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Note 13 | 9 Months Ended
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Jun. 25, 2022
Notes to Financial Statements |
Fair Value Disclosures [Text Block] |
Note 13 | 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 25, 2022 are summarized as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  | Fair |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Market |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  | (in thousands) |
Corporate bonds |  | $ | 4,520 |  |  | $ | - |  |  | $ | 52 |  |  | $ | 4,468 |
Total marketable securities held to maturity |  | $ | 4,520 |  |  | $ | - |  |  | $ | 52 |  |  | $ | 4,468 |
The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at June 25, 2022 are summarized as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  | Fair |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Market |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  |  |  |  |  | (in thousands) |  |  |  |  |
Mutual funds |  | $ | 3,588 |  |  | $ | - |  |  | $ | 742 |  |  | $ | 2,846 |
Preferred stock |  |  | 2,816 |  |  |  | 15 |  |  |  | 69 |  |  |  | 2,762 |
Total marketable securities available for sale |  | $ | 6,404 |  |  | $ | 15 |  |  | $ | 811 |  |  | $ | 5,608 |
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 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 2022 through 2023, with $4.5 million maturing within the next 12 months. 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 25, 2021 are summarized as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  | Fair |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Market |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  |  |  |  |  | (in thousands) |  |  |  |  |
Corporate bonds |  |  | 12,027 |  |  |  | 123 |  |  |  | 18 |  |  |  | 12,132 |
Total marketable securities held to maturity |  | $ | 12,027 |  |  | $ | 123 |  |  | $ | 18 |  |  | $ | 12,132 |
The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September 25, 2021 are summarized as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  | Fair |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Market |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  |  |  |  |  | (in thousands) |  |  |  |  |
Mutual funds |  | $ | 3,588 |  |  | $ | - |  |  | $ | 536 |  |  | $ | 3,052 |
Preferred stock |  |  | 6,892 |  |  |  | 175 |  |  |  | 35 |  |  |  | 7,032 |
Total marketable securities available for sale |  | $ | 10,480 |  |  | $ | 175 |  |  | $ | 571 |  |  | $ | 10,084 |
The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at June 25, 2022 and September 25, 2021 are summarized as follows:
|  | June 25, 2022 |  |  | September 25, 2021 |
|  |  |  |  |  | Fair |  |  |  |  |  |  | Fair |
|  | Amortized |  |  | Market |  |  | Amortized |  |  | Market |
|  | Cost |  |  | Value |  |  | Cost |  |  | Value |
|  |  |  |  |  | (in thousands) |  |  |  |  |
Due in one year or less |  | $ | 4,520 |  |  | $ | 4,468 |  |  | $ | 7,980 |  |  | $ | 8,080 |
Due after one year through five years |  |  | - |  |  |  | - |  |  |  | 4,047 |  |  |  | 4,052 |
Total held to maturity securities |  | $ | 4,520 |  |  | $ | 4,468 |  |  | $ | 12,027 |  |  | $ | 12,132 |
Less current portion |  |  | 4,520 |  |  |  | 4,468 |  |  |  | 7,980 |  |  |  | 8,080 |
Long term held to maturity securities |  | $ | - |  |  | $ | - |  |  | $ | 4,047 |  |  | $ | 4,052 |
Proceeds from the redemption and sale of marketable securities were $0 and $11,526,000 in the three and nine months ended June 25, 2022 and were $12,854,000 and $54,191,000 in the three and nine months ended June 26, 2021, respectively. Losses of $343,000 and $412,000 were recorded in the three and nine months ended June 25, 2022, and gains of $21,000 and $139,000 were recorded in the three and nine months ended June 26, 2021. Included in the gains and losses were unrealized losses of $401,000 and unrealized gains of $786,000 in the nine months ended June 25, 2022 and June 26, 2021, respectively. An unrealized loss of $343,000 and an unrealized gain of $137,000 were recorded in the three months ended June 25, 2022, and June 26, 2021, respectively. We use the specific identification method to determine the cost of securities sold. Total marketable securities held to maturity as of June 25, 2022, with credit ratings of BBB/BB/B had an amortized cost basis totaling $4,520,000. This rating information was obtained June 30, 2022.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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