8.	Marketable Securities

The FASB ASC topic entitled Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for identical assets or liability

Level 2

Observable inputs for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3

Unobservable inputs for the asset or liability

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The valuation methods used by the Company for each significant class of investments are summarized below.

Mortgage-backed securities, corporate bonds and obligations of states and political subdivisions – Valued based on prices obtained from an independent pricing vendor using both market and income approaches. The primary inputs to the valuation include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, and credit spreads.

Common stocks – Valued at the closing price reported on the active market on which the individual securities are traded.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Available for sale securities measured at estimated fair value on a recurring basis are summarized below:

	Fair Value Measurements as
	of June 28, 2014
Description	Total		Level 1		Level 2		Level 3

Mortgage-backed securities	$	380,211	$	-	$	380,211	$	-
Obligations of states and political subdivisions		600,823		-		600,823		-
Corporate bonds		517,867		-		517,867		-
Common stocks		30,850		30,850		-		-
Other		87,253		-		87,253		-
Total	$	1,617,004	$	30,850	$	1,586,154	$	-

	Fair Value Measurements as
	of December 28, 2013
Description	Total		Level 1		Level 2		Level 3

Mortgage-backed securities	$	437,330	$	-	$	437,330	$	-
Obligations of states and political subdivisions		647,354		-		647,354		-
Corporate bonds		457,148		-		457,148		-
Common stocks		29,854		29,854		-		-
Other		80,282		-		80,282		-
Total	$	1,651,968	$	29,854	$	1,622,114	$	-

Marketable securities classified as available-for-sale securities are summarized below:

	Available-For-Sale Securities as
	of June 28, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses-OTTI⁽¹⁾		Gross Unrealized Losses-Other⁽²⁾		Estimated Fair Value (Net Carrying Amount)
Mortgage-backed securities	$	388,065	$	2,408	$	(5,392)	$	(4,870)	$	380,211
Obligations of states and political subdivisions		611,731		1,381		(12,244)		(45)		600,823
U.S. corporate bonds		521,141		976		(4,040)		(210)		517,867
Common stocks		30,392		473		(15)		-		30,850
Other		84,911		2,390		(48)		-		87,253
Total	$	1,636,240	$	7,628	$	(21,739)	$	(5,125)	$	1,617,004

	Available-For-Sale Securities as
	of December 28, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses-OTTI⁽¹⁾		Gross Unrealized Losses-Other⁽²⁾		Estimated Fair Value (Net Carrying Amount)
Mortgage-backed securities	$	461,054	$	2,692	$	(22,614)	$	(3,802)	$	437,330
Obligations of states and political subdivisions		673,529		1,601		(27,509)		(267)		647,354
U.S. corporate bonds		463,437		1,050		(7,031)		(308)		457,148
Common stocks		24,540		5,413		(99)		-		29,854
Other		78,059		2,326		(103)		-		80,282
Total	$	1,700,619	$	13,082	$	(57,356)	$	(4,377)	$	1,651,968

⁽¹⁾ Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired.

⁽²⁾ Represents unrealized losses on investment securities that have not been determined to be other-than-temporarily impaired.

The Company’s investment policy requires investments to be rated A or better with the objective of minimizing the potential risk of principal loss. The Company does not intend to sell the securities that have an unrealized loss shown in the table above and it is not more likely than not that the Company will be required to sell the investment before recovery of their amortized costs bases, which may be maturity. The Company recognizes the credit component of other-than-temporary impairments of debt securities in "Other Income" and the noncredit component in "Other comprehensive income (loss)" for those securities that we do not intend to sell and for which it is not more likely than not that we will be required to sell before recovery. During 2014 and 2013, the Company did not record any material impairment charges on its outstanding securities.

The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral and in the credit performance of the underlying issuer, among other factors. In 2013, the Company experienced unrealized, non-cash losses on its investment portfolio resulting in a balance of $57,356 and $4,377 of gross other-than-temporary impairment and other unrealized losses on marketable securities at December 28, 2013. The amortized cost and estimated fair value of the securities at an unrealized loss position at December 28, 2013 were $1,215,498 and $1,153,765, respectively. This decrease in estimated fair value was primarily due to market valuations on mortgage-backed securities and obligations of states and political subdivisions declining. The decline was due to increases in the 10 Year Treasury Bond Yield during 2013, which caused market valuations of securities in our investment portfolios to decline.

The 10 Year Treasury Bond Yield decreased in 2014, resulting in a balance of $21,739 and $5,125 of gross other-than-temporary impairment and other unrealized losses on marketable securities at June 28, 2014. The amortized cost and estimated fair value of the securities at an unrealized loss position at June 28, 2014 were $1,026,696 and $999,832, respectively. Approximately 43% of securities in our portfolio were at an unrealized loss position at June 28, 2014. We have the ability to hold these securities until maturity or their value is recovered. We do not consider these unrealized losses to be other than temporary credit losses because there has been no deterioration in credit quality and no change in the cash flows of the underlying securities. We do not intend to sell the securities and it is not more likely than not that we will be required to sell the securities; therefore, no impairment has been recorded in the accompanying condensed consolidated statement of income.

The cost of securities sold is based on the specific identification method.

The following table displays additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of June 28, 2014. There was an immaterial amount of unrealized losses related to securities that had been in a continuous unrealized loss position for 12 months or longer as of December 28, 2013.

	As of June 28, 2014
	Less than 12 Consecutive Months				12 Consecutive Months or Longer
	Gross Unrealized				Gross Unrealized
	Losses		Fair Value		Losses		Fair Value

Mortgage-backed securities	$	(446)	$	57,696	$	(9,816)	$	204,669
Obligations of states and political subdivisions		(468)		82,370		(11,821)		318,318
Corporate bonds		(2,005)		232,032		(2,245)		83,073
Common stocks		(15)		5,797		-		-
Other		(35)		12,705		(13)		3,172
Total	$	(2,969)	$	390,600	$	(23,895)	$	609,232

The amortized cost and estimated fair value of marketable securities at June 28, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

			Estimated
	Cost		Fair Value

Due in one year or less	$	161,024	$	160,901
Due after one year through five years		754,105		752,589
Due after five years through ten years		209,953		205,152
Due after ten years		443,137		427,560
Other (No contractual maturity dates)		68,021		70,802
	$	1,636,240	$	1,617,004