UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 26, 2020~~July 3, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-08822

CAVCO INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Delaware

56-2405642

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3636 North Central Ave, Ste 1200

Phoenix

Arizona

85012

(Address of principal executive offices, including zip code)

(602) 256-6263

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01	CVCO	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)

Indicate by check mark 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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark 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 definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	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 any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~January 22,~~July 30, 2021, ~~9,192,237~~9,187,030 shares of the registrant's Common Stock, $.01 par value, were outstanding.

CAVCO INDUSTRIES, INC.

FORM 10-Q

~~December 26, 2020~~July 3, 2021

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of ~~December~~ ~~26, 2020~~July 3, 2021 (unaudited) and ~~March 28, 2020~~April 3, 2021			1
Consolidated Statements of Comprehensive Income (unaudited) for the three ~~and~~ ~~nine~~months ended ~~December~~ ~~26,~~July 3, 2021 and June 27, 2020 ~~and~~ ~~December~~ ~~28, 2019~~			2
Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~December~~ ~~26,~~July 3, 2021 and June 27, 2020 ~~and~~ ~~December~~ ~~28, 2019~~			3
Notes to Consolidated Financial Statements			4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2418
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3224
Item 4. Controls and Procedures			3225
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			3326
Item 1A. Risk Factors			3326
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 5. Other Information			3426
Item 6. Exhibits			3427
SIGNATURES			3528

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

CAVCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

December 26,
2020 March 28,
2020
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 327,487 $ 241,826
Restricted cash, current 12,802 13,446
Accounts receivable, net 40,932 42,800
Short-term investments 16,966 14,582
Current portion of consumer loans receivable, net 42,091 32,376
Current portion of commercial loans receivable, net 15,649 14,657
Current portion of commercial loans receivable from affiliates, net 3,363 766
Inventories 110,624 113,535
Prepaid expenses and other current assets 55,805 42,197
Total current assets 625,719 516,185
Restricted cash 335 335
Investments 35,485 31,557
Consumer loans receivable, net 39,501 49,928
Commercial loans receivable, net 16,563 23,685
Commercial loans receivable from affiliates, net 4,171 7,457
Property, plant and equipment, net 78,493 77,190
Goodwill 75,090 75,090
Other intangibles, net 14,550 15,110
Operating lease right-of-use assets 16,659 13,894
Total assets $ 906,566 $ 810,431
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,176 $ 29,924
Accrued expenses and other current liabilities 186,026 139,930
Current portion of secured credit facilities and other 2,140 2,248
Total current liabilities 213,342 172,102
Operating lease liabilities 13,827 10,743
Secured credit facilities and other 10,847 12,705
Deferred income taxes 6,809 7,295
Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; NaN shares issued or outstanding 0 0
Common stock, $0.01 par value; 40,000,000 shares authorized; Outstanding 9,192,237 and 9,173,242 shares, respectively 92 92
Additional paid-in capital 255,664 252,260
Retained earnings 405,835 355,144
Accumulated other comprehensive income 150 90
Total stockholders' equity 661,741 607,586
Total liabilities and stockholders' equity $ 906,566 $ 810,431


	July 3, 2021		April 3, 2021
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	329,753	$	322,279
Restricted cash, current	16,728		16,693
Accounts receivable, net	51,054		47,396
Short-term investments	19,749		19,496
Current portion of consumer loans receivable, net	32,429		37,690
Current portion of commercial loans receivable, net	16,500		14,568
Current portion of commercial loans receivable from affiliates, net	2,113		4,664
Inventories	150,917		131,234
Prepaid expenses and other current assets	48,621		57,779
Total current assets	667,864		651,799
Restricted cash	335		335
Investments	38,192		35,010
Consumer loans receivable, net	35,095		37,108
Commercial loans receivable, net	21,245		20,281
Commercial loans receivable from affiliates, net	4,730		4,801
Property, plant and equipment, net	97,981		96,794
Goodwill	75,090		75,090
Other intangibles, net	14,190		14,363
Operating lease right-of-use assets	16,150		16,252
Total assets	$	970,872	$	951,833
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	30,175	$	32,120
Accrued expenses and other current liabilities	210,190		203,133
Current portion of secured financings and other	1,822		1,851
Total current liabilities	242,187		237,104
Operating lease liabilities	13,085		13,361
Secured financings and other	9,927		10,335
Deferred income taxes	6,606		7,393
Stockholders' equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; NaN shares issued or outstanding	0		0
Common stock, $0.01 par value; 40,000,000 shares authorized; Issued 9,245,721 and 9,241,256 shares, respectively	92		92
Treasury stock, at cost; 67,901 and 6,600 shares, respectively	(14,283)		(1,441)
Additional paid-in capital	255,071		253,835
Retained earnings	458,103		431,057
Accumulated other comprehensive income	84		97
Total stockholders' equity	699,067		683,640
Total liabilities and stockholders' equity	$	970,872	$	951,833

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Net revenue	Net revenue	$	288,772	$	273,722	$	801,549	$	806,439	Net revenue		$	330,422	$	254,801
Cost of sales	Cost of sales	229,534		213,867		633,447		627,819		Cost of sales		256,409		199,478
Gross profit	Gross profit	59,238		59,855		168,102		178,620		Gross profit		74,013		55,323
Selling, general and administrative expenses	Selling, general and administrative expenses	35,414		36,844		106,190		108,191		Selling, general and administrative expenses		40,832		35,323
Income from operations	Income from operations	23,824		23,011		61,912		70,429		Income from operations		33,181		20,000
Interest expense	Interest expense	(177)		(490)		(567)		(1,278)		Interest expense		(164)		(196)
Other income, net	Other income, net	2,243		2,211		5,821		10,198		Other income, net		2,461		1,876
Income before income taxes	Income before income taxes	25,890		24,732		67,166		79,349		Income before income taxes		35,478		21,680
Income tax expense	Income tax expense	(6,189)		(3,834)		(15,742)		(16,284)		Income tax expense		(8,432)		(5,006)
Net income	Net income	$	19,701	$	20,898	$	51,424	$	63,065	Net income		$	27,046	$	16,674

Comprehensive income:
Comprehensive income										Comprehensive income
Net income	Net income	$	19,701	$	20,898	$	51,424	$	63,065	Net income		$	27,046	$	16,674
Reclassification adjustment for securities sold or matured		(13)		15		20		17
Reclassification adjustment for securities sold										Reclassification adjustment for securities sold		1		26
Applicable income taxes	Applicable income taxes	3		(3)		(4)		(4)		Applicable income taxes		0		(5)
Net change in unrealized position of investments held	Net change in unrealized position of investments held	(6)		(14)		56		126		Net change in unrealized position of investments held		(18)		59
Applicable income taxes	Applicable income taxes	1		3		(12)		(26)		Applicable income taxes		4		(12)
Comprehensive income		$	19,686	$	20,899	$	51,484	$	63,178
												$	27,033	$	16,742
Net income per share:

Net income per share										Net income per share
Basic	Basic	$	2.14	$	2.29	$	5.60	$	6.91	Basic		$	2.94	$	1.82
Diluted	Diluted	$	2.12	$	2.25	$	5.54	$	6.81	Diluted		$	2.92	$	1.80
Weighted average shares outstanding:
Weighted average shares outstanding										Weighted average shares outstanding
Basic	Basic	9,190,254		9,138,202		9,182,491		9,120,241		Basic		9,198,229		9,174,182
Diluted	Diluted	9,295,553		9,293,941		9,285,238		9,259,203		Diluted		9,276,529		9,264,661

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019			July 3, 2021		June 27, 2020
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	51,424	$	63,065	Net income	$	27,046	$	16,674
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities						Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	4,735		4,208		Depreciation and amortization	1,576		1,613
Provision for credit losses	Provision for credit losses	(1,082)		138		Provision for credit losses	(239)		(884)
Deferred income taxes	Deferred income taxes	(272)		1,407		Deferred income taxes	(783)		406
Stock-based compensation expense	Stock-based compensation expense	2,935		2,268		Stock-based compensation expense	1,100		945
Non-cash interest income, net	Non-cash interest income, net	(2,984)		(1,134)		Non-cash interest income, net	(394)		(2,186)
Loss (gain) on sale or retirement of property, plant and equipment, net		220		(3,416)
Gain (loss) on sale or retirement of property, plant and equipment, net						Gain (loss) on sale or retirement of property, plant and equipment, net	(35)		289
Gain on investments and sale of loans, net	Gain on investments and sale of loans, net	(14,964)		(11,801)		Gain on investments and sale of loans, net	(5,579)		(4,982)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities						Changes in operating assets and liabilities
Accounts receivable	Accounts receivable	1,868		2,196		Accounts receivable	(3,659)		4,629
Consumer loans receivable originated	Consumer loans receivable originated	(124,058)		(121,637)		Consumer loans receivable originated	(42,706)		(47,356)
Proceeds from sales of consumer loans	Proceeds from sales of consumer loans	122,597		117,127		Proceeds from sales of consumer loans	49,631		39,271
Principal payments received on consumer loans receivable	Principal payments received on consumer loans receivable	10,720		7,816		Principal payments received on consumer loans receivable	3,929		3,261
Inventories	Inventories	2,911		11,567		Inventories	(19,683)		7,139
Prepaid expenses and other current assets	Prepaid expenses and other current assets	10,913		(676)		Prepaid expenses and other current assets	2,801		7,128
Commercial loans receivable	Commercial loans receivable	6,444		487		Commercial loans receivable	(243)		2,556
Accounts payable and accrued expenses and other current liabilities	Accounts payable and accrued expenses and other current liabilities	20,159		(3,295)		Accounts payable and accrued expenses and other current liabilities	11,513		7,189
Net cash provided by operating activities	Net cash provided by operating activities	91,566		68,320		Net cash provided by operating activities	24,275		35,692
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(5,816)		(6,487)		Purchases of property, plant and equipment	(2,593)		(1,856)
Payments for acquisition, net		0		(15,937)

Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	118		73		Proceeds from sale of property, plant and equipment	38		5
Purchases of investments	Purchases of investments	(14,056)		(4,648)		Purchases of investments	(4,429)		(1,160)
Proceeds from sale of investments	Proceeds from sale of investments	14,656		8,126		Proceeds from sale of investments	3,368		3,116
Net cash used in investing activities		(5,098)		(18,873)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(3,616)		105
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Proceeds from exercise of stock options		469		226
Proceeds from (payments for) exercise of stock options						Proceeds from (payments for) exercise of stock options	136		(533)
Proceeds from secured financings and other	Proceeds from secured financings and other	64		76		Proceeds from secured financings and other	0		64
Payments on securitized financings and other		(1,984)		(19,360)
Payments on secured financings and other						Payments on secured financings and other	(444)		(453)
Payments for common stock repurchases						Payments for common stock repurchases	(12,842)		0
Net cash used in financing activities	Net cash used in financing activities	(1,451)		(19,058)		Net cash used in financing activities	(13,150)		(922)
Net increase in cash, cash equivalents and restricted cash	Net increase in cash, cash equivalents and restricted cash	85,017		30,389		Net increase in cash, cash equivalents and restricted cash	7,509		34,875
Cash, cash equivalents and restricted cash at beginning of the fiscal year	Cash, cash equivalents and restricted cash at beginning of the fiscal year	255,607		199,869		Cash, cash equivalents and restricted cash at beginning of the fiscal year	339,307		255,607
Cash, cash equivalents and restricted cash at end of the period	Cash, cash equivalents and restricted cash at end of the period	$	340,624	$	230,258	Cash, cash equivalents and restricted cash at end of the period	$	346,816	$	290,482
Supplemental disclosures of cash flow information:
Supplemental disclosures of cash flow information						Supplemental disclosures of cash flow information
Cash paid for income taxes	Cash paid for income taxes	$	13,111	$	15,901	Cash paid for income taxes	$	4,774	$	2,536
Cash paid for interest	Cash paid for interest	$	371	$	604	Cash paid for interest	$	100	$	127
Supplemental disclosures of noncash activity:
GNMA loans eligible for repurchase		$	21,366	$	2,442
Right-of-use assets recognized		$	5,692	$	14,322
Operating lease obligations incurred		$	5,692	$	14,347
Supplemental disclosures of noncash activity						Supplemental disclosures of noncash activity
Change in GNMA loans eligible for repurchase						Change in GNMA loans eligible for repurchase	$	(6,607)	$	1,242
Right-of-use assets recognized and operating lease obligations incurred						Right-of-use assets recognized and operating lease obligations incurred	$	708	$	5,559

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cavco Industries, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, that are necessary to fairly state the results for the periods presented. ~~Certain prior period amounts have been reclassified to conform to current period classification.~~ We have evaluated subsequent events after the balance sheet date through the date of the filing of this report with the ~~SEC,~~SEC; and except for the events set forth in Note 20 of the Notes to Consolidated Financial Statements ("Notes") of the Company's Quarterly Report on Form 10-Q for the period ended July 3, 2021, there were no subsequent events requiring disclosure. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in our ~~2020~~2021 Annual Report on Form 10-K for the year ended ~~March 28, 2020~~April 3, 2021, filed with the SEC ~~on May 27, 2020~~ ("Form 10-K").

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying ~~Notes to the Consolidated Financial Statements ("Notes").~~Notes. The uncertainty created by the novel coronavirus COVID-19 pandemic ("COVID-19") has made such estimates more difficult and subjective. Due to that and other uncertainties, actual results could differ from those estimates. The Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows for the interim periods are not necessarily indicative of the results or cash flows for the full year. The Company operates on a 52-53 week fiscal year ending on the Saturday nearest to March 31st of each year. Each fiscal quarter consists of 13 weeks, with an occasional fourth quarter extending to 14 weeks, if necessary, for the fiscal year to end on the Saturday nearest to March 31st. The current fiscal year will end on April ~~3, 2021~~2, 2022 and will include 5352 weeks.

We operate ~~principally~~ in 2 segments: (1) factory-built housing, which includes wholesale and retail ~~systems-built~~factory-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. We design and build a wide variety of affordable manufactured homes, modular homes and park model RVs through 20 homebuilding production lines located throughout the United States, which are sold to a network of independent distributors, community owners and developers and through our 40 Company-owned retail stores. The financial services segment is comprised of a finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), and an insurance subsidiary, Standard Casualty ~~Co.~~Company ("Standard Casualty"). CountryPlace is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation seller/servicer and a Government National Mortgage Association ("GNMA") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Standard Casualty provides property and casualty insurance primarily to owners of manufactured homes.

~~Table of Contents~~

~~Recently Issued or Adopted Accounting Standards.~~

~~On March 29, 2020, we adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Update ("ASU") 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments and requires a forward-looking impairment model based on expected losses rather than incurred losses. We adopted the standard by recognizing the cumulative effect of initially applying the new credit loss standard as an adjustment to the opening balance of Retained earnings. The comparative information has not been restated and continues to be reported under the accounting standard in effect for the applicable prior periods. The cumulative effect of the changes made to our consolidated balance sheet at March 29, 2020 for the adoption of ASU 2016-13 was $733,000, net of taxes. The application of ASU 2016-13 increased our allowance for loan losses by $435,000 for commercial loans receivable and $528,000 for non-acquired consumer loans receivable. It had an insignificant impact to our allowance for credit losses for Accounts receivable, net.

ASU 2016-13 was adopted using the prospective transition approach for acquired consumer loans receivable assets that were previously accounted for under FASB Accounting Standards Codification ("ASC") 310-30, ~~Loans and Debt Securities Acquired with Deteriorated Credit Quality~~ ("ASC 310-30"). We determined that $1.7 million of the existing purchase discount for acquired consumer loans was related to credit factors and was reclassified to the allowance for loan loss upon adoption. The remaining discount on the acquired consumer loans was determined to be related to non-credit factors and will be accreted into interest income over the life of the loans.

For a description of ~~other~~ significant accounting policies we used in the preparation of our Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K.

Table of Contents

2. Revenue from Contracts with Customers

The following table summarizes customer contract revenues disaggregated by reportable segment and source (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Factory-built housing	Factory-built housing									Factory-built housing
U.S. Housing and Urban Development code homes	U.S. Housing and Urban Development code homes	$	222,684	$	208,966	$	609,853	$	619,001	U.S. Housing and Urban Development code homes		$	262,390	$	189,446
Modular homes	Modular homes	26,059		24,508		67,325		63,327		Modular homes		26,617		20,783
Park model RVs	Park model RVs	8,296		10,219		31,045		34,831		Park model RVs		9,671		13,722
Other	Other	13,783		13,413		41,656		41,405		Other		13,605		14,139
Net revenue from factory-built housing		270,822		257,106		749,879		758,564
												312,283		238,090
Financial services	Financial services									Financial services
Insurance agency commissions received from third-party insurance companies	Insurance agency commissions received from third-party insurance companies	840		783		2,387		2,212		Insurance agency commissions received from third-party insurance companies		873		770
Other	Other	17,110		15,833		49,283		45,663		Other		17,266		15,941
Net revenue from financial services		17,950		16,616		51,670		47,875
Total Net revenue		$	288,772	$	273,722	$	801,549	$	806,439
												18,139		16,711
												$	330,422	$	254,801

~~Table of Contents~~

3. Restricted Cash

Restricted cash consisted of the following (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Cash related to CountryPlace customer payments to be remitted to third parties	Cash related to CountryPlace customer payments to be remitted to third parties	$	11,889	$	12,740	Cash related to CountryPlace customer payments to be remitted to third parties	$	15,928	$	16,049
Other restricted cash	Other restricted cash	1,248		1,041		Other restricted cash	1,135		979
		$	13,137	$	13,781		17,063		17,028
Less current portion						Less current portion	(16,728)		(16,693)
							$	335	$	335

Corresponding amounts for customer payments to be remitted to third parties are recorded in Accounts payable.

The following table provides a reconciliation of Cash and cash equivalents and Restricted cash reported within the Consolidated Balance Sheets to the combined amounts shown on the Consolidated Statements of Cash Flows (in thousands):


		December 26, 2020		March 28, 2020		December 28, 2019		March 30, 2019			July 3, 2021		April 3, 2021
Cash and cash equivalents	Cash and cash equivalents	$	327,487	$	241,826	$	216,882	$	187,370	Cash and cash equivalents	$	329,753	$	322,279
Restricted cash, current		12,802		13,446		13,026		12,148
Restricted cash	Restricted cash	335		335		350		351		Restricted cash	17,063		17,028
Cash, cash equivalents and restricted cash per statement of cash flows		$	340,624	$	255,607	$	230,258	$	199,869
											$	346,816	$	339,307

Table of Contents

4. Investments

Investments consisted of the following (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Available-for-sale debt securities	Available-for-sale debt securities	$	16,673	$	14,774	Available-for-sale debt securities	$	17,962	$	14,946
Marketable equity securities	Marketable equity securities	13,987		9,829		Marketable equity securities	17,550		17,600
Non-marketable equity investments	Non-marketable equity investments	21,791		21,536		Non-marketable equity investments	22,429		21,960
		52,451		46,139			57,941		54,506
Less current portion	Less current portion	(16,966)		(14,582)		Less current portion	(19,749)		(19,496)
		$	35,485	$	31,557		$	38,192	$	35,010

Investments in marketable equity securities consist of investments in the common stock of industrial and other companies.

As of ~~December 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, non-marketable equity investments included contributions of $15.0 million to equity-method investments in community-based initiatives that buy and sell our homes and provide home-only financing to residents of certain manufactured home communities. Other non-marketable equity investments included investments in other distribution operations.

~~Table of Contents~~

The following tables summarize our available-for-sale debt securities, gross unrealized gains and losses and fair value, aggregated by investment category (in thousands):


		December 26, 2020									July 3, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Residential mortgage-backed securities	Residential mortgage-backed securities	$	5,209	$	45	$	(17)	$	5,237	Residential mortgage-backed securities	$	2,609	$	26	$	(11)	$	2,624
State and political subdivision debt securities	State and political subdivision debt securities	6,156		151		(1)		6,306		State and political subdivision debt securities	8,265		109		(19)		8,355
Corporate debt securities	Corporate debt securities	5,117		15		(2)		5,130		Corporate debt securities	6,982		12		(11)		6,983
		$	16,482	$	211	$	(20)	$	16,673		$	17,856	$	147	$	(41)	$	17,962

March 28, 2020
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value
Residential mortgage-backed securities $ 5,400 $ 69 $ (26) $ 5,443
State and political subdivision debt securities 4,239 134 (3) 4,370
Corporate debt securities 5,021 5 (65) 4,961
$ 14,660 $ 208 $ (94) $ 14,774

The following tables show gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position (in thousands):

December 26, 2020
Less than 12 Months 12 Months or Longer Total
Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses
Residential mortgage-backed securities $ 342 $ (9) $ 460 $ (8) $ 802 $ (17)
State and political subdivision debt securities 321 (1) 0 0 321 (1)
Corporate debt securities 805 (2) 0 0 805 (2)
$ 1,468 $ (12) $ 460 $ (8) $ 1,928 $ (20)


		March 28, 2020
		Less than 12 Months				12 Months or Longer				Total					April 3, 2021
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Residential mortgage-backed securities	Residential mortgage-backed securities	$	133	$	0	$	1,779	$	(26)	$	1,912	$	(26)	Residential mortgage-backed securities	$	2,787	$	30	$	(13)	$	2,804
State and political subdivision debt securities	State and political subdivision debt securities	601		(2)		101		(1)		702		(3)		State and political subdivision debt securities	7,239		125		(19)		7,345
Corporate debt securities	Corporate debt securities	3,747		(65)		0		0		3,747		(65)		Corporate debt securities	4,797		11		(11)		4,797
		$	4,481	$	(67)	$	1,880	$	(27)	$	6,361	$	(94)
															$	14,823	$	166	$	(43)	$	14,946

We are not aware of any changes to the securities or issuers that would indicate the losses above are indicative of credit impairment as of ~~December 26, 2020.~~July 3, 2021. Further, we do not intend to sell the investments, and it is more likely than not that we will not be required to sell the investments, before recovery of their amortized cost.

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The amortized cost and fair value of our investments in available-for-sale debt securities, by contractual maturity, are shown in the table below (in thousands). Expected maturities differ from contractual maturities as borrowers may have the right to call or prepay obligations, with or without penalties.


		December 26, 2020					July 3, 2021
		Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in less than one year	Due in less than one year	$	601	$	603	Due in less than one year	$	1,518	$	1,519
Due after one year through five years	Due after one year through five years	8,335		8,375		Due after one year through five years	11,033		11,028
Due after five years through ten years	Due after five years through ten years	1,025		1,097		Due after five years through ten years	1,391		1,450
Due after ten years	Due after ten years	1,312		1,361		Due after ten years	1,305		1,341
Mortgage-backed securities	Mortgage-backed securities	5,209		5,237		Mortgage-backed securities	2,609		2,624
		$	16,482	$	16,673		$	17,856	$	17,962

~~We recognize investment gains and losses on available-for-sale debt securities when we sell or otherwise dispose of securities using the specific identification method. For the~~ ~~three and nine months ended December 26, 2020, there were 0 gross gains realized~~ ~~on the sale of available-for-sale debt securities~~ ~~and gross losses realized were~~ ~~$1,000~~ ~~and~~ ~~$6,000, respectively.~~There were 0 gross gains or losses realized on the sale of available-for-sale debt securities during ~~the~~the three ~~and nine~~ months ended ~~December 28, 2019.~~July 3, 2021 or June 27, 2020.

We recognize unrealized gains and losses on marketable equity securities from changes in market prices during the period as a component of earnings in the Consolidated Statements of Comprehensive Income. Net investment gains and losses on marketable equity securities were as follows (in thousands):

Three Months Ended Nine Months Ended
December 26,
2020 December 28,
2019 December 26,
2020 December 28,
2019
Marketable equity securities:
Net gains on securities held $ 1,857 $ 764 $ 5,132 $ 2,066
Net gains on securities sold 151 13 157 11
$ 2,008 $ 777 $ 5,289 $ 2,077


	Three Months Ended
		July 3, 2021		June 27, 2020
Marketable equity securities
Net gain recognized during the period		$	1,696	$	2,030
Less: Net gains recognized on securities sold during the period		(136)		(33)
Unrealized gains recognized during the period on securities still held		$	1,560	$	1,997

5. Inventories

Inventories consisted of the following (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Raw materials	Raw materials	$	45,821	$	35,691	Raw materials	$	69,123	$	54,336
Work in process	Work in process	16,223		13,953		Work in process	20,426		19,149
Finished goods	Finished goods	48,580		63,891		Finished goods	61,368		57,749
		$	110,624	$	113,535		$	150,917	$	131,234

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6. Consumer Loans Receivable

The following table summarizes consumer loans receivable (in thousands):

December 26,
2020 March 28,
2020
Loans held for investment (at Acquisition Date, defined below) $ 33,726 $ 37,779
Loans held for investment (originated after Acquisition Date) 17,873 20,140
Loans held for sale 22,014 14,671
Construction advances 13,923 13,400
87,536 85,990
Deferred financing fees and other, net (2,525) (1,919)
Allowance for loan losses (3,419) (1,767)
81,592 82,304
Less current portion (42,091) (32,376)
$ 39,501 $ 49,928

The Company acquired consumer loans receivable as part of the acquisition of Palm Harbor Homes, Inc. in April 2011 ("Acquisition Date"). The allowance for loan losses reflects our judgment of the probable loss exposure on loans held for investment. On March 29, 2020 we adopted ASU 2016-13 using the prospective transition approach for acquired consumer loans receivable assets that were previously accounted for under ASC 310-30. We determined th~~at $1.7 million o~~f the existing purchase discount for such consumer loans was related to credit factors and was reclassified to the allowance for loan losses upon adoption. The remaining discount on the acquired consumer loans was determined to be related to non-credit factors and will be accreted into interest income over the life of the loans.


	July 3, 2021		April 3, 2021
Loans held for investment, previously securitized	$	30,384	$	31,949
Loans held for investment	17,565		18,690
Loans held for sale	13,542		15,587
Construction advances	10,479		13,801
	71,970		80,027
Deferred financing fees and other, net	(1,528)		(2,041)
Allowance for loan losses	(2,918)		(3,188)
	67,524		74,798
Less current portion	(32,429)		(37,690)
	$	35,095	$	37,108

The following table represents changes in the estimated allowance for loan losses, including related additions and deductions to the allowance for loan losses (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Allowance for loan losses at beginning of period	Allowance for loan losses at beginning of period	$	3,910	$	415	$	1,767	$	415	Allowance for loan losses at beginning of period		$	3,188	$	1,767
Impact of adoption of ASU 2016-13		0		0		2,276		0
Impact of adoption of Financial Accounting Standards Board's Accounting Standards Update 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13")										Impact of adoption of Financial Accounting Standards Board's Accounting Standards Update 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13")		0		2,276
Change in estimated loan losses, net	Change in estimated loan losses, net	(491)		16		(424)		16		Change in estimated loan losses, net		(267)		161
Charge-offs	Charge-offs	0		0		(200)		0		Charge-offs		(3)		(192)
Recoveries		0		0		0		0
Allowance for loan losses at end of period	Allowance for loan losses at end of period	$	3,419	$	431	$	3,419	$	431	Allowance for loan losses at end of period		$	2,918	$	4,012

The consumer loans held for investment had the following characteristics:

December 26,
2020 March 28,
2020
Weighted average contractual interest rate 8.4 % 8.4 %
Weighted average effective interest rate 9.5 % 9.3 %
Weighted average months to maturity 159 164

~~Table of Contents~~


	July 3, 2021		April 3, 2021
Weighted average contractual interest rate	8.2	%	8.3	%
Weighted average effective interest rate	8.8	%	9.3	%
Weighted average months to maturity	160		162

The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Current	Current	$	84,200	$	83,861	Current	$	68,258	$	76,378
31 to 60 days	31 to 60 days	834		547		31 to 60 days	192		508
61 to 90 days	61 to 90 days	178		307		61 to 90 days	3,112		21
91+ days	91+ days	2,324		1,275		91+ days	408		3,120
		$	87,536	$	85,990		$	71,970	$	80,027

Table of Contents

The following ~~table disaggregates CountryPlace's~~tables disaggregate gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands):


		December 26, 2020																	July 3, 2021
		2021		2020		2019		2018		2017		Prior		Total		March 28, 2020			2022		2021		2020		2019		2018		Prior		Total
Prime- FICO score 680 and greater	Prime- FICO score 680 and greater	$	21,087	$	4,191	$	1,832	$	996	$	1,761	$	24,582	$	54,449	$	55,513	Prime- FICO score 680 and greater	$	5,068	$	10,500	$	2,970	$	1,578	$	770	$	24,028	$	44,914
Near Prime- FICO score 620-679	Near Prime- FICO score 620-679	11,502		4,074		1,809		1,141		614		10,875		30,015		27,767		Near Prime- FICO score 620-679	2,312		6,528		2,159		1,676		1,360		10,353		24,388
Sub-Prime- FICO score less than 620	Sub-Prime- FICO score less than 620	426		54		0		0		85		1,786		2,351		2,142		Sub-Prime- FICO score less than 620	0		260		53		0		0		1,605		1,918
No FICO score	No FICO score	151		0		28		0		0		542		721		568		No FICO score	150		149		0		27		0		424		750
		$	33,166	$	8,319	$	3,669	$	2,137	$	2,460	$	37,785	$	87,536	$	85,990		$	7,530	$	17,437	$	5,182	$	3,281	$	2,130	$	36,410	$	71,970


	April 3, 2021
	2021		2020		2019		2018		2017		Prior		Total
Prime- FICO score 680 and greater	$	18,250	$	3,575	$	1,718	$	971	$	1,959	$	23,375	$	49,848
Near Prime- FICO score 620-679	10,227		2,744		1,794		1,364		500		10,401		27,030
Sub-Prime- FICO score less than 620	348		53		0		0		84		1,579		2,064
No FICO score	576		0		28		0		0		481		1,085
	$	29,401	$	6,372	$	3,540	$	2,335	$	2,543	$	35,836	$	80,027

Loan contracts secured by geographically concentrated collateral could experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically dispersed. As of ~~December 26, 2020~~July 3, 2021 and April 3, 2021, ~~37% of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and 20% was concentrated in Florida. As of March 28, 2020, 36%~~35% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and ~~16%~~20% was concentrated in Florida. Other than Texas and Florida, no ~~state~~state had concentrations in excess of 10% of the principal balance of the consumer loans receivable as of ~~December 26, 2020~~July 3, 2021 or ~~March 28, 2020.~~April 3, 2021.

Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home less the costs to sell. At repossession, the fair value of the collateral is determined based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is recorded to the allowance for loan losses. Repossessed homes totaled approximately ~~$162,000~~$493,000 and ~~$1.5 million~~$518,000 as of ~~December 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately ~~$606,000~~$1.0 million and ~~$560,000~~$1.1 million as of ~~December 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, respectively.

7. Commercial Loans Receivable

The commercial loans receivable balance consists of ~~two classes: (i)~~ direct financing arrangements for the home product needs of our independent distributors, community owners and ~~developers;~~developers and ~~(ii)~~ amounts loaned by us under participation financing programs.

~~Under the terms~~Commercial loans receivable, net consisted of the direct programs, we provide funds for financed home purchases by distributors, community owners and developers. The notes are secured by the homes as collateral and, in some instances, other security. Other terms of direct arrangements vary, depending on the needs of the borrower and the opportunity for the Company.following (in thousands):


	July 3, 2021		April 3, 2021
Loans receivable	$	45,620	$	45,377
Allowance for loan losses	(785)		(816)
Deferred financing fees, net	(247)		(247)
	44,588		44,314
Less current portion of commercial loans receivable (including from affiliates), net	(18,613)		(19,232)
	$	25,975	$	25,082

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Under the terms of the participation programs, we provide loans to independent floor plan lenders that then lend to distributors to finance their inventory purchases. The participation commercial loans receivables are unsecured general obligations of the independent floor plan lenders.

~~Commercial loans receivable, net consisted of the following, by class of financing notes receivable (in thousands):~~

December 26,
2020 March 28,
2020
Direct loans receivable $ 40,653 $ 47,058
Participation loans receivable 105 144
Allowance for loan losses (765) (393)
Deferred financing fees, net (247) (244)
39,746 46,565
Less current portion of commercial loans receivable (including from affiliates), net (19,012) (15,423)
$ 20,734 $ 31,142

The commercial loans receivable balance had the following characteristics:

December 26,
2020 March 28,
2020
Weighted average contractual interest rate 6.1 % 5.7 %
Weighted average months to maturity 11 10

The risk of loss is spread over numerous borrowers. Borrower activity is monitored on a regular basis and contractual arrangements are in place to provide adequate loss mitigation in the event of a default. Historically, we have been able to sell repossessed homes, thereby mitigating loss exposure. If a default occurs and collateral is lost, we are exposed to loss of the full value of the home loan. We evaluate the potential for loss from the commercial loan programs based on the borrower's risk rating, overall financial stability, historical experience and estimates of other economic factors. We have included considerations related to the COVID-19 pandemic when assessing our risk of loan loss and setting reserve amounts for the commercial finance portfolio as of December 26, 2020.


	July 3, 2021		April 3, 2021
Weighted average contractual interest rate	6.0	%	6.4	%
Weighted average months to maturity	10		11

The following table represents changes in the estimated allowance for loan losses, including related additions and deductions to the allowance for loan losses (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Balance at beginning of period	Balance at beginning of period	$	789	$	163	$	393	$	180	Balance at beginning of period		$	816	$	393
Impact of adoption of ASU 2016-13	Impact of adoption of ASU 2016-13	0		0		435		0		Impact of adoption of ASU 2016-13		0		435
Change in estimated loan losses, net	Change in estimated loan losses, net	(24)		(1)		(63)		(18)		Change in estimated loan losses, net		(31)		0
Loans charged off, net of recoveries		0		0		0		0
Balance at end of period	Balance at end of period	$	765	$	162	$	765	$	162	Balance at end of period		$	785	$	828

~~Table~~As of ~~Contents~~

July 3, 2021 and April 3, 2021, there were 0 commercial loans considered watch list or nonperforming. The following table disaggregates our commercial loans receivable by ~~credit quality indicator and~~ fiscal year of origination (in thousands):

December 26, 2020
2021 2020 2019 2018 2017 Total March 28,
2020
Risk profile based on payment activity:
Performing $ 22,708 $ 10,394 $ 3,954 $ 2,180 $ 1,522 $ 40,758 $ 47,016
Watch list 0 0 0 0 0 0 186
Nonperforming 0 0 0 0 0 0 0
$ 22,708 $ 10,394 $ 3,954 $ 2,180 $ 1,522 $ 40,758 $ 47,202


	July 3, 2021
	2022		2021		2020		2019		2018		Prior		Total
Performing	$	15,150	$	19,119	$	5,973	$	2,689	$	1,743	$	946	$	45,620


	April 3, 2021
	2021		2020		2019		2018		2017		Prior		Total
Performing	$	30,627	$	8,677	$	3,206	$	1,864	$	1,003	$	0	$	45,377

At ~~December 26, 2020,~~July 3, 2021, there were 0 commercial loans 90 days or more past due that were still accruing interest and we were not aware of any potential problem loans that would have a material effect on the commercial loans receivable balance.

As of ~~December 26, 2020, 10.0%~~July 3, 2021, 14% of our outstanding commercial loans receivable principal balance was concentrated in Arizona and 13% was concentrated in California. As of April 3, 2021, 13% of our outstanding commercial loans receivable principal balance was concentrated in Arizona. ~~As of~~ ~~March 28, 2020,~~ ~~11.0% of the outstanding commercial loans receivable principal balance was concentrated in California.~~ No other state had concentrations in excess of 10% of the principal balance of the consumer loans receivable as of ~~December 26, 2020~~July 3, 2021 or ~~March 28, 2020.~~April 3, 2021.

We had concentrations with one independent third-party and its affiliates that equaled ~~16.8% and 21.0%~~18% of the net commercial loans receivable principal balance outstanding, all of which was secured, as of ~~December 26, 2020~~July 3, 2021 and ~~March 28, 2020, respectively. T~~April 3, 2021.

~~he risks created by these concentrations have been considered in the determination~~Table of ~~the adequacy of the allowance for loan losses.~~Contents

8. Property, Plant and Equipment, net

Property, plant and equipment, net, consisted of the following (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Property, plant and equipment, at cost:
Property, plant and equipment, at cost						Property, plant and equipment, at cost
Land	Land	$	26,862	$	26,827	Land	$	28,314	$	28,314
Buildings and improvements	Buildings and improvements	54,710		52,011		Buildings and improvements	73,415		71,827
Machinery and equipment	Machinery and equipment	33,163		30,984		Machinery and equipment	35,075		34,146
		114,735		109,822			136,804		134,287
Accumulated depreciation	Accumulated depreciation	(36,242)		(32,632)		Accumulated depreciation	(38,823)		(37,493)
		$	78,493	$	77,190		$	97,981	$	96,794

Depreciation expense was $1.4 million for each of the three month periods ended ~~December 26, 2020~~July 3, 2021 and ~~December 28, 2019. Depreciation expense for the nine months ended December 26, 2020 and December 28, 2019 was $4.2 million and $3.8 million, respectively.~~

~~Included in the amounts above are certain assets under finance leases. See Note 9 of the Notes to the Consolidated Financial Statements included in the Form 10-K for additional information.~~June 27, 2020.

9. ~~Leases~~

~~We lease~~ certain production and retail locations, office space and equipment. During the period ended December 26, 2020, we executed various lease renewals, including a five-year extension at one of our active manufacturing facilities, which increased the right of use asset and lease liability.

~~Table of Contents~~

~~The present value of minimum payments for future fiscal years under non-cancelable leases as of December 26, 2020 was as follows (in thousands):~~

Operating Leases Finance Leases Total
Remainder of 2021 $ 1,051 $ 19 $ 1,070
2022 4,182 73 4,255
2023 3,854 73 3,927
2024 3,503 73 3,576
2025 2,706 73 2,779
2026 2,799 49 2,848
Thereafter 2,206 0 2,206
20,301 360 20,661
Less amount representing interest (2,392) (41) (2,433)
17,909 319 18,228
Less current portion (4,082) (71) (4,153)
$ 13,827 $ 248 $ 14,075

~~10.~~ Goodwill and Other Intangibles

Goodwill and other intangibles, net, consisted of the following (in thousands):


		December 26, 2020						March 28, 2020							July 3, 2021						April 3, 2021
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived:
Indefinite-lived														Indefinite-lived
Goodwill	Goodwill	$	75,090	$	—	$	75,090	$	75,090	$	—	$	75,090	Goodwill	$	75,090	$	—	$	75,090	$	75,090	$	—	$	75,090
Trademarks and trade names	Trademarks and trade names	8,900		—		8,900		8,900		—		8,900		Trademarks and trade names	8,900		—		8,900		8,900		—		8,900
State insurance licenses	State insurance licenses	1,100		—		1,100		1,100		—		1,100		State insurance licenses	1,100		—		1,100		1,100		—		1,100
		85,090		—		85,090		85,090		—		85,090			85,090		—		85,090		85,090		—		85,090
Finite-lived:
Finite-lived														Finite-lived
Customer relationships	Customer relationships	11,300		(6,938)		4,362		11,300		(6,463)		4,837		Customer relationships	11,300		(7,255)		4,045		11,300		(7,097)		4,203
Other	Other	1,424		(1,236)		188		1,424		(1,151)		273		Other	1,424		(1,279)		145		1,424		(1,264)		160
		$	97,814	$	(8,174)	$	89,640	$	97,814	$	(7,614)	$	90,200		$	97,814	$	(8,534)	$	89,280	$	97,814	$	(8,361)	$	89,453

Amortization expense recognized on intangible assets was ~~$186,000~~$173,000 and ~~$188,000~~$187,000 for the three months ended ~~December 26,~~July 3, 2021 and June 27, 2020, ~~and December 28, 2019, respectively. Amortization expense recognized on intangible assets was $560,000 and $419,000 for the nine months ended December 26, 2020 and December 28, 2019,~~ respectively.

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~~11.~~10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Customer deposits	Customer deposits	$	34,373	$	22,055	Customer deposits	$	48,989	$	41,835
Salaries, wages and benefits	Salaries, wages and benefits	32,338		25,885		Salaries, wages and benefits	37,176		37,737
Unearned insurance premiums						Unearned insurance premiums	24,125		22,643
Company repurchase options on certain loans sold	Company repurchase options on certain loans sold	29,104		7,444		Company repurchase options on certain loans sold	19,432		25,938
Unearned insurance premiums		21,223		20,614
Estimated warranties	Estimated warranties	17,996		18,678		Estimated warranties	19,344		18,032
Accrued volume rebates	Accrued volume rebates	12,063		9,801		Accrued volume rebates	14,097		12,132
Accrued self-insurance		5,661		5,112
Insurance loss reserves		5,351		5,582
Operating lease liabilities		4,082		4,170
Reserve for repurchase commitments		2,281		2,679
Accrued taxes		2,212		1,908

Other	Other	19,342		16,002		Other	47,027		44,816
		$	186,026	$	139,930		$	210,190	$	203,133

~~12.~~11. Warranties

Activity in the liability for estimated warranties was as follows (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Balance at beginning of period	Balance at beginning of period	$	17,805	$	18,563	$	18,678	$	17,069	Balance at beginning of period		$	18,032	$	18,678

Purchase accounting additions		0		0		0		1,192
Charged to costs and expenses	Charged to costs and expenses	7,724		7,269		20,303		21,855		Charged to costs and expenses		9,125		6,347
Payments and deductions	Payments and deductions	(7,533)		(7,873)		(20,985)		(22,157)		Payments and deductions		(7,813)		(6,487)
Balance at end of period	Balance at end of period	$	17,996	$	17,959	$	17,996	$	17,959	Balance at end of period		$	19,344	$	18,538

~~13.~~12. Debt and Finance Lease Obligations

Debt and finance lease obligations primarily consist of secured ~~credit facilities~~financings at our finance subsidiary and lease obligations for which it is expected that we will obtain ownership of the leased assets at the end of ~~their~~the lease term. The following table summarizes debt and finance lease obligations (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Secured credit facilities		$	8,825	$	10,474
Secured term loan						Secured term loan	$	7,980	$	8,210
Other secured financings	Other secured financings	3,843		4,113		Other secured financings	3,473		3,672
Finance lease obligations	Finance lease obligations	319		366		Finance lease obligations	296		304
		12,987		14,953			11,749		12,186
Less current portion	Less current portion	(2,140)		(2,248)		Less current portion	(1,822)		(1,851)
		$	10,847	$	12,705		$	9,927	$	10,335

~~Table of Contents~~

~~CountryPlace~~We entered into secured credit facilities with independent third-party banks ~~with draw periods from one to fifteen months and maturity dates of ten years after the expiration of the draw periods, which have now expired. The proceeds were used~~ to originate and hold consumer home-only loans secured by manufactured homes, which ~~are~~were pledged as collateral to the facilities. ~~Upon completion of the draw down periods, the~~Those facilities ~~were~~have since been converted into an amortizing loan with maturity dates starting in 2028 and payments based on a ~~20-year~~20 or 25-year amortization period, ~~with~~resulting in a balloon payment due upon maturity. ~~The maximum advance for loans under this program was 80% of the outstanding collateral principal balance, with the Company providing the remaining funds.~~ The outstanding balance of the converted loans was ~~$8.8~~$8.0 million as of ~~December 26, 2020~~July 3, 2021 and ~~$10.5~~$8.2 million as of ~~March 28, 2020,~~April 3, 2021 with a weighted average interest rate of ~~4.91%~~4.9%.

~~See Note 9~~

Table of ~~the Notes to the Consolidated Financial Statements included in the Form 10-K for further discussion of the finance lease obligations.~~Contents

13. Reinsurance and Insurance Loss Reserves

~~14. Reinsurance~~

~~Standard Casualty is primarily a specialty writer of manufactured home physical damage insurance.~~ Certain of Standard Casualty's premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. ~~Standard Casualty remains~~We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations. ~~Substantially all of Standard Casualty's assumed reinsurance is with one entity.~~

The effects of reinsurance on premiums written and earned were as follows (in thousands):

Three Months Ended
December 26, 2020 December 28, 2019
Written Earned Written Earned
Direct premiums $ 5,420 $ 5,429 $ 4,654 $ 4,756
Assumed premiums—nonaffiliated 6,541 7,195 5,918 6,676
Ceded premiums—nonaffiliated (3,146) (3,146) (3,071) (3,071)
$ 8,815 $ 9,478 $ 7,501 $ 8,361


		Nine Months Ended									Three Months Ended
		December 26, 2020				December 28, 2019					July 3, 2021				June 27, 2020
		Written		Earned		Written		Earned			Written		Earned		Written		Earned
Direct premiums	Direct premiums	$	16,100	$	15,759	$	13,866	$	13,979	Direct premiums	$	6,839	$	5,996	$	5,765	$	5,185
Assumed premiums—nonaffiliated	Assumed premiums—nonaffiliated	21,787		21,028		20,191		19,703		Assumed premiums—nonaffiliated	8,574		7,378		7,653		6,790
Ceded premiums—nonaffiliated	Ceded premiums—nonaffiliated	(9,201)		(9,201)		(9,087)		(9,087)		Ceded premiums—nonaffiliated	(3,647)		(3,647)		(3,202)		(3,202)
		$	28,686	$	27,586	$	24,970	$	24,595		$	11,766	$	9,727	$	10,216	$	8,773

Typical insurance policies written or assumed ~~by Standard Casualty~~ have a maximum coverage of $300,000 per claim, of which ~~Standard Casualty cedes~~we cede $150,000 of the risk of loss per reinsurance. Therefore, ~~Standard Casualty's~~our risk of loss is limited to $150,000 per claim on typical policies, subject to the reinsurers meeting their obligations. After this limit, amounts are recoverable ~~by Standard Casualty~~ through reinsurance for catastrophic losses in excess of $2 million per occurrence, up to a maximum of $55 million in the ~~aggregate.~~aggregate for that occurrence.

Standard Casualty establishes reserves for claims and claims expense on reported and unreported claims of non-reinsured losses. The following details the activity in the reserve for the three months ended July 3, 2021 and June 27, 2020 (in thousands):


	Three Months Ended
	July 3, 2021		June 27, 2020
Balance at beginning of period	$	7,451	$	5,582
Net incurred losses during the year	7,975		5,982
Net claim payments during the year	(7,078)		(4,834)
Balance at end of period	$	8,348	$	6,730

~~15.~~14. Commitments and Contingencies

Repurchase Contingencies. ~~The Company is~~We are contingently liable under terms of repurchase agreements with financial institutions providing inventory financing ~~for~~to independent distributors of ~~its~~our products. These arrangements, which are customary in the industry, provide for the repurchase of products sold to distributors in the event of default by the distributor.

~~Table of Contents~~

The maximum amount for which we were liable under such agreements approximated ~~$70.8~~$80.9 million and ~~$79.3~~$74.2 million at ~~December 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, respectively, without a reduction for the resale value of the ~~homes. We apply ASC 460,~~ ~~Guarantees, and ASC 450-20,~~ ~~Loss Contingencies, to account for the repurchase commitment liability.~~homes that are repurchased. We had a reserve for repurchase commitments of $2.3 million at July 3, 2021 and ~~$2.7 million at December 26, 2020 and March 28, 2020, respectively.~~

~~Letter of Credit.~~ To secure certain reinsurance contracts, Standard Casualty maintained an irrevocable letter of credit of $11.0 million to provide assurance that Standard Casualty would fulfill its reinsurance obligations. The letter of credit was released on July 11, 2020.April 3, 2021.

Construction-Period Mortgages. ~~CountryPlace funds~~We fund construction-period mortgages through periodic advances during home construction. At the time of initial funding, ~~CountryPlace commits~~we commit to fully fund the loan contract in accordance with a predetermined schedule. Subsequent advances are contingent upon the performance of contractual obligations by the seller of the home and the borrower. Cumulative advances on construction-period mortgages are carried on the Consolidated Balance Sheets at the amount advanced less a valuation allowance and are included in Consumer loans receivable, net. The total loan contract amount, less cumulative advances, represents an off-balance sheet contingent commitment ~~of CountryPlace~~ to fund future advances.

Table of Contents

Loan contracts with off-balance sheet commitments are summarized below (in thousands):


		December 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Construction loan contract amount	Construction loan contract amount	$	41,763	$	31,136	Construction loan contract amount	$	28,204	$	37,628
Cumulative advances	Cumulative advances	(13,923)		(13,400)		Cumulative advances	(10,479)		(13,801)
		$	27,840	$	17,736		$	17,725	$	23,827

Representations and Warranties of Mortgages Sold. ~~CountryPlace sells~~ We sell loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and ~~finances~~finance certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, ~~CountryPlace provides~~we provide to ~~the~~ GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed. Upon a breach of a representation, ~~CountryPlace~~we may be required to ~~repurchase~~repurchase the loan or to indemnify a party for incurred losses. ~~During the nine months ended December 26, 2020, the Company executed indemnification agreements to cover 20% of the losses experienced over the next~~ ~~two~~ ~~years related to 5 loans that were impacted by COVID-19.~~ We maintain a reserve for these contingent repurchase and indemnification ~~obligations.~~obligations. This reserve of $1.3 million as of ~~December 26, 2020~~July 3, 2021 and ~~$1.0~~$1.2 million as of ~~March 28, 2020,~~April 3, 2021, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. There were 0 claim requests that resulted in the execution of an indemnification agreement or in the repurchase of a loan during the ~~nine~~three months ended ~~December 26, 2020.~~July 3, 2021.

Interest Rate Lock Commitments. In originating loans for sale, ~~CountryPlace issues~~we issue interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs ~~represent an agreement to extend credit to a loan applicant, whereby the interest rate on the loan is set prior to loan closing or sale. These IRLCs~~ bind ~~CountryPlace~~us to fund the approved loan at the specified rate regardless of whether interest rates or market prices for similar loans have changed between the commitment date and the closing date.

As of ~~December 26, 2020, CountryPlace~~July 3, 2021, we had outstanding IRLCs with a notional amount of ~~$24.5~~$32.1 million ~~which are recorded at fair value~~ and recognized a gain of $47,000 in ~~accordance with ASC 815,~~the ~~Derivatives~~2022first quarter and ~~Hedging~~a ~~. During the three months ended December 26, 2020 and December 28, 2019, we recognized gains of $57,000 and losses of $5,000, respectively, on outstanding IRLCs. During the nine months ended December 26, 2020 and December 28, 2019, we recognized losses~~loss of ~~$87,000 and $8,000~~$125,000 in the 2021, ~~respectively, on outstanding IRLCs.~~first quarter

~~Table of Contents~~.

Forward Sales Commitments. ~~CountryPlace manages~~We manage the risk profiles of a portion of ~~its~~the outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale ~~commitments.~~commitments (collectively "Commitments"). As of ~~December 26, 2020, CountryPlace~~July 3, 2021, we had ~~$68.9~~$42.9 million in outstanding ~~notional forward sales of MBSs~~Commitments and forward sales commitments. Commitments for forward sales of whole loans are typically in an amount proportionate with the amount of IRLCs expected to close in particular time frames, assuming no change in mortgage interest rates, for the respective loan products intended for whole loan sale.

The estimated fair values of forward sales of MBS and whole loan sale commitments are based on quoted market values and are recorded within Prepaid expenses and other current assets in the Consolidated Balance Sheets. During the three months ended December 26, 2020 andrecognized a non-cash ~~December 28, 2019, we~~ ~~recognized losses of $318,000 and gains of $79,000, respectively,on forward sales of MBS and whole loan sale commitments. During the nine months ended December 26, 2020 and December 28, 2019, we recognized gains~~loss of $~~816,000~~347,000 in the 2022first quarter and ~~$163,000,respectively,~~gain of $1.0 million in the 2021 ~~on forward sales of MBS and whole loan sale commitments.~~first quarter.

Legal Matters.Since 2018, ~~the Company has~~we have been cooperating with an investigation by the enforcement staff of the SEC's Los Angeles Regional Office regarding securities trading in personal and Company accounts directed by the ~~Company's~~Company's former Chief Executive Officer, Joseph Stegmayer. ~~The Audit Committee of the Board of Directors conducted an internal investigation led by independent legal counsel and other advisers and, following the completion of its work~~As previously disclosed, in ~~early 2019, the Audit Committee shared the results of its work with the Company's auditors, listing exchange and the SEC staff. We have also made documents and personnel available to~~November 2020, the SEC staff ~~and we intend~~issued a Wells Notice to ~~continue cooperating with its investigation. We have been exploring~~Cavco stating that the ~~possibility of a settlement~~staff intends to recommend an enforcement action against us in connection with the ~~SEC staff but, at~~investigation. While we cannot predict with certainty the resolution of this ~~time,~~matter, we ~~are unable~~do not expect it to ~~assess the probability of that outcome or reasonably estimate the amount of~~have a ~~potential loss, if any.~~material adverse effect on our Consolidated Financial Statements.

~~Joseph D. Robles v. Cavco Industries, Inc.~~ ~~("Robles"),was filed in the Superior Court for the State of California, Riverside on June 25, 2019 and~~ ~~Malik Griffin v. Fleetwood Homes, Inc~~. ("Griffin"), was filed in the Superior Court for the State of California, San Bernardino on September 19, 2019, each seeking recovery on behalf of a putative class of current and former hourly employees for certain alleged wage-and-hour violations including, among other things: (i) alleged failure to comply with certain wage statement formatting requirements; (ii) alleged failure to compensate employees for straight-time and overtime hours worked; and (iii) alleged failure to provide employees with all requisite work breaks. On November 24, 2020, Robles dismissed his separate action in the Riverside County Superior Court and Griffin filed an amended complaint adding Robles as a named plaintiff to the action in the San Bernardino County Superior Court. A joint mediation occurred on January 27, 2021 where the Parties failed to reach a settlement or resolution to the matter

~~The Company is~~We are party to certain other lawsuits in the ordinary course of business. Based on management's present knowledge of the facts and, ~~(in~~in certain ~~cases)~~cases, advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on our consolidated financial position, liquidity or results of operations after taking into account any existing reserves, which reserves are included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. However, future events or circumstances that may currently be unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods.

1714

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15. Stockholders' Equity

The following table represents changes in stockholders' equity during the three months ended July 3, 2021 (dollars in thousands):


				Treasury Stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income		Total
	Common Stock
	Shares	Amount
Balance, April 3, 2021	9,241,256	$	92	$	(1,441)	$	253,835	$	431,057	$	97	$	683,640
Net income	—	0		0		0		27,046		0		27,046
Other comprehensive income, net	—	0		0		0		0		(13)		(13)
Issuance of common stock under stock incentive plans	4,465	0		—		136		0		0		136
Stock-based compensation	—	0		0		1,100		0		0		1,100
Common stock repurchases	—	—		(12,842)		—		—		—		(12,842)
Balance, July 3, 2021	9,245,721	$	92	$	(14,283)	$	255,071	$	458,103	$	84	$	699,067

The following table represents changes in stockholders' equity during the three months ended June 27, 2020 (dollars in thousands):


				Treasury Stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income		Total
	Common Stock
	Shares	Amount
Balance, March 28, 2020	9,173,242	$	92	$	0	$	252,260	$	355,144	$	90	$	607,586
Cumulative effect of implementing ASU 2016-13, net	—	0		0		0		(733)		0		(733)
Net income	—	0		0		0		16,674		0		16,674
Other comprehensive income, net	—	0		0		0		0		68		68
Issuance of common stock under stock incentive plans	3,822	0		0		(533)		0		0		(533)
Stock-based compensation	—	0		0		945		0		0		945
Balance, June 27, 2020	9,177,064	$	92	$	0	$	252,672	$	371,085	$	158	$	624,007

Table of Contents

16. ~~Stockholders' Equity~~

~~The following table represents changes in stockholders' equity for each quarterly period during the nine months ended December 26, 2020 (dollars in thousands):~~

Additional paid-in capital Retained earnings Accumulated other comprehensive income Total
Common Stock
Shares Amount
Balance, March 28, 2020 9,173,242 $ 92 $ 252,260 $ 355,144 $ 90 $ 607,586
Cumulative effect of implementing ASU 2016-13, net — 0 0 (733) 0 (733)
Net income — 0 0 16,674 0 16,674
Issuance of common stock under stock incentive plans 3,822 0 (533) 0 0 (533)
Stock-based compensation — 0 945 0 0 945
Other comprehensive income, net — 0 0 0 68 68
Balance, June 27, 2020 9,177,064 $ 92 $ 252,672 $ 371,085 $ 158 $ 624,007
Net income — 0 0 15,049 0 15,049
Issuance of common stock under stock incentive plans 11,098 0 522 0 0 522
Stock-based compensation — 0 1,103 0 0 1,103
Other comprehensive income, net — 0 0 0 7 7
Balance, September 26, 2020 9,188,162 $ 92 $ 254,297 $ 386,134 $ 165 $ 640,688
Net income — 0 0 19,701 0 19,701
Issuance of common stock under stock incentive plans 4,075 0 480 0 0 480
Stock-based compensation — 0 887 0 0 887
Other comprehensive loss, net — 0 0 0 (15) (15)
Balance, December 26, 2020 9,192,237 $ 92 $ 255,664 $ 405,835 $ 150 $ 661,741

~~Table of Contents~~

~~The following table represents changes in stockholders' equity for each quarterly period during the nine months ended December 28, 2019 (dollars in thousands):~~

Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total
Common Stock
Shares Amount
Balance, March 30, 2019 9,098,320 $ 91 $ 249,447 $ 280,078 $ (28) $ 529,588
Net income — 0 0 21,282 0 21,282
Issuance of common stock under stock incentive plans 13,304 0 (1,252) 0 0 (1,252)
Stock-based compensation — 0 630 0 0 630
Other comprehensive income, net — 0 0 0 89 89
Balance, June 29, 2019 9,111,624 $ 91 $ 248,825 $ 301,360 $ 61 $ 550,337
Net income — 0 0 20,885 0 20,885
Issuance of common stock under stock incentive plans 15,842 0 941 0 0 941
Stock-based compensation — 0 818 0 0 818
Other comprehensive loss, net — 0 0 0 23 23
Balance, September 28, 2019 9,127,466 $ 91 $ 250,584 $ 322,245 $ 84 $ 573,004
Net income — 0 0 20,898 0 20,898
Issuance of common stock under stock incentive plans 13,725 0 537 0 0 537
Stock-based compensation — 0 820 0 0 820
Other comprehensive income, net — 0 0 0 1 1
Balance, December 28, 2019 9,141,191 $ 91 $ 251,941 $ 343,143 $ 85 $ 595,260

~~Table of Contents~~

~~17.~~ Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Net income	Net income	$	19,701	$	20,898	$	51,424	$	63,065	Net income		$	27,046	$	16,674
Weighted average shares outstanding:
Weighted average shares outstanding										Weighted average shares outstanding
Basic	Basic	9,190,254		9,138,202		9,182,491		9,120,241		Basic		9,198,229		9,174,182
Effect of dilutive securities	Effect of dilutive securities	105,299		155,739		102,747		138,962		Effect of dilutive securities		78,300		90,479
Diluted	Diluted	9,295,553		9,293,941		9,285,238		9,259,203		Diluted		9,276,529		9,264,661
Net income per share:
Net income per share										Net income per share
Basic	Basic	$	2.14	$	2.29	$	5.60	$	6.91	Basic		$	2.94	$	1.82
Diluted	Diluted	$	2.12	$	2.25	$	5.54	$	6.81	Diluted		$	2.92	$	1.80

~~Anti-dilutive~~There were 8,366 anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended ~~December 26, 2020~~July 3, 2021 and December 28, 2019 were 26,601 and 14,482, respectively. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the nine months ended December 26, 2020 and December 28, 2019 were 26,357 and 29,971, respectively. In addition, outstanding restricted share awards excluded from the calculation of diluted earnings per share because the underlying performance criteria had not been met were 14,40539,996 for the three ~~and nine~~ months ended ~~December 26, 2020, and 7,305 for the three and nine months ended December 28, 2019.~~June 27, 2020.

~~18.~~17. Fair Value Measurements

The book value and estimated fair value of our financial instruments were as follows (in thousands):


		December 26, 2020				March 28, 2020					July 3, 2021				April 3, 2021
		Book Value		Estimated Fair Value		Book Value		Estimated Fair Value			Book Value		Estimated Fair Value		Book Value		Estimated Fair Value
Available-for-sale debt securities	Available-for-sale debt securities	$	16,673	$	16,673	$	14,774	$	14,774	Available-for-sale debt securities	$	17,962	$	17,962	$	14,946	$	14,946
Marketable equity securities	Marketable equity securities	13,987		13,987		9,829		9,829		Marketable equity securities	17,550		17,550		17,600		17,600
Non-marketable equity investments	Non-marketable equity investments	21,791		21,791		21,536		21,536		Non-marketable equity investments	22,429		22,429		21,960		21,960
Consumer loans receivable	Consumer loans receivable	81,592		96,313		82,304		97,395		Consumer loans receivable	67,524		76,466		74,798		86,209
Interest rate lock commitment derivatives		77		77		164		164
Forward loan sale commitment derivatives		(195)		(195)		(1,011)		(1,011)

Commercial loans receivable	Commercial loans receivable	39,746		38,300		46,565		46,819		Commercial loans receivable	44,588		42,586		44,314		42,379
Secured financings and other		(12,987)		(12,493)		(14,953)		(15,592)
Secured financings other										Secured financings other	(11,749)		(11,810)		(12,186)		(12,340)

See Note 19, Fair Value Measurements and the Fair Value of Financial Instruments caption in Note 1, Summary of Significant Accounting Policies in the Form 10-K for more information on the methodologies we use in determining fair value.

~~Table of Contents~~

~~Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):~~

December 26, 2020
Total Level 1 Level 2 Level 3
Residential mortgage-backed securities (1)
$ 5,237 $ 0 $ 5,237 $ 0
State and political subdivision debt securities (1)
6,306 0 6,306 0
Corporate debt securities (1)
5,130 0 5,130 0
Marketable equity securities (2)
13,987 13,987 0 0
Interest rate lock commitment derivatives (3)
77 0 0 77
Forward loan sale commitment derivatives (3)
(195) 0 0 (195)
Mortgage servicing rights (4)
831 0 0 831

March 28, 2020
Total Level 1 Level 2 Level 3
Residential mortgage-backed securities (1)
$ 5,443 $ 0 $ 5,443 $ 0
State and political subdivision debt securities (1)
4,370 0 4,370 0
Corporate debt securities (1)
4,961 0 4,961 0
Marketable equity securities (2)
9,829 9,829 0 0
Interest rate lock commitment derivatives (3)
164 0 0 164
Forward loan sale commitment derivatives (3)
(1,011) 0 0 (1,011)
Mortgage servicing rights (4)
1,225 0 0 1,225

~~(1)Unrealized gains or losses on investments are recorded in Accumulated other comprehensive income at each measurement date.~~

~~(2)Unrealized gains or losses on investments are recorded in earnings at each measurement date.~~

~~(3)Gains or losses on derivatives are recorded in earnings through Cost of sales.~~

~~(4)Changes in the fair value of mortgage servicing rights are recorded in earnings through Net revenue.~~

~~NaN transfers between Level 1, Level 2 or Level 3 occurred during the nine months ended December 26, 2020.~~

~~Financial instruments for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis are summarized below (in thousands):~~

December 26, 2020
Total Level 1 Level 2 Level 3
Loans held for investment $ 59,167 $ 0 $ 0 $ 59,167
Loans held for sale 23,223 0 0 23,223
Construction advances 13,923 0 0 13,923
Commercial loans receivable 38,300 0 0 38,300
Secured financings and other (12,493) 0 (12,493) 0
Non-marketable equity investments 21,791 0 0 21,791

~~Table of Contents~~

March 28, 2020
Total Level 1 Level 2 Level 3
Loans held for investment $ 68,503 $ 0 $ 0 $ 68,503
Loans held for sale 15,492 0 0 15,492
Construction advances 13,400 0 0 13,400
Commercial loans receivable 46,819 0 0 46,819
Secured financings and other (15,592) 0 (15,592) 0
Non-marketable equity investments 21,536 0 0 21,536

~~NaN impairment charges were recorded during the nine months ended December 26, 2020.~~

Mortgage Servicing. Mortgage Servicing Rights ("MSRs") are the rights to receive a portion of the interest coupon and fees collected from the mortgagors for performing specified mortgage servicing activities, which consist of collecting loan payments, remitting principal and interest payments to investors, managing escrow accounts, performing loss mitigation activities on behalf of investors and otherwise administering the loan servicing portfolio.activities. MSRs are initially recorded at fair value. ~~Changes in fair value subsequent to the initial capitalization are recorded in earnings.~~


	July 3, 2021			April 3, 2021
Number of loans serviced with MSRs	4,614			4,647
Weighted average servicing fee (basis points)	33.86			33.57
Capitalized servicing multiple	67.3		%	45.9		%
Capitalized servicing rate (basis points)	22.78			15.42
Serviced portfolio with MSRs (in thousands)	$	594,373		$	593,939
MSRs (in thousands)	$	1,354		$	916

December 26,
2020 March 28,
2020
Number of loans serviced with MSRs 4,663 4,688
Weighted average servicing fee (basis points) 31.81 31.12
Capitalized servicing multiple 44.23 % 67.19 %
Capitalized servicing rate (basis points) 14.07 20.91
Serviced portfolio with MSRs (in thousands) $ 590,433 $ 585,777
MSRs (in thousands) $ 831 $ 1,225

~~19.~~

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18. Related Party Transactions

We have non-marketable equity investments in other distribution operations outside of Company-owned retail ~~locations.~~stores. In the ordinary course of business, we sell homes and lend to certain of these operations through our commercial lending programs. For the three months ended ~~December 26,~~July 3, 2021 and June 27, 2020, ~~and December 28, 2019,~~ the total amount of sales to related parties was ~~$11.2~~$14.8 million and $~~13.3 million, respectively. For the nine months ended December 26, 2020 and December 28, 2019, the total amount of sales to related parties was $34.2 millionand$37.1~~12.7 million, respectively. As of ~~December 26, 2020,~~July 3, 2021, receivables from related parties included ~~$3.9~~$4.3 million of accounts receivable and ~~$7.5~~$6.8 million of commercial loans outstanding. As of ~~March 28, 2020,~~April 3, 2021, receivables from related parties ~~included $1.7~~included $4.7 million of accounts receivable and ~~$8.2~~$9.5 million of commercial loans outstanding.

~~20. Acquisition of Destiny Homes~~

On August 2, 2019, the Company purchased certain manufactured housing assets and assumed certain liabilities of Destiny Homes, which operates one manufacturing facility located in Moultrie, Georgia and produces and distributes manufactured and modular homes through a network of independent retailers in the Southeastern United States, further expanding our reach. We finalized the purchase price allocation and have not made any purchase accounting adjustments during fiscal year 2021.

~~Table of Contents~~

~~Pro Forma Impact of Acquisition. The following table presents supplemental pro forma information as if the acquisition of Destiny Homes had occurred on March 31, 2019 (in thousands, except per share data):~~

Three Months Ended Nine Months Ended
December 26,
2020 December 28,
2019 December 26,
2020 December 28,
2019
Net revenue $ 288,772 $ 273,722 $ 801,549 $ 817,674
Net income 19,701 20,898 51,424 63,868
Diluted net income per share 2.12 2.25 5.54 6.90

~~21.~~19. Business Segment Information

We operate principally in 2 segments: (1) factory-built housing, which includes wholesale and retail ~~systems-built~~factory-built housing operations and (2) financial services, which includes manufactured housing consumer finance and insurance. The following table ~~details Net revenue and Income before income taxes~~provides selected financial data by segment (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019				July 3, 2021		June 27, 2020
Net revenue:
Net revenue										Net revenue
Factory-built housing	Factory-built housing	$	270,822	$	257,106	$	749,879	$	758,564	Factory-built housing		$	312,283	$	238,090
Financial services	Financial services	17,950		16,616		51,670		47,875		Financial services		18,139		16,711
		$	288,772	$	273,722	$	801,549	$	806,439			$	330,422	$	254,801

Income before income taxes:
Income before income taxes										Income before income taxes
Factory-built housing	Factory-built housing	$	18,752	$	19,247	$	54,654	$	66,023	Factory-built housing		$	33,559	$	18,450
Financial services	Financial services	7,138		5,485		12,512		13,326		Financial services		1,919		3,230
		$	25,890	$	24,732	$	67,166	$	79,349			$	35,478	$	21,680

20. Subsequent Event

On July 23, 2021, we entered into an agreement to acquire the business and certain assets and liabilities of The Commodore Corporation ("Commodore"), including its 6 manufacturing and 2 retail locations. Commodore is the largest private independent builder of manufactured and modular housing in the United States, operating under a variety of strong brand names. Commodore operates across the Northeast, Midwest and Mid-Atlantic regions, with wholly owned retail stores. In addition to manufacturing, Commodore also has a commercial lending portfolio with its dealers that we will acquire and continue. For the last 12 months ended March 31, 2021, Commodore generated net sales of approximately $258 million and sold over 6,600 modules, equating to over 3,700 homes.

The purchase price totals $153 million, before certain adjustments that will be determined upon close of the transaction. The estimated cash outlay is $140 million after adjustments and including transaction fees. We expect to fund the acquisition entirely with cash on hand. The transaction is expected to close in our third quarter of fiscal year 2022, subject to applicable regulatory approvals and satisfaction of certain customary conditions.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Statements in this Report on Form 10-Q include "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans," or "anticipates," or by discussions of strategy, plans or intentions. Forward-looking statements are typically included, for example, in discussions regarding the manufactured housing and site-built housing industries; our financial performance and operating results; the expected effect of certain risks and uncertainties on our business, financial condition and results of operations; economic conditions and consumer confidence; operational and legal risks; how the Company may be affected by the novel coronavirus COVID-19 pandemic ("COVID-19") ~~pandemic;~~or any other pandemic or outbreak; governmental regulations and legal proceedings; the availability of favorable consumer and wholesale manufactured home financing; market interest rates and Company investments and the ultimate outcome of our commitments and contingencies. Forward-looking statements contained in this Report on Form 10-Q speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We do not intend to publicly update or revise any forward-looking statement contained in this Report on Form 10-Q or in any document incorporated herein by reference to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

Forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, many of which are beyond our control. To the extent that our assumptions and expectations differ from actual results, our ability to meet such forward-looking statements, including the ability to generate positive cash flow from operations, may be significantly hindered. Factors that could affect our results and cause them to materially differ from those contained in the forward-looking statements include, without limitation, those discussed in Risk Factors in Part I, Item 1A of our ~~2020~~2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("Form 10-K").

Introduction

The following should be read in conjunction with Cavco Industries, Inc. and its subsidiaries' (collectively, "we," "us," "our," the "Company" or "Cavco") Consolidated Financial Statements and the related Notes that appear in Item 1 of this Report. References to "Note" or "Notes" pertain to the Notes to our Consolidated Financial Statements.

Company Overview

Headquartered in Phoenix, Arizona, we design and produce factory-built housing products primarily distributed through a network of independent and Company-owned retailers, planned community operators and residential developers. We are one of the largest producers of manufactured homes in the United States, based on reported wholesale shipments, marketed under a variety of brand names including Cavco, Fleetwood, Palm Harbor, Fairmont, Friendship, Chariot Eagle and Destiny. We are also one of the leading producers of park model RVs, vacation cabins and ~~systems-built~~factory-built commercial structures, as well as modular homes built primarily under the Nationwide Homes brand. Our finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation ("Freddie Mac") seller/servicer and a Government National Mortgage Association ("Ginnie Mae") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Our insurance subsidiary, Standard Casualty ~~Co.~~Company ("Standard Casualty"), provides property and casualty insurance to owners of manufactured homes.

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We operate 20 homebuilding production lines located in Millersburg and Woodburn, Oregon; Nampa, Idaho; Riverside, California; Phoenix and Goodyear, Arizona; Austin, Fort Worth, Seguin and Waco, Texas; Montevideo, Minnesota; Nappanee, Indiana; Lafayette, Tennessee; Martinsville and Rocky Mount, Virginia; Douglas and Moultrie, Georgia; and Ocala and Plant City, Florida. The majority of the homes produced are sold to, and distributed by, independently owned and controlled retail operations located throughout the United States and Canada. In addition, our homes are sold through 40 Company-owned U.S. retail locations.

In April 2020, the Company shut down production and closed its Lexington, Mississippi manufacturing facility, finalizing production in June 2020. However, we remain available to serve wholesale customers previously served by the Lexington facility from our other production lines in the southeast. The production facility has been placed on the market for sale.

Company and Industry Outlook

According to data reported by the Manufactured Housing Institute, industry home shipments ~~decreased 1.3%~~increased 14.9% for the first 115 months of calendar year ~~2020~~2021 compared to the same period in the prior ~~year.~~year, which was impacted by shutdowns related to COVID-19. However, we did not experience any significant factory shutdowns in the prior year period like some other industry participants did.

The industry offers solutions to the affordable housing crisis and these industry shipment numbers ~~have~~do not ~~represented~~represent demand; instead, they represent the industry's ability to produce in the current environment. The average price per square foot for a manufactured home is lower than a site-built home. Also, based on the relatively low cost associated with manufactured home ownership, our products have traditionally competed with rental housing's monthly payment affordability.

The two largest manufactured housing consumer demographics, young adults and those who are age 55 and older, are both growing. "~~First-time~~First-time" and "move-up" buyers of affordable homes are historically among the largest segments of new manufactured home purchasers. Included in this group are lower-income households that ~~may be limited in their ability to qualify for a new home loan~~are particularly affected by ~~their particular~~periods of low employment ~~status~~rates and ~~down payment capability.~~underemployment. Consumer confidence ~~as an indicator of retirement security,~~ is especially important among manufactured home buyers interested in our products for seasonal or retirement living.

We seek out niche market opportunities where our diverse product lines and custom building capabilities provide a competitive advantage. Our green building initiatives involve the creation of an energy efficient envelope and higher utilization of renewable materials. These homes provide environmentally-friendly maintenance requirements, typically lower utility costs and sustainability.

We maintain a conservative cost structure in an effort to build added value into our homes and we work diligently to maintain a solid financial position. Our balance sheet strength, including the position in cash and cash equivalents, helps avoid liquidity problems and enables us to act effectively as market opportunities or challenges present themselves.

We continue to make certain commercial loan programs available to members of our wholesale distribution chain. Under direct commercial loan arrangements, we provide funds for financed home purchases by distributors, community owners and ~~developers. In addition, we provide loans to independent floor plan lenders that then lend to distributors to finance their inventory purchases~~developers (see Note 7 to the Consolidated Financial Statements). Our involvement in commercial loans helps to increase the availability of manufactured home financing to distributors, community owners and developers and provides additional opportunity for product exposure to potential home buyers. While these initiatives support our ongoing efforts to expand product distribution, they do expose us to risks associated with the creditworthiness of this customer base and our inventory financing partners. ~~We have included considerations related to the COVID-19 pandemic when assessing the risks of loan loss and setting reserve amounts for the commercial finance portfolio.~~

~~Table of Contents~~

The lack of an efficient secondary market for manufactured home-only loans and the limited number of institutions providing such loans results in higher borrowing costs for home-only loans and continues to constrain industry growth. We work directly with other industry participants to develop secondary market opportunities for manufactured home-only loan portfolios and expand lending availability in the industry. Additionally, we continue to invest in community-based lending initiatives that provide home-only financing to new residents of certain manufactured home communities. ~~Our mortgage subsidiary~~We also ~~develops~~develop and ~~invests~~invest in home-only lending programs to grow sales of homes through traditional distribution points. We believe that growing our investment and participation in home-only lending may provide additional sales growth opportunities for our financial services segment, as well as provide a means that could lead to increased home sales for our factory-built housing operations.

~~COVID-19 Impact and Strategy~~

Table of Contents

In March 2020, the World Health Organization declared COVID-19 a global pandemic. As our business was considered essential, we continued to operate substantially all of our homebuilding and retail sales facilities while working to follow COVID-19 health guidelines. We have worked to minimize exposure and transmission risks by implementing enhanced facility cleaning, social distancing and related protocols while continuing to serve our customers. Operational efficiencies have declined ~~due to managing~~from hiring challenges, higher and largely unpredictable factory employee absenteeism ~~hiring challenges~~ and other inefficiencies from building material supply shortages. Accordingly, our total average plant capacity utilization rate was approximately 75% during the ~~third~~first fiscal quarter of ~~2021,~~2022, which ~~has improved from approximately 65% during the second fiscal~~ remains consistent with that of our fourth quarter of ~~2021, but is~~ ~~lower than pre-pandemic levels of more than 80%.~~fiscal 2021.

Sales order activity remained exceptionally strong during the ~~third~~first fiscal quarter of ~~2021 to the point where home sales order rates were~~2022 and was nearly ~~65%~~50% higher than the comparable prior year quarter. Increased order volume is the result of a higher number of well-qualified home buyers making purchase decisions, supported by reduced home loan interest rates. Increased orders outpaced the challenging production environment during the quarter, raising order backlogs ~~310%~~ to ~~$472~~$792 million at ~~December 26, 2020,~~July 3, 2021, up 31.3% compared to ~~$115~~$603 million at ~~December 28, 2019~~April 3, 2021 and ~~$321~~up 404.5% compared to $157 million at ~~September 26,~~June 27, 2020. ~~The backlog of~~Backlog excludes home ~~orders excludes~~ orders that have been paused or canceled at the request of the customer. ~~Distributors~~

Key housing building materials include wood and wood products, gypsum wallboard, steel, windows, appliances, insulation and other petroleum-based products. Pricing and availability of certain raw materials have recently been volatile due to a number of factors in the current environment. We continue to monitor and react to inflation in these materials by maintaining a focus on our product pricing in response to higher materials costs, but such increases may ~~cancel orders prior~~lag behind the escalation of such costs. Availability of these products has not caused a production halt in the current period, but we have experienced periodic shutdowns in other periods and shortages of primary building materials have caused production inefficiencies as we have needed to ~~production without penalty. After production of a particular home has commenced,~~change processes in response to the order becomes non-cancelable and the distributor is obligated to take delivery of the home. Accordingly, until production of a particular home has commenced, we do not consider order backlog to be firm orders.delay in materials.

~~The~~While it is difficult to predict the future of housing demand, employee availability, supply chain and Company performance and operations, maintaining an appropriately sized and well-trained workforce is key to increasing production to meet increased demand, and we face challenges in overcoming labor-related difficulties in the current environment to increase home production. We continually review the wage rates of our production employees, and have established other monetary incentive and benefit programs, with a goal of providing competitive compensation. We also provide leadership training to new managers and other employees in supervisory roles to enhance communication and improve the oversight and motivation of other employees, more extensively use online recruiting tools, update our recruitment brochures and improve the appearance and appeal of our manufacturing facilities to improve the recruitment and retention of qualified production employees and reduce annualized turnover rates. Regardless, we believe our ability to recruit the workforce we need to meet the overall need for affordable housing continues to improve.

In the financial services segment, has also maintained operations since the onset of the COVID-19 pandemic, largely through the implementation of work-from-home solutions. In addition to accepting and processing new applications for home loans and insurance policies, the financial services operationswe continue to assist customers in need ~~and service~~by servicing existing loans and insurance policies ~~while~~and complying with state and federal regulations regarding loan forbearance, home foreclosures and policy cancellations. ~~Because of these economic conditions, loan loss reserves were increased at the end of fiscal year 2020 and continue to be adjusted as considered appropriate.~~

Certain loans serviced ~~by CountryPlace~~ for investors expose ~~the Company~~us to cash flow ~~decreases~~deficits if customers do not make contractual monthly payments of principal and interest in a timely manner. ~~Our primary investor,~~For certain loans serviced for Ginnie Mae and Freddie Mac, and home-only loans serviced for certain other investors, we must remit scheduled monthly principal and/or interest payments and principal curtailments regardless of whether monthly mortgage payments are collected from borrowers. Ginnie Mae permits cash obligations on loans in forbearance from COVID-19 to be offset by other incoming cash flows from loans such as loan pre-payments. ~~While~~Although monthly collections of principal and interest from borrowers ~~has normally~~have exceeded scheduled principal and interest payments owed to investors, ~~this~~mandatory extended forbearance under the Coronavirus Aid, Relief and Economic Security Act and certain other regulations related to COVID-19 could be negatively ~~impacted given various state and local emergency orders~~impact cash obligations in ~~light of COVID-19.~~the future.

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It is difficult to predict the future impacts of the COVID-19 pandemic on housing demand, employee availability, supply chain and Company performance and operations. We continue to focus on developing order volume growth opportunities by working to improve our production capabilities and adjusting product offerings. We strive to balance the production levels and workforce size with the demand for our product offerings to maximize efficiencies. We continually review wage rates of our production employees and have established other monetary incentive programs to ensure competitive compensation. We are also working to more extensively use online recruiting tools, update recruitment brochures and improve the appearance and appeal of our manufacturing facilities in order to improve the recruitment and retention of qualified production employees and reduce annualized turnover rates. Maintaining an appropriately sized and well-trained workfor~~ce is key to increasing production to meet increased demand. We face a major challenge in overcoming labor-related difficulties in the COVID-19 environment to increase home production.~~

Results of Operations

Net Revenue.


		Three Months Ended									Three Months Ended
($ in thousands, except revenue per home sold)	($ in thousands, except revenue per home sold)	December 26, 2020		December 28, 2019		Change				($ in thousands, except revenue per home sold)	July 3, 2021		June 27, 2020		Change
Net revenue:
Factory-built housing	Factory-built housing	$	270,822	$	257,106	$	13,716	5.3	%	Factory-built housing	$	312,283	$	238,090	$	74,193	31.2	%
Financial services	Financial services	17,950		16,616		1,334		8.0	%	Financial services	18,139		16,711		1,428		8.5	%
		$	288,772	$	273,722	$	15,050	5.5	%		$	330,422	$	254,801	$	75,621	29.7	%

Total homes sold		3,603		3,865		(262)		(6.8)	%

Factory-built homes sold										Factory-built homes sold
by Company-owned retail sales centers										by Company-owned retail sales centers	723		752		(29)		(3.9)	%
to independent retailers, builders, communities & developers										to independent retailers, builders, communities & developers	2,977		2,597		380		14.6	%
											3,700		3,349		351		10.5	%
Net factory-built housing revenue per home sold	Net factory-built housing revenue per home sold	$	75,166	$	66,522	$	8,644	13.0	%	Net factory-built housing revenue per home sold	$	84,401	$	71,093	$	13,308	18.7	%

Nine Months Ended
($ in thousands, except revenue per home sold) December 26,
2020 December 28,
2019 Change
Net revenue:
Factory-built housing $ 749,879 $ 758,564 $ (8,685) (1.1) %
Financial services 51,670 47,875 3,795 7.9 %
$ 801,549 $ 806,439 $ (4,890) (0.6) %
Total homes sold 10,379 11,453 (1,074) (9.4) %
Net factory-built housing revenue per home sold $ 72,250 $ 66,233 $ 6,017 9.1 %

In the factory-built housing segment, the increase in Net ~~revenue for the three months ended December 26, 2020~~ revenues was primarily due to a 10.5% increase in units sold and 18.7% increase in the average sales price. The higher home ~~selling~~ prices ~~resulting~~were driven by product price increases and a shift toward more multi-section homes. Home sales volume increased from ~~pricing increases implemented because~~higher factory capacity utilization. On a sequential basis, adjusting for the extra week of ~~rising input costs. These gains were partially offset by lower~~production in the fourth quarter of fiscal year 2021, home sales volume ~~during the third fiscal quarter, as production inefficiencies~~would have also increased from ~~challenges related to the COVID-19 pandemic continue to limit~~slightly higher factory ~~delivery volume.~~capacity utilization.

The decrease for the nine months ended December 26, 2020 was primarily from lower home sales volume related to the production inefficiencies previously discussed, partially offset by higher home selling prices compared to last year. Note that Destiny Homes was purchased in August 2019 and Lexington Homes was closed in June 2020.

~~Table of Contents~~

Net factory-built housing revenue per home sold is a volatile metric dependent upon several factors. A primary factor is the price disparity between sales of homes to independent distributors, builders, ~~community owners~~communities and developers ~~("Wholesale")~~ and sales of homes to consumers by Company-owned retail ~~centers ("Retail").~~stores. Wholesale sales prices are primarily comprised of the home and the cost to ship the home from a ~~manufacturing~~homebuilding facility to the home-site. Retail home prices include these items ~~plus~~and retail markup, as well as items that are largely subject to home buyer discretion, including, but not limited to, installation, utility connections, site improvements, landscaping and additional services. ~~Other factors include fluctuations~~Our homes are constructed in one or more floor sections ("modules") which are then installed on the customer's site. Changes in the number of modules per home, the selection of different home types/models and optional home upgrades create changes in product mix, also causing fluctuations in this metric. The table below presents the ~~result~~mix of ~~home buyer tastes~~modules and ~~preferences as they select home types/models, as well as optional home upgrades when purchasing the home.~~

~~As discussed above, changes to the proportion of home sales among the distribution channels between reporting periods impact the overall net revenue per home sold. For~~homes shipped for the three ~~and nine~~ months ended ~~December 26, 2020, we sold 2,835~~July 3, 2021 and June 27, 2020:~~8,096 homes Wholesale, respectively, and 768 and 2,283~~ ~~homes Retail, respectively. For the three and nine months ended December 28, 2019, we sold 3,158 and 9,222 homes Wholesale, respectively, and 707 and 2,231 homes Retail, respectively.~~


	Three Months Ended
	July 3, 2021		June 27, 2020		Change
	Modules	Homes	Modules	Homes	Modules		Homes
U.S. Housing and Urban Development code homes	5,652	3,276	4,881	2,865	15.8	%	14.3	%
Modular homes	468	226	466	215	0.4	%	5.1	%
Park model RVs	198	198	269	269	(26.4)	%	(26.4)	%
	6,318	3,700	5,616	3,349	12.5	%	10.5	%

Financial services segment revenue increased primarily due to unrealized gains on marketable equity securities in the insurance subsidiary's portfolio, which were $1.0 million and $2.7 million for the three and nine months ended December 26, 2020, respectively, compared to $0.3 million and $0.6 million in unrealized gains in the comparable prior year periods, respectively. In addition, higher volume in home loan sales and more insurance policies in force in the current year compared to the prior ~~year were positive contributors.~~year. These ~~overall increases~~gains were partially offset by lower unrealized gains on marketable equity securities in the insurance subsidiary's portfolio, which were $0.4 million and $1.0 million for the three months ended July 3, 2021 and June 27, 2020, respectively, and lower interest income earned on the acquired consumer loan portfolios that continue to amortize.

~~Gross Profit.~~

Three Months Ended
($ in thousands) December 26,
2020 December 28,
2019 Change
Gross profit:
Factory-built housing $ 47,031 $ 48,793 $ (1,762) (3.6) %
Financial services 12,207 11,062 1,145 10.4 %
$ 59,238 $ 59,855 $ (617) (1.0) %
Gross profit as % of Net revenue:
Consolidated 20.5 % 21.9 % N/A (1.4) %
Factory-built housing 17.4 % 19.0 % N/A (1.6) %
Financial services 68.0 % 66.6 % N/A 1.4 %

Nine Months Ended
($ in thousands) December 26,
2020 December 28,
2019 Change
Gross profit:
Factory-built housing $ 140,178 $ 149,567 $ (9,389) (6.3) %
Financial services 27,924 29,053 (1,129) (3.9) %
$ 168,102 $ 178,620 $ (10,518) (5.9) %
Gross profit as % of Net revenue:
Consolidated 21.0 % 22.1 % N/A (1.1) %
Factory-built housing 18.7 % 19.7 % N/A (1.0) %
Financial services 54.0 % 60.7 % N/A (6.7) %

Factory-built housing Gross profit as a percentage of Net revenue decreased for the three and nine months ended December 26, 2020 primarily due to higher material costs and lower sales volume resulting from the production inefficiencies caused by the COVID-19 pandemic.

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Gross Profit.


	Three Months Ended
($ in thousands)	July 3, 2021			June 27, 2020			Change
Factory-built housing	$	66,273		$	46,992		$	19,281	41.0	%
Financial services	7,740			8,331			(591)		(7.1)	%
	$	74,013		$	55,323		$	18,690	33.8	%
Gross profit as % of Net revenue
Consolidated	22.4		%	21.7		%	N/A		0.7	%
Factory-built housing	21.2		%	19.7		%	N/A		1.5	%
Financial services	42.7		%	49.9		%	N/A		(7.2)	%

Factory-built housing gross profit increased primarily due to increased home sales volume and higher average sales prices. We continue to monitor and react to inflation in building material prices by maintaining a focus on our product pricing; however, product price increases may lag behind the ~~financial services segment,~~escalation of building costs. Gross profit as a percentage of Net revenue also increased ~~for the three months ended December 26, 2020~~this period from a shift toward more multi-section homes.

Financial services gross profit decreased due to ~~lower~~higher weather-related claims volume and ~~higher~~lower unrealized gains on marketable equity securities. ~~However, for the nine months ended December 26, 2020,~~ Gross profit as a percentage of Net revenue decreased as a result of higher weather-related claims volume at our insurance subsidiary and lower interest income earned on the acquired consumer loan portfolios that continue to amortize.

Selling, General and Administrative Expenses.

Three Months Ended
($ in thousands) December 26,
2020 December 28,
2019 Change
Selling, general and administrative expenses:
Factory-built housing $ 30,575 $ 32,017 $ (1,442) (4.5) %
Financial services 4,839 4,827 12 0.2 %
$ 35,414 $ 36,844 $ (1,430) (3.9) %
Selling, general and administrative expenses as % of Net revenue: 12.3 % 13.5 % N/A (1.2) %


		Nine Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	December 26, 2020			December 28, 2019			Change				($ in thousands)	July 3, 2021			June 27, 2020			Change
Selling, general and administrative expenses:
Factory-built housing	Factory-built housing	$	92,037		$	94,348		$	(2,311)	(2.4)	%	Factory-built housing	$	35,497		$	30,737		$	4,760	15.5	%
Financial services	Financial services	14,153			13,843			310		2.2	%	Financial services	5,335			4,586			749		16.3	%
		$	106,190		$	108,191		$	(2,001)	(1.8)	%		$	40,832		$	35,323		$	5,509	15.6	%

Selling, general and administrative expenses as % of Net revenue:		13.2		%	13.4		%	N/A		(0.2)	%
Selling, general and administrative expenses as % of Net revenue												Selling, general and administrative expenses as % of Net revenue	12.4		%	13.9		%	N/A		(1.5)	%

Selling, general and administrative expenses related to factory-built housing ~~decreased~~increased between periods primarily from higher salary and incentive-based compensation expense. This was partially offset by a reduction in ~~legal expenses and~~ the amortization of the additional ~~director~~Director and ~~officer ("D&O")~~Officer insurance premium, ~~partially offset by increased corporate-related expenses. During the three months ended December 26, 2020, we incurred~~ ~~$0.7 million in expenses related~~ ~~to the SEC inquiry, but~~ ~~also received a $0.4 million insurance recovery of prior expenses, resulting in a net~~ ~~expense of~~ ~~$0.3 million during the period~~ ~~compared to~~ ~~$0.9 million in expense~~added in the third quarter of fiscal year ~~2020. For the nine months ended December 26, 2020, we recorded a net expense of~~2019, which was $~~0.1~~2.1 million for ~~SEC inquiry related expenses compared to~~ ~~$2.5 million~~ ~~in expense in the comparable prior year period.~~

~~As the amortization of the additional D&O insurance premium has now been completed,~~ the three months ended ~~December 26,~~June 27, 2020, ~~contains~~with no ~~related~~ expense ~~while the prior year period included a~~ ~~$2.1 million~~ ~~charge. For the nine months ended December 26, 2020, additional D&O insurance premium amortization was~~ ~~$4.2 million~~ ~~versus~~ ~~$6.3 million~~ in the ~~prior year period.~~current period.

In Financial services, Selling, general and administrative expenses increased ~~for the three and nine months ended December 26, 2020~~ primarily from greater expensing of deferred origination costs on higher ~~salary~~loan sales and ~~incentive-based~~higher compensation expense.

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~~Interest Expense.~~Other Components of Net Income.

Interest expense was $0.2 million and $0.5 million for the three months ended December 26, 2020 and December 28, 2019, respectively. For the nine months ended December 26, 2020 and December 28, 2019, Interest expense was $0.6 million and $1.3 million, respectively.


	Three Months Ended
($ in thousands)	July 3, 2021			June 27, 2020			Change
Interest expense	$	164		$	196		$	(32)	(16.3)	%
Other income, net	2,461			1,876			585		31.2	%
Income tax expense	8,432			5,006			3,426		68.4	%
Effective tax rate	23.8		%	23.1		%	N/A		0.7	%

Interest expense consists primarily of debt service on ~~CountryPlace's~~the financings of manufactured home-only loans and interest related to finance leases. The decrease is primarily the result of a reduction in securitized bond interest expense, as we exercised our right to repurchase the 2007-1 securitized loan portfolio in August 2019, thereby eliminating the related interest expense. This decrease is partially offset by increases in interest expense from secured credit facilities at CountryPlace.

~~Other Income, net.~~

Other income, net primarily consists of realized and unrealized gains and losses on corporate ~~marketable equity~~ investments, interest income related to commercial ~~loans~~loan receivable balances, interest income earned on cash balances and gains and losses from the sale of property, plant and equipment. ~~Other~~The increase is driven by more interest income ~~net was $2.2 million for each of the three month periods ended December 26, 2020 and December 28, 2019.~~

~~For the nine months ended December 26, 2020 and December 28, 2019, Other income, net was~~ ~~$5.8 million~~ ~~and~~ ~~$10.2 million, respectively. The decline was primarily due to a $3.4 million net gain~~earned on ~~the sale of idle land that was recorded in the prior year period, as well as a reduction in interest earned in the current periods on~~larger cash and commercial loan receivables ~~given~~than the ~~lower interest rate environment. These declines were partially offset by increases in unrealized gains on corporate marketable equity securities.~~

~~Income tax expense.~~

~~Income tax expense was $6.2 million and $3.8 million for the three months ended December 26, 2020~~ ~~and December 28, 2019, respectively, for an effective income tax rate of 23.9% and 15.5%, respectively.~~ ~~Income tax expense for the nine months ended December 26, 2020 and~~ ~~December 28, 2019 was~~ ~~$15.7 million~~ ~~and~~ ~~$16.3 million, respectively, for effective income tax rates of 23.4% and 20.5%, respectively. The lower effective tax rates for~~ prior year periods were primarily due to tax benefits from the exercise of stock options, which provided a benefit of $0.5 million in the nine months ended December 26, 2020 compared to the $1.3 million in the same period last year, and a catch up of tax credits that were enacted as part of the 2020 Appropriations Bill. Certain of these credits were extended as part of the 2021 Consolidated Appropriations Act that was signed into law after quarter end on December 27, 2020. We are currently evaluating the impact this will have in future periods.period.

Liquidity and Capital Resources

We believe that cash and cash equivalents at ~~December 26, 2020,~~July 3, 2021, together with cash flow from operations, will be sufficient to fund our operations and provide for growth for the next 12 months and into the foreseeable future. We maintain cash in U.S. Treasury and other money market funds, some of which are in excess of federally insured limits. We expect to continue to evaluate potential acquisitions of, or strategic investments in, businesses that are complementary to the Company, as well as other expansion opportunities. Such transactions may require the use of cash and have other impacts on our liquidity and capital resources. Because of our sufficient cash position, we have not historically sought external sources of liquidity, with the exception of certain credit facilities for the home-only lending programs. ~~However,~~Regardless, depending on our operating results and strategic opportunities, we may need to seek additional or alternative sources of ~~financing.~~financing in the future. There can be no assurance that such financing would be available on satisfactory terms, if at all. If this financing were not available, it could be necessary for us to reevaluate our long-term operating plans to make more efficient use of our existing capital ~~resources.~~resources at such time. The exact nature of any changes to ~~the Company's~~our plans that would be considered depends on various factors, such as conditions in the factory-built housing industry and general economic conditions outside of our control.

State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, the assets owned by our insurance subsidiary are generally not available to satisfy the claims of Cavco or its legal subsidiaries. We believe that stockholders' equity at ~~our~~the insurance subsidiary remains sufficient and we do not believe that ~~its~~the ability to pay ordinary dividends to Cavco will be restricted per state regulations.

The following is a summary of the Company's cash flows for the three months ended July 3, 2021 and June 27, 2020, respectively:


	Three Months Ended
(in thousands)	July 3, 2021		June 27, 2020		$ Change
Cash, cash equivalents and restricted cash at beginning of the fiscal year	$	339,307	$	255,607	$	83,700
Net cash provided by operating activities	24,275		35,692		(11,417)
Net cash (used in) provided by investing activities	(3,616)		105		(3,721)
Net cash used in financing activities	(13,150)		(922)		(12,228)
Cash, cash equivalents and restricted cash at end of the period	$	346,816	$	290,482	$	56,334

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~~The following is a summary of cash flows for the nine months ended December 26, 2020 and December 28, 2019, respectively:~~

Nine Months Ended
(in thousands) December 26,
2020 December 28,
2019 $ Change
Cash, cash equivalents and restricted cash at beginning of the fiscal year $ 255,607 $ 199,869 $ 55,738
Net cash provided by operating activities 91,566 68,320 23,246
Net cash used in investing activities (5,098) (18,873) 13,775
Net cash used in financing activities (1,451) (19,058) 17,607
Cash, cash equivalents and restricted cash at end of the period $ 340,624 $ 230,258 $ 110,366

Net cash provided by operating activities ~~increased during the nine months ended December 26, 2020 compared to the nine months ended December 28, 2019~~decreased primarily due to ~~more customer deposits received as a result~~the rising material costs of our raw materials and higher ~~order rates,~~purchases of such materials. This was partially offset by higher ~~collections on commercial loans receivables and the timing of payments on Accounts payable and Accrued expenses and other current liabilities.~~

~~Consumer~~proceeds from consumer loan ~~originations increased by $2.5 million to $124.1 million for the nine months ended December 26, 2020 from $121.6 million for the nine months ended December 28, 2019. Proceeds from~~ sales of ~~consumer loans provided $122.6~~$49.6 million ~~in cash~~ compared to ~~$117.1~~$39.3 million in the previous year.

Consumer loan originations decreased $4.7 million to $42.7 million for the three months ended July 3, 2021 from $47.4 million for the three months ended June 27, 2020 due to origination personnel shortages.

We ~~have entered~~enter into commercial loan arrangements with distributors, communities and developers under which the Company provides funds for financing homes. In addition, we enter into commercial loan arrangements with certain distributors of our products under which ~~we provide~~the Company provides funds for ~~Wholesale~~wholesale purchases. ~~In addition, we have entered into direct commercial loan arrangements with distributors, community owners and developers under which we provide funds for financing homes.~~ We have also invested in community-based lending initiatives that provide home-only financing to new residents of certain manufactured home communities. For additional information regarding our commercial loans receivable, see Note 7 to the Consolidated Financial Statements. Further, we ~~have invested~~invest in and ~~developed~~develop home-only loan pools and lending programs to attract third party financier interest in order to grow sales of new homes through traditional distribution points. Increased lending activity resulted in a net use of $0.2 million while the prior period net activity provided $2.6 million.

~~Investing~~Net cash used in or provided by investing activities consist of buying and selling debt and marketable equity securities in our Financial Services segment, purchases of property, plant and equipment and funding strategic growth acquisitions. Greater cash was used in the current period for the purchase of debt securities.

Net cash ~~for investing~~used in financing activities ~~in the prior year~~ was primarily ~~used to fund~~for the ~~acquisition~~repurchase of ~~Destiny Homes.~~

~~Financing activities used $17.6 million less cash during the period compared to the same period last year as we repurchased the 2007-1 securitized loan portfolio in August 2019.~~common stock.

~~CountryPlace~~We entered into secured credit facilities with independent third-party ~~banks. The proceeds were used~~banks to facilitate the origination of consumer home-only loans to be held for investment, secured by the manufactured homes which were subsequently pledged as collateral to the facilities. Upon completion of the draw down periods, these facilities were converted into an amortizing loan based on a ~~20-year~~20 or 25-year amortization period with a balloon payment due upon maturity. As of ~~December 26, 2020,~~July 3, 2021, the outstanding balance of the converted loans was ~~$8.8~~$8.0 million with a weighted average interest rate of 4.91%.

Contractual Commitments and Contingencies. There were no material changes to the contractual obligations as set forth in our Annual Report on Form 10-K.

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Critical Accounting Policies

~~On March 29, 2020, we adopted Accounting Standards Update 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ which changes the impairment model for most financial assets and certain other instruments. We adopted the standard by recognizing the cumulative effect of initially applying the new credit loss standard as an adjustment to the opening balance of Retained earnings. Refer to Note 1 to the Consolidated Financial Statements for additional discussion. There have been no other significant changes to our critical accounting policies during the ~~nine~~three months ended ~~December 26, 2020,~~July 3, 2021, as compared to those disclosed in Part II, Item 7 of our Form 10-K, under the heading "Critical Accounting Policies," which provides a discussion of the critical accounting policies that management believes affect its more significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.

~~Recent Accounting Pronouncements~~

~~See Note 1 to the Consolidated Financial Statements for a discussion of recently issued and adopted accounting pronouncements.~~

Other Matters

Related Party Transactions. See Note 1918 to the Consolidated Financial Statements for a discussion of our related party transactions.

Off Balance Sheet Arrangements

See Note 1514 to the Consolidated Financial Statements for a discussion of our off-balance sheet commitments, which discussion is incorporated herein by reference.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in the Form 10-K.

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Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its President and Chief Executive Officer and its Principal Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Company's President and Chief Executive Officer and its Principal Financial Officer concluded that, as of ~~December 26, 2020,~~July 3, 2021, its disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended ~~December 26, 2020~~July 3, 2021 which have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

3225

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Information regarding reportable legal proceedings is contained~~See the information under the "Legal Matters" caption in ~~Part I, Item 3,~~Note ~~Legal Proceedings~~14, in the Form 10-K. The following describes legal proceedings, if any, that became reportable during the period ended December 26, 2020, and, if applicable, amends and restates descriptions of previously reported legal proceedings in which th~~ere have been material developments during such quarter.~~

Since 2018, the Company has been cooperating with an investigation by the enforcement staff of the SEC's Los Angeles Regional Office regarding securities trading in personal and Company accounts directed by the Company's former Chief Executive Officer, Joseph Stegmayer. The Audit Committee of the Board of Directors conducted an internal investigation led by independent legal counsel and other advisers and, following the completion of its work in early 2019, the Audit Committee shared the results of its work with the Company's auditors, listing exchange and with the SEC staff. We have also made documents and personnel available to the ~~SEC staff and we intend to continue cooperating with its investigation.~~

~~As previously disclosed in September 2020, the SEC staff issued a Wells Notice to Dan Urness, the Company's Chief~~Consolidated Financial Officer and Principal Financial Officer and Principal Accounting Officer at the time, in connection with its investigation, noting that it intends to recommend an enforcement action against him. Rather than have this be a distraction to the Company, Mr. Urness has gone on leave to focus on his response to the Wells Notice. Also, as previously disclosed in November 2020, the SEC staff issued a Wells Notice to the Company stating that they intend to recommend an enforcement action against the Company in connection with the SEC's investigation. We have been exploring the possibility of a settlement with the SEC staff in connection with the matter ~~but, at this time, we are unable to assess the probability of that outcome or reasonably estimate the amount of a potential loss, if any~~.Statements, which is incorporated herein by reference.

~~Joseph D. Robles v. Cavco Industries, Inc.~~ ~~("Robles")~~, ~~was filed in the Superior Court for the State of California, Riverside on June 25, 2019 and~~ ~~Malik Griffin v. Fleetwood Homes, Inc~~. ("Griffin"), was filed in the Superior Court for the State of California, San Bernardino on September 19, 2019, each seeking recovery on behalf of a putative class of current and former hourly employees for certain alleged wage-and-hour violations, including, among other things: (i) alleged failure to comply with certain wage statement formatting requirements; (ii) alleged failure to compensate employees for straight-time and overtime hours worked; and (iii) alleged failure to provide employees with all requisite work breaks. On November 24, 2020, Robles dismissed his separate action in the Riverside County Superior Court and Griffin filed an amended complaint adding Robles as a named plaintiff to the action in the San Bernardino County Superior Court. A joint mediation occurred on January 27, 2021 where the Parties failed to reach a settlement or resolution to the matter.

The Company is party to certain other lawsuits in the ordinary course of business. Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations after taking into account any existing reserves included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. However, future events or circumstances that may currently be unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on the Company's consolidated financial position, liquidity or results of operations in any future reporting periods.

Item 1A. Risk Factors

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, Item 1A, Risk Factors, in the Form 10-K, which could materially affect our business, financial condition or future results. The risks described in this Report and in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

33Issuer Purchases of Equity Securities

On October 27, 2020, the Company's Board of Directors approved a $100 million stock repurchase program, which was announced on a Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2020, and that may be used to purchase its outstanding common stock. The repurchases may be made in the open market or in privately negotiated transactions in compliance with applicable state and federal securities laws and other legal requirements. The level of repurchase activity is subject to market conditions and other investment opportunities. The repurchase program does not obligate us to acquire any particular amount of common stock and may be suspended or discontinued at any time. The repurchase program is funded using our available cash. The following table sets forth repurchases of our common stock during the first quarter of fiscal year 2022:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publically Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in thousands)
April 4, 2021 to May 8, 2021	32,984	$	212.87	32,984	$	91,538
May 9, 2021 to June 5, 2021	28,317	205.56		28,317	85,717
June 6, 2021 to July 3, 2021	—	—		—	85,717
	61,301			61,301

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Item 5. Other Information

There is no other information required to be disclosed under this item which was not previously disclosed.

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Item 6. Exhibits


Exhibit No.		Exhibit
31.1	(1)	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Rule 13a-14(a)/15d-14(a)
31.2	(1)	Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Rule 13a-14(a)/15d-14(a)
32	(2)	Certification Pursuant to 18 U.S.C. 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

All other items required under Part II are omitted because they are not applicable.

(1) Filed herewith.

(2) Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Cavco Industries, Inc.
Registrant

Signature	Title	Date

/s/ William C. Boor	Director, President and Chief Executive Officer	~~January 29,~~August 6, 2021
William C. Boor	(Principal Executive Officer)

/s/ Paul Bigbee	Chief Accounting Officer	~~January 29,~~August 6, 2021
Paul Bigbee	(Principal Financial and Accounting Officer)

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	December 26, 2020		March 28, 2020
Loans held for investment (at Acquisition Date, defined below)	$	33,726	$	37,779
Loans held for investment (originated after Acquisition Date)	17,873		20,140
Loans held for sale	22,014		14,671
Construction advances	13,923		13,400
	87,536		85,990
Deferred financing fees and other, net	(2,525)		(1,919)
Allowance for loan losses	(3,419)		(1,767)
	81,592		82,304
Less current portion	(42,091)		(32,376)
	$	39,501	$	49,928


	December 26, 2020		March 28, 2020
Direct loans receivable	$	40,653	$	47,058
Participation loans receivable	105		144
Allowance for loan losses	(765)		(393)
Deferred financing fees, net	(247)		(244)
	39,746		46,565
Less current portion of commercial loans receivable (including from affiliates), net	(19,012)		(15,423)
	$	20,734	$	31,142


	Operating Leases		Finance Leases		Total
Remainder of 2021	$	1,051	$	19	$	1,070
2022	4,182		73		4,255
2023	3,854		73		3,927
2024	3,503		73		3,576
2025	2,706		73		2,779
2026	2,799		49		2,848
Thereafter	2,206		0		2,206
	20,301		360		20,661
Less amount representing interest	(2,392)		(41)		(2,433)
	17,909		319		18,228
Less current portion	(4,082)		(71)		(4,153)
	$	13,827	$	248	$	14,075


				Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Total
	Common Stock
	Shares	Amount
Balance, March 30, 2019	9,098,320	$	91	$	249,447	$	280,078	$	(28)	$	529,588
Net income	—	0		0		21,282		0		21,282
Issuance of common stock under stock incentive plans	13,304	0		(1,252)		0		0		(1,252)
Stock-based compensation	—	0		630		0		0		630
Other comprehensive income, net	—	0		0		0		89		89
Balance, June 29, 2019	9,111,624	$	91	$	248,825	$	301,360	$	61	$	550,337
Net income	—	0		0		20,885		0		20,885
Issuance of common stock under stock incentive plans	15,842	0		941		0		0		941
Stock-based compensation	—	0		818		0		0		818
Other comprehensive loss, net	—	0		0		0		23		23
Balance, September 28, 2019	9,127,466	$	91	$	250,584	$	322,245	$	84	$	573,004
Net income	—	0		0		20,898		0		20,898
Issuance of common stock under stock incentive plans	13,725	0		537		0		0		537
Stock-based compensation	—	0		820		0		0		820
Other comprehensive income, net	—	0		0		0		1		1
Balance, December 28, 2019	9,141,191	$	91	$	251,941	$	343,143	$	85	$	595,260


	December 26, 2020
	Total		Level 1		Level 2		Level 3

Residential mortgage-backed securities (1)	$	5,237	$	0	$	5,237	$	0
State and political subdivision debt securities (1)	6,306		0		6,306		0
Corporate debt securities (1)	5,130		0		5,130		0
Marketable equity securities (2)	13,987		13,987		0		0
Interest rate lock commitment derivatives (3)	77		0		0		77
Forward loan sale commitment derivatives (3)	(195)		0		0		(195)
Mortgage servicing rights (4)	831		0		0		831