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Note 11

9 Months Ended

Jun. 26, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 11

We have classified our investment securities as marketable securities held to maturity and available for sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB has established three levels of inputs that may be used to measure fair value:

Level 1

Observable input such as quoted prices in active markets for identical assets or liabilities;

Level 2

Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3

Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Marketable securities held to maturity and available for sale consist primarily of investments in mutual funds, preferred stock, and corporate bonds. The fair values of mutual funds are based on quoted market prices in active markets and are classified within Level 1 of the fair value hierarchy. The fair values of preferred stock and corporate bonds are based on quoted prices for identical or similar instruments in markets that are not active. As a result, preferred stock and corporate bonds are classified within Level 2 of the fair value hierarchy.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at June 26, 2021 are summarized as follows:

						Gross				Gross				Fair
		*Amortized*				*Unrealized*				*Unrealized*				*Market*
		*Cost*				*Gains*				*Losses*				*Value*
		(in thousands)

Corporate Bonds		$	17,470			$	243			$	6			$	17,707
Total marketable securities held to maturity		$	17,470			$	243			$	6			$	17,707

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at June 26, 2021 are summarized as follows:

						Gross				Gross				Fair
		*Amortized*				*Unrealized*				*Unrealized*				*Market*
		*Cost*				*Gains*				*Losses*				*Value*
		(in thousands)

Mutual Funds		$	3,588			$	-			$	581			$	3,007
Preferred Stock			8,107				213				54				8,266
Total marketable securities available for sale		$	11,695			$	213			$	635			$	11,273

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. The Fixed-to-Floating Perpetual Preferred Stock generate fixed income to call dates in 2021 and 2025 and then income is based on a spread above LIBOR if the securities are not called. The mutual funds and Fixed-to-Floating Perpetual Preferred Stock do not have contractual maturities; however, we classify them as long-term assets as it is our intent to hold them for a period of over one year, although we may sell some or all of them depending on presently unanticipated needs for liquidity or market conditions. The corporate bonds generate fixed income to maturity dates in 2021 through 2023, with $17.5 million maturing within 2 years. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at September 26, 2020 are summarized as follows:

						Gross				Gross				Fair
		*Amortized*				*Unrealized*				*Unrealized*				*Market*
		*Cost*				*Gains*				*Losses*				*Value*
		(in thousands)

Corporate Bonds			68,078				1,015				32				69,061
Total marketable securities held to maturity		$	68,078			$	1,015			$	32			$	69,061

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September 26, 2020 are summarized as follows:

						Gross				Gross				Fair
		*Amortized*				*Unrealized*				*Unrealized*				*Market*
		*Cost*				*Gains*				*Losses*				*Value*
		(in thousands)

Mutual Funds		$	3,588			$	-			$	738			$	2,850
Preferred Stock			11,596				116				586				11,126
Total marketable securities available for sale		$	15,184			$	116			$	1,324			$	13,976

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at June 26, 2021 and September 26, 2020 are summarized as follows:

		June 26, 2021								September 26, 2020

						*Fair*								*Fair*
		*Amortized*				*Market*				*Amortized*				*Market*
		*Cost*				*Value*				*Cost*				*Value*
		(in thousands)
Due in one year or less		$	9,902			$	10,041			$	51,151			$	51,815
Due after one year through five years			7,568				7,666				16,927				17,246
Due after five years through ten years			-				-				-				-
Total held to maturity securities		$	17,470			$	17,707			$	68,078			$	69,061
Less current portion			9,902				10,041				51,151				51,815
Long term held to maturity securities		$	7,568			$	7,666			$	16,927			$	17,246

Proceeds from the redemption and sale of marketable securities were $12,854,000 and $54,191,000 in the three and nine months ended June 26, 2021 and were $23,187,000 and $54,125,000 in the three and nine months ended June 27, 2020, respectively. Gains of $21,000 and $139,000 were recorded in the three and nine months ended June 26, 2021, respectively. A gain of $324,000 was recorded in the three months ended June 27, 2020 and losses of $1,746,000 were recorded in the nine months ended June 27, 2020. Included in the gains and losses were unrealized gains of $786,000 and unrealized losses of $1,708,000 in the nine months ended June 26, 2021 and June 27, 2020, respectively. Unrealized gains of $137,000 and $285,000 were recorded in the three months ended June 26, 2021 and June 27, 2020, respectively. We use the specific identification method to determine the cost of securities sold.

Total marketable securities held to maturity as of June 26, 2021 with credit ratings of AAA/AA/A had an amortized cost basis totaling $4,970,000 and those with credit ratings of BBB/BB/B had an amortized cost basis totaling $12,500,000. This rating information was obtained June 30, 2021.

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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