S. dollar    denominated foreign bonds	$	66,658	$	(1,996	)	$	64,662
U.S. Treasury		1,176		(24	)		1,152
Total	$	67,834	$	(2,020	)	$	65,814

For the 13-week periods ended March 26, 2023 and March 27, 2022, there were no proceeds from the sale of available-for-sale securities. During the 13-week period ended March 26, 2023, the unrealized losses in our U.S. corporate bond portfolio consist of losses on 81 diversified issuances with credit ratings ranging from BBB to AAA. As of March 26, 2023, there are no individual bonds with unrealized losses exceeding $73, and 59 issuances have been in a loss position greater than 12 months with aggregate unrealized losses of $1,198.

The decline in fair value has resulted primarily from rising interest rates over the last 12 months, and the Company does not believe there has been any significant decline in the creditworthiness of the issuers. The Company also does not believe it is likely that the bonds will be called early and it does not have current liquidity needs that would necessitate a sale of any material investments prior to maturity. Therefore, the Company has not recorded an allowance for credit losses on the investment securities as of March 26, 2023.

8

Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities of investment securities as of March 26, 2023 are as follows:

	Amortized Cost		Fair Value
Due within one year	$	28,758	$	28,152
Due in 1-5 years		29,944		29,081
Total available-for-sale	$	58,702	$