Marketable Securities

9 Months Ended

Sep. 25, 2021

Investments Debt And Equity Securities [Abstract]

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 the identical asset 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. Valuation is 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.

The method 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.

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


	Available-For-Sale Securities as of September 25, 2021
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	Level 2	$	400	$	1	$	—		$	401
Agency securities	Level 2		7,975		—		(43	)		7,932
Mortgage-backed securities	Level 2		159,299		707		(625	)		159,381
Corporate securities	Level 2		1,051,416		16,021		(5,606	)		1,061,831
Municipal securities	Level 2		335,507		2,748		(1,845	)		336,410
Other	Level 2		33,436		56		(644	)		32,848
Total		$	1,588,033	$	19,533	$	(8,763	)	$	1,598,803


	Available-For-Sale Securities as of December 26, 2020
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	Level 2	$	400	$	6	$	—		$	406
Agency securities	Level 2		5,954		56		—			6,010
Mortgage-backed securities	Level 2		239,445		1,051		(1,923	)		238,573
Corporate securities	Level 2		984,696		25,962		(1,637	)		1,009,021
Municipal securities	Level 2		214,515		3,644		(223	)		217,936
Other	Level 2		47,760		167		(1,056	)		46,871
Total		$	1,492,770	$	30,886	$	(4,839	)	$	1,518,817

The Company’s investment policy targets low risk investments with the objective of minimizing the potential risk of principal loss. The fair value of securities varies from period to period due to changes in interest rates, the performance of the underlying collateral, and the credit performance of the underlying issuer, among other factors.

Accrued interest receivable, which totaled $9,671 as of September 25, 2021, is excluded from both the fair value and amortized cost basis of available-for-sale securities and is included within Prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheets. The Company writes off impaired accrued interest on a timely basis, generally within 30 days of the due date, by reversing interest income. No accrued interest was written off during the 39-week period ended September 25, 2021.

The Company recognizes impairments relating to credit losses of available-for-sale securities through an allowance for credit losses and Other income on the Company’s Condensed Consolidated Statements of Income. Impairment not relating to credit losses is recorded in Other comprehensive income on the Company’s Condensed Consolidated Balance Sheets. The cost of securities sold is based on the specific identification method. Approximately 37% of securities in the Company’s portfolio were at an unrealized loss position as of September 25, 2021.

The following tables display 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 September 25, 2021 and December 26, 2020.


	As of September 25, 2021
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	—		$	—	$	—		$	—	$	—		$	—
Agency securities		(43	)		6,957		—			—		(43	)		6,957
Mortgage-backed securities		(103	)		14,116		(522	)		8,289		(625	)		22,405
Corporate securities		(4,400	)		377,924		(1,206	)		66,783		(5,606	)		444,707
Municipal securities		(1,746	)		176,509		(99	)		15,287		(1,845	)		191,796
Other		(341	)		15,259		(303	)		7,553		(644	)		22,812
Total	$	(6,633	)	$	590,765	$	(2,130	)	$	97,912	$	(8,763	)	$	688,677


	As of December 26, 2020
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	—		$	—	$	—		$	—	$	—		$	—
Agency securities		—			—		—			—		—			—
Mortgage-backed securities		(1,849	)		85,688		(74	)		2,122		(1,923	)		87,810
Corporate securities		(1,065	)		199,187		(572	)		8,625		(1,637	)		207,812
Municipal securities		(223	)		50,403		—			—		(223	)		50,403
Other		(726	)		22,600		(330	)		3,426		(1,056	)		26,026
Total	$	(3,863	)	$	357,878	$	(976	)	$	14,173	$	(4,839	)	$	372,051

As of September 25, 2021 and December 26, 2020, the Company had not recognized an allowance for credit losses on any securities in an unrealized loss position.

The Company has not recorded an allowance for credit losses and charge to Other income for the unrealized losses on agency, mortgage-backed, corporate, municipal, and other securities presented above because we do not consider the declines in fair value to have resulted from credit losses. We have not observed a significant deterioration in credit quality of these securities, which are highly rated with moderate to low credit risk. Declines in value are largely attributable to current global economic conditions. The securities continue to make timely principal and interest payments, and the fair values are expected to recover as they approach maturity. The Company does not intend to sell the securities, and it is not more likely than not that the Company will be required to sell the securities, before the respective recoveries of their amortized cost bases, which may be maturity.

The amortized cost and fair value of marketable securities at September 25, 2021, by maturity, are shown below.


	Amortized Cost		Fair Value
Due in one year or less	$	342,809	$	345,214
Due after one year through five years		1,174,790		1,183,662
Due after five years through ten years		67,278		67,038
Due after ten years		3,156		2,889
	$	1,588,033	$	1,598,803