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FAIR VALUE

9 Months Ended

Sep. 26, 2020

B. FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows:


		September 26, 2020												September 28, 2019
		Quoted			Prices with									Quoted			Prices with
		Prices in			Other				Prices with					Prices in			Other				Prices with
		Active			Observable				Unobservable					Active			Observable				Unobservable
		Markets			Inputs				Inputs					Markets			Inputs				Inputs
(in thousands)		(Level 1)			(Level 2)				(Level 3)		Total			(Level 1)			(Level 2)				(Level 3)		Total
Money market funds		$	64		$	3,133		$	—		$	3,197		$	56,781		$	843		$	—		$	57,624
Fixed income funds			248			16,522			—			16,770			733			14,566			—			15,299
Equity securities			10,524			—			—			10,524			8,840			—			—			8,840
Alternative investments			—			—			1,926			1,926			—			—			1,895			1,895
Mutual funds:
Domestic stock funds			6,826			—			—			6,826			2,630			—			—			2,630
International stock funds			1,243			—			—			1,243			2,054			—			—			2,054
Target funds			260			—			—			260			268			—			—			268
Bond funds			208			—			—			208			825			—			—			825
Alternative funds			433			—			—			433			1,531			—			—			1,531
Total mutual funds			8,970			—			—			8,970			7,308			—			—			7,308
Total		$	19,806		$	19,655		$	1,926		$	41,387		$	73,662		$	15,409		$	1,895		$	90,966
Assets at fair value		$	19,806		$	19,655		$	1,926		$	41,387		$	73,662		$	15,409		$	1,895		$	90,966

From the assets measured at fair value as of September 26, 2020, listed in the table above, $20.5 million of mutual funds, equity securities, and alternative investments are held in Investments, $0.9 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $16.8 million of fixed income funds and $3.2 million of money markets funds are held in Restricted Investments.

We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan, our wholly owned licensed captive insurance company, and assets held in financial institutions. These funds are valued at prices quoted in an active exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Other Assets”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $37.3 million as of September 26, 2020, which has been included in the aforementioned table of total investments. This portfolio consists of domestic and international stocks, alternative investments, and fixed income bonds.

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):


		September 26, 2020									September 28, 2019
					Unrealized									Unrealized
		Cost			Gain/(Loss)			Fair Value			Cost			Gain/(Loss)			Fair Value
Fixed Income		$	15,750		$	1,020		$	16,770		$	14,969		$	330		$	15,299
Equity			9,121			1,403			10,524			7,584			1,256			8,840
Mutual Funds			7,228			852			8,080			6,391			(98)			6,293
Alternative Investments			1,881			45			1,926			1,790			105			1,895
Total		$	33,980		$	3,320		$	37,300		$	30,734		$	1,593		$	32,327

Our fixed income investments consist of a blend of US Government and Agency bonds and investment grade corporate bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our mutual fund investments consist of domestic and international stock. Our alternative investments consist of the private real estate income trust which is valued as a Level 3 asset. The net unrealized gain was $3.3 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of September 26, 2020 and September 28, 2019.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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