UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification Number) | |||
organization) | ||||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (
NONE | ||||
(Former name or former address, if changed since last report.) | ||||
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated Filer ◻ | Non-Accelerated Filer ◻ | Smaller Reporting Company | |
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class |
| Outstanding as of March 27, 2021 | ||
Common stock, $1 par value |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Trading Symbol | Name of Each Exchange On Which Registered |
TABLE OF CONTENTS
PART I. | FINANCIAL INFORMATION. | Page No. | |
Item 1. | Financial Statements | ||
Condensed Consolidated Balance Sheets at March 27, 2021, December 26, 2020 and March 28, 2020 | 3 | ||
4 | |||
5 | |||
6 | |||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | ||
28 | |||
28 | |||
PART II. | OTHER INFORMATION | ||
Item 1. | Legal Proceedings – NONE | ||
29 | |||
29 | |||
Item 3. | Defaults upon Senior Securities – NONE | ||
Item 4. | Mine Safety Disclosures – NONE | ||
29 | |||
29 |
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data) | ||||||||||
March 27, | December 26, | March 28, | ||||||||
| 2021 |
| 2020 |
| 2020 | |||||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents | $ | |
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Restricted cash |
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Investments |
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Accounts receivable, net |
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Inventories: |
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Raw materials |
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Finished goods |
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Total inventories |
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Refundable income taxes |
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Other current assets |
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TOTAL CURRENT ASSETS |
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DEFERRED INCOME TAXES |
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RESTRICTED INVESTMENTS | |
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RIGHT OF USE ASSETS | | | | |||||||
OTHER ASSETS |
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GOODWILL |
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INDEFINITE-LIVED INTANGIBLE ASSETS |
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OTHER INTANGIBLE ASSETS, NET |
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PROPERTY, PLANT AND EQUIPMENT: |
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Property, plant and equipment |
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Less accumulated depreciation and amortization |
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PROPERTY, PLANT AND EQUIPMENT, NET | | | ||||||||
TOTAL ASSETS | | | | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Cash overdraft | $ | | $ | — |
| $ | — | |||
Accounts payable | | |
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Accrued liabilities: |
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Compensation and benefits |
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Income taxes | | — | — | |||||||
Other |
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Current portion of lease liability | | | | |||||||
Current portion of long-term debt |
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TOTAL CURRENT LIABILITIES |
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LONG-TERM DEBT |
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LEASE LIABILITY | | | | |||||||
DEFERRED INCOME TAXES |
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OTHER LIABILITIES |
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TOTAL LIABILITIES |
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SHAREHOLDERS’ EQUITY: |
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Controlling interest shareholders’ equity: |
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Preferred stock, | $ | $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total controlling interest shareholders’ equity |
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Noncontrolling interest |
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TOTAL SHAREHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | | $ | |
| $ | |
See notes to consolidated condensed financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except per share data) | ||||||
Three Months Ended | ||||||
March 27, | March 28, | |||||
2021 |
| 2020 |
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NET SALES | $ | |
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COST OF GOODS SOLD |
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GROSS PROFIT |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
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OTHER LOSSES (GAINS), NET | ( | ( | ||||
EARNINGS FROM OPERATIONS |
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INTEREST EXPENSE |
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INTEREST AND INVESTMENT (INCOME) LOSS |
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EQUITY IN EARNINGS OF INVESTEE | | — | ||||
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EARNINGS BEFORE INCOME TAXES |
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INCOME TAXES |
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NET EARNINGS |
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LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST |
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NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST | $ | | $ | | ||
EARNINGS PER SHARE – BASIC | $ | | $ | | ||
EARNINGS PER SHARE – DILUTED | $ | | $ | | ||
OTHER COMPREHENSIVE INCOME: | ||||||
NET EARNINGS |
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OTHER COMPREHENSIVE GAIN (LOSS) |
| ( |
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COMPREHENSIVE INCOME |
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LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST |
| ( |
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COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | | $ | |
See notes to consolidated condensed financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share and per share data) | ||||||||||||||||||
Controlling Interest Shareholders’ Equity | ||||||||||||||||||
Accumulated | ||||||||||||||||||
Additional | Other | |||||||||||||||||
Common | Paid-In | Retained | Comprehensive | Noncontrolling | ||||||||||||||
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest |
| Total | |||||||
Balance at December 26, 2020 | $ | | $ | | $ | | $ | ( | $ | |
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Net earnings |
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Foreign currency translation adjustment |
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Unrealized loss on debt securities |
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Distributions to noncontrolling interest |
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Additional purchase of noncontrolling interest | — | |||||||||||||||||
Cash dividends - $ | ( |
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Issuance of |
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Net issuance of |
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Issuance of |
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Expense associated with share-based compensation arrangements | |
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Accrued expense under deferred compensation plans | |
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Balance at March 27, 2021 | $ | | $ | |
| $ | | $ | ( |
| $ | |
| $ | |
(in thousands, except share and per share data) | ||||||||||||||||||
Controlling Interest Shareholders’ Equity | ||||||||||||||||||
Accumulated | ||||||||||||||||||
Additional | Other | |||||||||||||||||
Common | Paid-In | Retained | Comprehensive | Noncontrolling | ||||||||||||||
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest |
| Total | |||||||
Balance at December 28, 2019 | $ | | $ | |
| $ | | $ | ( |
| $ | |
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Net earnings |
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Foreign currency translation adjustment |
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Unrealized loss on debt securities |
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Distributions to noncontrolling interest |
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Additional purchase of noncontrolling interest | ( |
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Cash dividends - $ |
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Issuance of |
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Net issuance of |
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Issuance of | |
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Repurchase of | ( |
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Expense associated with share-based compensation arrangements |
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Accrued expense under deferred compensation plans |
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Balance at March 28, 2020 | $ | | $ | |
| $ | | $ | ( |
| $ | |
| $ | |
See notes to consolidated condensed financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands) | Three Months Ended | ||||||
March 27, | March 28, | ||||||
| 2021 |
| 2020 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net earnings | $ | |
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Adjustments to reconcile net earnings to net cash from operating activities: |
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Depreciation |
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Amortization of intangibles |
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Expense associated with share-based and grant compensation arrangements |
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Deferred income taxes |
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Unrealized (gain) loss on investments and other |
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Equity in earnings of investee | | — | |||||
Net gain on disposition of assets |
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Changes in: |
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Accounts receivable |
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Inventories |
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Accounts payable and cash overdraft |
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Accrued liabilities and other |
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NET CASH USED IN OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property, plant and equipment |
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Proceeds from sale of property, plant and equipment |
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Acquisitions and purchases of non-controlling interest, net of cash received |
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Purchases of investments |
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Proceeds from sale of investments |
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Other |
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NET CASH USED IN INVESTING ACTIVITIES |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Borrowings under revolving credit facilities |
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Repayments under revolving credit facilities |
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Contingent consideration payments and other | ( | ( | |||||
Proceeds from issuance of common stock |
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Dividends paid to shareholders |
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Distributions to noncontrolling interest | ( | ( | |||||
Repurchase of common stock |
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Other |
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NET CASH FROM (USED IN) FINANCING ACTIVITIES |
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Effect of exchange rate changes on cash |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $ | | $ | | |||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | |||||||
Cash and cash equivalents, beginning of period | $ | | $ | | |||
Restricted cash, beginning of period | | | |||||
Cash, cash equivalents, and restricted cash, beginning of period | $ | | $ | | |||
Cash and cash equivalents, end of period | $ | | $ | | |||
Restricted cash, end of period | | | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | | $ | | |||
SUPPLEMENTAL INFORMATION: |
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Interest paid | $ | | $ | | |||
Income taxes paid |
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NON-CASH FINANCING ACTIVITIES: | |||||||
Common stock issued under deferred compensation plans |
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See notes to consolidated condensed financial statements.
6
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation.
In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10-K for the fiscal year ended December 26, 2020.
Seasonality has a significant impact on our working capital from March to August, which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the March 28, 2020 balances in the accompanying unaudited condensed consolidated balance sheets.
B. FAIR VALUE
We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value.
March 27, 2021 | March 28, 2020 | |||||||||||||||||||||||
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 | |||||||||||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) | Total |
| (Level 1) |
| (Level 2) |
| (Level 3) |
| Total | ||||||||||
Money market funds | $ | |
| $ | | $ | — |
| $ | |
| $ | |
| $ | | $ | — |
| $ | | |||
Fixed income funds |
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Equity securities |
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Alternative investments | — | — | | | — | — | | | ||||||||||||||||
Mutual funds: |
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Domestic stock funds |
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International stock funds |
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Target funds |
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Bond funds |
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| — | — |
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| — | — |
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Alternative funds | | — | — | | | — | — | | ||||||||||||||||
Total mutual funds |
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| — | — |
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| — | — |
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Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Assets at fair value | $ | | $ | | $ | |
| $ | | $ | | $ | | $ | |
| $ | |
7
From the assets measured at fair value as of March 27, 2021, listed in the table above, $
We maintain money market, mutual funds, bonds, and/or equity securities 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 $
Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):
March 27, 2021 | March 28, 2020 | |||||||||||||||||
Unrealized | Unrealized | |||||||||||||||||
| Cost |
| Gain/(Loss) |
| Fair Value |
| Cost |
| Gain/(Loss) |
| Fair Value | |||||||
Fixed Income | $ | |
| $ | |
| $ | | $ | |
| $ | |
| $ | | ||
Equity |
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Mutual Funds | |