Investments

9 Months Ended

Sep. 28, 2024

Investments

(8) Investments

Investments include primarily investment-grade corporate bonds, asset-backed securities and commercial paper having maturities of up to five years (the “bond portfolio”) and money market investments. Investments in the bond portfolio are reported as available-for-sale and are carried at fair value. Investments maturing less than one year from the balance sheet date are included in short-term investments and investments maturing more than one year from the balance sheet date are included in other assets in the consolidated balance sheets. Management performs an analysis of the nature of the unrealized losses on available-for-sale investments to determine whether an allowance for credit loss is necessary. Unrealized losses, representing the excess of the purchase price of an investment over its fair value as of the end of a period, considered to be a result of credit-related factors, are to be included as a charge in the statements of income, while unrealized losses considered to be a result of non-credit-related factors are to be included as a component of shareholders’ equity. Investments whose values are based on quoted market prices in active markets are classified within Level 1. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, are classified within Level 2. As Level 2 investments include positions that are not traded in active markets, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Any transfers between levels are recognized as of the beginning of any reporting period. Fair value of the bond portfolio was determined using Level 1 inputs related to money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities, commercial paper and direct obligations of government agencies. Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $2,531,000 and $6,382,000 at September 28, 2024 and December 30, 2023, respectively.

The amortized cost and fair values of available-for-sale investments are as follows at September 28, 2024 and December 30, 2023 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 28, 2024
Money market investments	$	14,998	$	—	$	—	$	14,998
Asset-backed securities		17,535		21		1,563		15,993
Corporate bonds, commercial paper and direct obligations of government agencies		118,857		998		1,987		117,868
Total	$	151,390	$	1,019	$	3,550	$	148,859
December 30, 2023
Money market investments	$	16,832	$	—	$	—	$	16,832
Asset-backed securities		16,543		—		2,236		14,307
Corporate bonds, commercial paper and direct obligations of government agencies		118,481		279		4,384		114,376
U.S. Treasury obligations		6,287		2		43		6,246
Total	$	158,143	$	281	$	6,663	$	151,761

For those available-for-sale investments with unrealized losses at September 28, 2024 and December 30, 2023, the following table summarizes the duration of the unrealized loss (in thousands):

	Less than 12 months				12 months or longer						Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 28, 2024
Asset-backed securities	$	—	$	—	$	13,107	$	1,563	$	13,107	$	1,563
Corporate bonds, commercial paper, and direct obligations of government agencies		—		—		65,324		1,987		65,324		1,987
Total	$	—	$	—	$	78,431	$	3,550	$	78,431	$	3,550
December 30, 2023
Asset-backed securities	$	—	$	—	$	14,307	$	2,236	$	14,307	$	2,236
Corporate bonds, commercial paper, and direct obligations of government agencies		3,506		42		86,841		4,342		90,347		4,384
U.S. Treasury obligations		—		—		2,305		43		2,305		43
Total	$	3,506	$	42	$	103,453	$	6,621	$	106,959	$	6,663

The Company believes unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality. The Company expects to recover, through collection of all of the contractual cash flows of each security, the amortized cost basis of these securities as it does not intend to sell, and does not anticipate being required to sell, these securities before recovery of the cost basis. For these reasons, no losses have been recognized in the Company’s consolidated statements of income.