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 ~~September~~December 26, 2020


☐			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 ~~October 23, 2020, 9,188,162~~January 22, 2021, 9,192,237 shares of the registrant's Common Stock, $.01 par value, were outstanding.

CAVCO INDUSTRIES, INC.

FORM 10-Q

~~September~~December 26, 2020

TABLE OF CONTENTS

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

CAVCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
ASSETS	ASSETS	(Unaudited)				ASSETS	(Unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	312,243	$	241,826	Cash and cash equivalents	$	327,487	$	241,826
Restricted cash, current	Restricted cash, current	16,691		13,446		Restricted cash, current	12,802		13,446
Accounts receivable, net	Accounts receivable, net	36,852		42,800		Accounts receivable, net	40,932		42,800
Short-term investments	Short-term investments	16,589		14,582		Short-term investments	16,966		14,582
Current portion of consumer loans receivable, net	Current portion of consumer loans receivable, net	39,023		32,376		Current portion of consumer loans receivable, net	42,091		32,376
Current portion of commercial loans receivable, net	Current portion of commercial loans receivable, net	13,261		14,657		Current portion of commercial loans receivable, net	15,649		14,657
Current portion of commercial loans receivable from affiliates, net	Current portion of commercial loans receivable from affiliates, net	1,700		766		Current portion of commercial loans receivable from affiliates, net	3,363		766
Inventories	Inventories	111,872		113,535		Inventories	110,624		113,535

Prepaid expenses and other current assets	Prepaid expenses and other current assets	49,193		42,197		Prepaid expenses and other current assets	55,805		42,197
Total current assets	Total current assets	597,424		516,185		Total current assets	625,719		516,185
Restricted cash	Restricted cash	335		335		Restricted cash	335		335
Investments	Investments	30,278		31,557		Investments	35,485		31,557
Consumer loans receivable, net	Consumer loans receivable, net	42,817		49,928		Consumer loans receivable, net	39,501		49,928
Commercial loans receivable, net	Commercial loans receivable, net	20,946		23,685		Commercial loans receivable, net	16,563		23,685
Commercial loans receivable from affiliates, net	Commercial loans receivable from affiliates, net	5,571		7,457		Commercial loans receivable from affiliates, net	4,171		7,457
Property, plant and equipment, net	Property, plant and equipment, net	77,836		77,190		Property, plant and equipment, net	78,493		77,190
Goodwill	Goodwill	75,090		75,090		Goodwill	75,090		75,090
Other intangibles, net	Other intangibles, net	14,736		15,110		Other intangibles, net	14,550		15,110
Operating lease right-of-use assets	Operating lease right-of-use assets	17,477		13,894		Operating lease right-of-use assets	16,659		13,894
Total assets	Total assets	$	882,510	$	810,431	Total assets	$	906,566	$	810,431
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	32,919	$	29,924	Accounts payable	$	25,176	$	29,924
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	173,184		139,930		Accrued expenses and other current liabilities	186,026		139,930
Current portion of secured credit facilities and other	Current portion of secured credit facilities and other	2,118		2,248		Current portion of secured credit facilities and other	2,140		2,248
Total current liabilities	Total current liabilities	208,221		172,102		Total current liabilities	213,342		172,102
Operating lease liabilities	Operating lease liabilities	14,602		10,743		Operating lease liabilities	13,827		10,743
Secured credit facilities and other	Secured credit facilities and other	11,933		12,705		Secured credit facilities and other	10,847		12,705
Deferred income taxes	Deferred income taxes	7,066		7,295		Deferred income taxes	6,809		7,295
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; NaN shares issued or outstanding	Preferred stock, $0.01 par value; 1,000,000 shares authorized; NaN shares issued or outstanding	0		0		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 9,188,162 and 9,173,242 shares, respectively		92		92
Common stock, $0.01 par value; 40,000,000 shares authorized; Outstanding 9,192,237 and 9,173,242 shares, respectively						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	Additional paid-in capital	254,297		252,260		Additional paid-in capital	255,664		252,260
Retained earnings	Retained earnings	386,134		355,144		Retained earnings	405,835		355,144
Accumulated other comprehensive income	Accumulated other comprehensive income	165		90		Accumulated other comprehensive income	150		90
Total stockholders' equity	Total stockholders' equity	640,688		607,586		Total stockholders' equity	661,741		607,586
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	882,510	$	810,431	Total liabilities and stockholders' equity	$	906,566	$	810,431

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				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Net revenue	Net revenue	$	257,976	$	268,675	$	512,777	$	532,717	Net revenue	$	288,772	$	273,722	$	801,549	$	806,439
Cost of sales	Cost of sales	204,435		210,208		403,913		413,952		Cost of sales	229,534		213,867		633,447		627,819
Gross profit	Gross profit	53,541		58,467		108,864		118,765		Gross profit	59,238		59,855		168,102		178,620
Selling, general and administrative expenses	Selling, general and administrative expenses	35,453		36,083		70,776		71,347		Selling, general and administrative expenses	35,414		36,844		106,190		108,191
Income from operations	Income from operations	18,088		22,384		38,088		47,418		Income from operations	23,824		23,011		61,912		70,429
Interest expense	Interest expense	(194)		(302)		(390)		(788)		Interest expense	(177)		(490)		(567)		(1,278)
Other income, net	Other income, net	1,702		5,173		3,578		7,987		Other income, net	2,243		2,211		5,821		10,198
Income before income taxes	Income before income taxes	19,596		27,255		41,276		54,617		Income before income taxes	25,890		24,732		67,166		79,349
Income tax expense	Income tax expense	(4,547)		(6,370)		(9,553)		(12,450)		Income tax expense	(6,189)		(3,834)		(15,742)		(16,284)
Net income	Net income	$	15,049	$	20,885	$	31,723	$	42,167	Net income	$	19,701	$	20,898	$	51,424	$	63,065

Comprehensive income:	Comprehensive income:									Comprehensive income:
Net income	Net income	$	15,049	$	20,885	$	31,723	$	42,167	Net income	$	19,701	$	20,898	$	51,424	$	63,065
Reclassification adjustment for securities sold or matured	Reclassification adjustment for securities sold or matured	7		0		33		2		Reclassification adjustment for securities sold or matured	(13)		15		20		17
Applicable income taxes	Applicable income taxes	(2)		0		(7)		(1)		Applicable income taxes	3		(3)		(4)		(4)
Net change in unrealized position of investments held	Net change in unrealized position of investments held	3		29		62		140		Net change in unrealized position of investments held	(6)		(14)		56		126
Applicable income taxes	Applicable income taxes	(1)		(6)		(13)		(29)		Applicable income taxes	1		3		(12)		(26)
Comprehensive income	Comprehensive income	$	15,056	$	20,908	$	31,798	$	42,279	Comprehensive income	$	19,686	$	20,899	$	51,484	$	63,178

Net income per share:	Net income per share:									Net income per share:
Basic	Basic	$	1.64	$	2.29	$	3.46	$	4.63	Basic	$	2.14	$	2.29	$	5.60	$	6.91
Diluted	Diluted	$	1.62	$	2.25	$	3.42	$	4.56	Diluted	$	2.12	$	2.25	$	5.54	$	6.81
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	9,182,945		9,119,835		9,178,609		9,111,260		Basic	9,190,254		9,138,202		9,182,491		9,120,241
Diluted	Diluted	9,295,409		9,266,085		9,280,080		9,241,834		Diluted	9,295,553		9,293,941		9,285,238		9,259,203

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Six Months Ended					Nine Months Ended
		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	31,723	$	42,167	Net income	$	51,424	$	63,065
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	3,182		2,648		Depreciation and amortization	4,735		4,208
Provision for credit losses	Provision for credit losses	223		30		Provision for credit losses	(1,082)		138
Deferred income taxes	Deferred income taxes	(18)		1,011		Deferred income taxes	(272)		1,407
Stock-based compensation expense	Stock-based compensation expense	2,048		1,448		Stock-based compensation expense	2,935		2,268
Non-cash interest income, net	Non-cash interest income, net	(2,596)		(694)		Non-cash interest income, net	(2,984)		(1,134)
Loss (gain) on sale or retirement of property, plant and equipment, net	Loss (gain) on sale or retirement of property, plant and equipment, net	242		(3,370)		Loss (gain) on sale or retirement of property, plant and equipment, net	220		(3,416)
Gain on investments and sale of loans, net	Gain on investments and sale of loans, net	(9,597)		(7,683)		Gain on investments and sale of loans, net	(14,964)		(11,801)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	5,948		(3,300)		Accounts receivable	1,868		2,196
Consumer loans receivable originated	Consumer loans receivable originated	(82,352)		(80,259)		Consumer loans receivable originated	(124,058)		(121,637)
Proceeds from sales of consumer loans	Proceeds from sales of consumer loans	80,589		77,182		Proceeds from sales of consumer loans	122,597		117,127
Principal payments received on consumer loans receivable	Principal payments received on consumer loans receivable	6,974		4,759		Principal payments received on consumer loans receivable	10,720		7,816
Inventories	Inventories	1,663		6,506		Inventories	2,911		11,567
Prepaid expenses and other current assets	Prepaid expenses and other current assets	11,536		322		Prepaid expenses and other current assets	10,913		(676)
Commercial loans receivable	Commercial loans receivable	4,691		(1,409)		Commercial loans receivable	6,444		487
Accounts payable and accrued expenses and other current liabilities	Accounts payable and accrued expenses and other current liabilities	20,353		4,235		Accounts payable and accrued expenses and other current liabilities	20,159		(3,295)
Net cash provided by operating activities	Net cash provided by operating activities	74,609		43,593		Net cash provided by operating activities	91,566		68,320
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(3,773)		(3,944)		Purchases of property, plant and equipment	(5,816)		(6,487)
Payments for acquisition, net	Payments for acquisition, net	0		(15,937)		Payments for acquisition, net	0		(15,937)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	77		64		Proceeds from sale of property, plant and equipment	118		73
Purchases of investments	Purchases of investments	(4,440)		(2,751)		Purchases of investments	(14,056)		(4,648)
Proceeds from sale of investments	Proceeds from sale of investments	8,054		4,260		Proceeds from sale of investments	14,656		8,126
Net cash used in investing activities	Net cash used in investing activities	(82)		(18,308)		Net cash used in investing activities	(5,098)		(18,873)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Payments for exercise of stock options		(11)		(311)
Proceeds from exercise of stock options						Proceeds from exercise of stock options	469		226
Proceeds from secured financings and other	Proceeds from secured financings and other	64		75		Proceeds from secured financings and other	64		76
Payments on securitized financings and other	Payments on securitized financings and other	(918)		(19,109)		Payments on securitized financings and other	(1,984)		(19,360)
Net cash used in financing activities	Net cash used in financing activities	(865)		(19,345)		Net cash used in financing activities	(1,451)		(19,058)
Net increase in cash, cash equivalents and restricted cash	Net increase in cash, cash equivalents and restricted cash	73,662		5,940		Net increase in cash, cash equivalents and restricted cash	85,017		30,389
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	255,607		199,869
Cash, cash equivalents and restricted cash at end of the period	Cash, cash equivalents and restricted cash at end of the period	$	329,269	$	205,809	Cash, cash equivalents and restricted cash at end of the period	$	340,624	$	230,258
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	$	7,865	$	13,073	Cash paid for income taxes	$	13,111	$	15,901
Cash paid for interest	Cash paid for interest	$	251	$	473	Cash paid for interest	$	371	$	604
Supplemental disclosures of noncash activity:	Supplemental disclosures of noncash activity:					Supplemental disclosures of noncash activity:
GNMA loans eligible for repurchase	GNMA loans eligible for repurchase	$	16,170	$	704	GNMA loans eligible for repurchase	$	21,366	$	2,442
Right-of-use assets recognized	Right-of-use assets recognized	$	5,617	$	13,464	Right-of-use assets recognized	$	5,692	$	14,322
Operating lease obligations incurred	Operating lease obligations incurred	$	5,617	$	13,489	Operating lease obligations incurred	$	5,692	$	14,347

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 ~~the Company believes~~ are necessary to fairly state the results for the periods presented. Certain prior period amounts have been reclassified to conform to current period classification. ~~The Company has~~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 22 of the Consolidated Financial Statements Notes ("Notes") of the Company's Quarterly Report on Form 10-Q for the period ended September 26, 2020,~~ 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 ~~the Company's~~our 2020 Annual Report on Form 10-K for the year ended March 28, 2020 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.~~Notes to the Consolidated Financial Statements ("Notes"). The uncertainty created by the novel coronavirus COVID-19 ("COVID-19") ~~have~~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 ~~Company's~~ current fiscal year will end on April 3, ~~2021.~~2021 and will include 53 weeks.

~~The Company operates~~We operate principally in 2 segments: (1) factory-built housing, which includes wholesale and retail systems-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. ~~The Company designs~~We design and ~~builds~~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 ~~the Company's~~our 40 Company-owned retail stores. ~~Our~~The financial services segment is comprised of a finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), and an insurance subsidiary, Standard Casualty Co. ("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, ~~the Company~~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. ~~The Company~~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.

~~The Company adopted~~ 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"). ~~The Company~~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 ~~by the Company~~ in the preparation of ~~its~~our Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K.

2. Revenue from Contracts with Customers

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

Three Months Ended Six Months Ended
September 26, 2020 September 28, 2019 September 26,
2020 September 28,
2019
Factory-built housing
     U.S. Housing and Urban Development code homes $ 197,723 $ 207,556 $ 387,169 $ 410,035
     Modular homes 20,483 19,412 41,266 38,819
     Park model RVs 9,027 11,751 22,749 24,612
     Other (1)
13,734 13,971 27,873 27,992
       Net revenue from factory-built housing 240,967 252,690 479,057 501,458
Financial services
     Insurance agency commissions received from third-party insurance companies 777 274 1,547 1,429
     Other (2)
16,232 15,711 32,173 29,830
       Net revenue from financial services 17,009 15,985 33,720 31,259
Total Net revenue $ 257,976 $ 268,675 $ 512,777 $ 532,717

~~(1) Other factory-built housing revenue includes revenue from ancillary products and services including used homes, freight and other services.~~

~~(2) Other financial services revenue includes consumer finance and insurance revenue that is not within the scope of ASU 2014-09,~~ ~~Revenue from Contracts with Customers ("Topic 606")~~.


	Three Months Ended				Nine Months Ended
	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Factory-built housing
U.S. Housing and Urban Development code homes	$	222,684	$	208,966	$	609,853	$	619,001
Modular homes	26,059		24,508		67,325		63,327
Park model RVs	8,296		10,219		31,045		34,831
Other	13,783		13,413		41,656		41,405
Net revenue from factory-built housing	270,822		257,106		749,879		758,564
Financial services
Insurance agency commissions received from third-party insurance companies	840		783		2,387		2,212
Other	17,110		15,833		49,283		45,663
Net revenue from financial services	17,950		16,616		51,670		47,875
Total Net revenue	$	288,772	$	273,722	$	801,549	$	806,439

Table of Contents

3. Restricted Cash

Restricted cash consisted of the following (in thousands):


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Cash related to CountryPlace customer payments to be remitted to third parties	Cash related to CountryPlace customer payments to be remitted to third parties	$	15,818	$	12,740	Cash related to CountryPlace customer payments to be remitted to third parties	$	11,889	$	12,740
Other restricted cash	Other restricted cash	1,208		1,041		Other restricted cash	1,248		1,041
		$	17,026	$	13,781		$	13,137	$	13,781

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):


		September 26, 2020		March 28, 2020		September 28, 2019		March 30, 2019			December 26, 2020		March 28, 2020		December 28, 2019		March 30, 2019
Cash and cash equivalents	Cash and cash equivalents	$	312,243	$	241,826	$	190,478	$	187,370	Cash and cash equivalents	$	327,487	$	241,826	$	216,882	$	187,370
Restricted cash, current	Restricted cash, current	16,691		13,446		14,981		12,148		Restricted cash, current	12,802		13,446		13,026		12,148
Restricted cash	Restricted cash	335		335		350		351		Restricted cash	335		335		350		351
Cash, cash equivalents and restricted cash per statement of cash flows	Cash, cash equivalents and restricted cash per statement of cash flows	$	329,269	$	255,607	$	205,809	$	199,869	Cash, cash equivalents and restricted cash per statement of cash flows	$	340,624	$	255,607	$	230,258	$	199,869

4. Investments

Investments consisted of the following (in thousands):


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Available-for-sale debt securities	Available-for-sale debt securities	$	12,676	$	14,774	Available-for-sale debt securities	$	16,673	$	14,774
Marketable equity securities	Marketable equity securities	12,791		9,829		Marketable equity securities	13,987		9,829
Non-marketable equity investments	Non-marketable equity investments	21,400		21,536		Non-marketable equity investments	21,791		21,536
		46,867		46,139			52,451		46,139
Less current portion	Less current portion	(16,589)		(14,582)		Less current portion	(16,966)		(14,582)
		$	30,278	$	31,557		$	35,485	$	31,557

~~The Company's investments~~Investments in marketable equity securities consist of investments in the common stock of industrial and other companies.

As of ~~September~~December 26, 2020 and March 28, 2020, non-marketable equity investments included contributions of $15.0 million to equity-method investments in community-based initiatives that buy and sell ~~the Company's~~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 ~~the Company's~~our available-for-sale debt securities, gross unrealized gains and losses and fair value, aggregated by investment category (in thousands):


		September 26, 2020									December 26, 2020
		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	$	3,605	$	55	$	(19)	$	3,641	Residential mortgage-backed securities	$	5,209	$	45	$	(17)	$	5,237
State and political subdivision debt securities	State and political subdivision debt securities	4,116		162		0		4,278		State and political subdivision debt securities	6,156		151		(1)		6,306
Corporate debt securities	Corporate debt securities	4,746		15		(4)		4,757		Corporate debt securities	5,117		15		(2)		5,130
		$	12,467	$	232	$	(23)	$	12,676		$	16,482	$	211	$	(20)	$	16,673


	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):


		September 26, 2020													December 26, 2020
		Less than 12 Months				12 Months or Longer				Total					Less than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Residential mortgage-backed securities	Residential mortgage-backed securities	$	462	$	(8)	$	567	$	(11)	$	1,029	$	(19)	Residential mortgage-backed securities	$	342	$	(9)	$	460	$	(8)	$	802	$	(17)
State and political subdivision debt securities	State and political subdivision debt securities	250		0		0		0		250		0		State and political subdivision debt securities	321		(1)		0		0		321		(1)
Corporate debt securities	Corporate debt securities	1,117		(4)		0		0		1,117		(4)		Corporate debt securities	805		(2)		0		0		805		(2)
		$	1,829	$	(12)	$	567	$	(11)	$	2,396	$	(23)		$	1,468	$	(12)	$	460	$	(8)	$	1,928	$	(20)


	March 28, 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	$	133	$	0	$	1,779	$	(26)	$	1,912	$	(26)
State and political subdivision debt securities	601		(2)		101		(1)		702		(3)
Corporate debt securities	3,747		(65)		0		0		3,747		(65)
	$	4,481	$	(67)	$	1,880	$	(27)	$	6,361	$	(94)

~~Table of Contents~~

~~The Company is~~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 ~~September~~December 26, 2020. Further, ~~the Company does~~we do not intend to sell the investments, and it is more likely than not that ~~the Company~~we will not be required to sell the investments, before recovery of their amortized cost.

Table of Contents

The amortized cost and fair value of ~~the Company's~~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.


		September 26, 2020					December 26, 2020
		Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in less than one year	Due in less than one year	$	3,506	$	3,515	Due in less than one year	$	601	$	603
Due after one year through five years	Due after one year through five years	3,013		3,040		Due after one year through five years	8,335		8,375
Due after five years through ten years	Due after five years through ten years	1,028		1,109		Due after five years through ten years	1,025		1,097
Due after ten years	Due after ten years	1,315		1,371		Due after ten years	1,312		1,361
Mortgage-backed securities	Mortgage-backed securities	3,605		3,641		Mortgage-backed securities	5,209		5,237
		$	12,467	$	12,676		$	16,482	$	16,673

~~The Company recognizes~~We recognize investment gains and losses on available-for-sale debt securities when ~~it sells~~we sell or otherwise ~~disposes~~dispose of securities using the specific identification method. For the three and ~~six~~nine months ended ~~September~~December 26, 2020, there were 0 gross gains realized on the sale of available-for-sale debt securities and gross losses realized were $~~5,000.~~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 three and ~~six~~nine months ended ~~September~~December 28, 2019.

~~The Company recognizes~~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				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Marketable equity securities:	Marketable equity securities:									Marketable equity securities:
Net gains on securities held	Net gains on securities held	$	1,278	$	350	$	3,275	$	1,302	Net gains on securities held	$	1,857	$	764	$	5,132	$	2,066
Net (losses) gains on securities sold		(27)		(1)		6		(2)
Net gains on securities sold										Net gains on securities sold	151		13		157		11
		$	1,251	$	349	$	3,281	$	1,300		$	2,008	$	777	$	5,289	$	2,077

5. Inventories

Inventories consisted of the following (in thousands):


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Raw materials	Raw materials	$	41,907	$	35,691	Raw materials	$	45,821	$	35,691
Work in process	Work in process	15,723		13,953		Work in process	16,223		13,953
Finished goods	Finished goods	54,242		63,891		Finished goods	48,580		63,891
		$	111,872	$	113,535		$	110,624	$	113,535

Table of Contents

6. Consumer Loans Receivable

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


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Loans held for investment (at Acquisition Date, defined below)	Loans held for investment (at Acquisition Date, defined below)	$	35,692	$	37,779	Loans held for investment (at Acquisition Date, defined below)	$	33,726	$	37,779
Loans held for investment (originated after Acquisition Date)	Loans held for investment (originated after Acquisition Date)	19,299		20,140		Loans held for investment (originated after Acquisition Date)	17,873		20,140
Loans held for sale	Loans held for sale	18,986		14,671		Loans held for sale	22,014		14,671
Construction advances	Construction advances	14,063		13,400		Construction advances	13,923		13,400
		88,040		85,990			87,536		85,990
Deferred financing fees and other, net	Deferred financing fees and other, net	(2,290)		(1,919)		Deferred financing fees and other, net	(2,525)		(1,919)
Allowance for loan losses	Allowance for loan losses	(3,910)		(1,767)		Allowance for loan losses	(3,419)		(1,767)
		81,840		82,304			81,592		82,304
Less current portion	Less current portion	(39,023)		(32,376)		Less current portion	(42,091)		(32,376)
		$	42,817	$	49,928		$	39,501	$	49,928

The Company acquired consumer loans receivable as part of ~~its~~the acquisition of Palm Harbor Homes, Inc. in April 2011 ("Acquisition Date"). The allowance for loan losses reflects ~~the Company's~~our judgment of the probable loss exposure on ~~its~~ loans held for ~~investment portfolio.~~investment. On March 29, 2020 ~~the Company~~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. ~~The Company~~We determined that $1.7 million of the existing purchase discount for such consumer loans was related to credit factors and was reclassified to the allowance for loan ~~loss~~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.

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				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Allowance for loan losses at beginning of period	Allowance for loan losses at beginning of period	$	4,012	$	421	$	1,767	$	415	Allowance for loan losses at beginning of period	$	3,910	$	415	$	1,767	$	415
Impact of adoption of ASU 2016-13	Impact of adoption of ASU 2016-13	0		0		2,276		0		Impact of adoption of ASU 2016-13	0		0		2,276		0
Change in estimated loan losses, net	Change in estimated loan losses, net	(94)		(6)		67		0		Change in estimated loan losses, net	(491)		16		(424)		16
Charge-offs	Charge-offs	(8)		0		(200)		0		Charge-offs	0		0		(200)		0
Recoveries	Recoveries	0		0		0		0		Recoveries	0		0		0		0
Allowance for loan losses at end of period	Allowance for loan losses at end of period	$	3,910	$	415	$	3,910	$	415	Allowance for loan losses at end of period	$	3,419	$	431	$	3,419	$	431

The consumer loans held for investment had the following characteristics:


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Weighted average contractual interest rate	Weighted average contractual interest rate	8.4	%	8.4	%	Weighted average contractual interest rate	8.4	%	8.4	%
Weighted average effective interest rate	Weighted average effective interest rate	9.6	%	9.3	%	Weighted average effective interest rate	9.5	%	9.3	%
Weighted average months to maturity	Weighted average months to maturity	163		164		Weighted average months to maturity	159		164

Table of Contents

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


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Current	Current	$	84,852	$	83,861	Current	$	84,200	$	83,861
31-to-60 days		1,200		547
61-to-90 days		26		307
31 to 60 days						31 to 60 days	834		547
61 to 90 days						61 to 90 days	178		307
91+ days	91+ days	1,962		1,275		91+ days	2,324		1,275
		$	88,040	$	85,990		$	87,536	$	85,990

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


		September 26, 2020																	December 26, 2020
		2021		2020		2019		2018		2017		Prior		Total		March 28, 2020			2021		2020		2019		2018		2017		Prior		Total		March 28, 2020
Prime- FICO score 680 and greater	Prime- FICO score 680 and greater	$	14,707	$	8,496	$	2,315	$	1,523	$	1,848	$	25,991	$	54,880	$	55,513	Prime- FICO score 680 and greater	$	21,087	$	4,191	$	1,832	$	996	$	1,761	$	24,582	$	54,449	$	55,513
Near Prime- FICO score 620-679	Near Prime- FICO score 620-679	8,684		6,216		1,864		1,146		779		11,496		30,185		27,767		Near Prime- FICO score 620-679	11,502		4,074		1,809		1,141		614		10,875		30,015		27,767
Sub-Prime- FICO score less than 620	Sub-Prime- FICO score less than 620	100		89		0		0		86		1,991		2,266		2,142		Sub-Prime- FICO score less than 620	426		54		0		0		85		1,786		2,351		2,142
No FICO score	No FICO score	152		0		29		0		0		528		709		568		No FICO score	151		0		28		0		0		542		721		568
		$	23,643	$	14,801	$	4,208	$	2,669	$	2,713	$	40,006	$	88,040	$	85,990		$	33,166	$	8,319	$	3,669	$	2,137	$	2,460	$	37,785	$	87,536	$	85,990

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 ~~September~~December 26, 2020, ~~35%~~37% of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and ~~19%~~20% was concentrated in Florida. As of March 28, 2020, 36% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 16% was concentrated in Florida. Other than Texas and Florida, no state had concentrations in excess of 10% of the principal balance of the consumer loans receivable as of ~~September~~December 26, 2020 or March 28, 2020.

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 ~~$931,000~~$162,000 and $1.5 million as of ~~September~~December 26, 2020 and March 28, 2020, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately ~~$240,000~~$606,000 and $560,000 as of ~~September~~December 26, 2020 and March 28, 2020, respectively.

7. Commercial Loans Receivable

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

Under the terms of the direct programs, ~~the Company provides~~we provide funds for financed home purchases by ~~independent~~ distributors, ~~communities~~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.

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Under the terms of the participation programs, ~~the Company provides~~we provide loans to independent floor plan lenders ~~representing a significant portion of the funds~~ that ~~such financiers~~ 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):


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Direct loans receivable	Direct loans receivable	$	42,336	$	47,058	Direct loans receivable	$	40,653	$	47,058
Participation loans receivable	Participation loans receivable	175		144		Participation loans receivable	105		144
Allowance for loan losses	Allowance for loan losses	(789)		(393)		Allowance for loan losses	(765)		(393)
Deferred financing fees, net	Deferred financing fees, net	(244)		(244)		Deferred financing fees, net	(247)		(244)
		41,478		46,565			39,746		46,565
Less current portion of commercial loans receivable (including from affiliates), net	Less current portion of commercial loans receivable (including from affiliates), net	(14,961)		(15,423)		Less current portion of commercial loans receivable (including from affiliates), net	(19,012)		(15,423)
		$	26,517	$	31,142		$	20,734	$	31,142

The commercial loans receivable balance had the following characteristics:


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Weighted average contractual interest rate	Weighted average contractual interest rate	6.1	%	5.7	%	Weighted average contractual interest rate	6.1	%	5.7	%
Weighted average months to maturity	Weighted average months to maturity	11		10		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. ~~The Company has historically~~Historically, we have been able to sell repossessed homes, thereby mitigating loss exposure. If a default occurs and collateral is lost, ~~the Company is~~we are exposed to loss of the full value of the home loan. ~~The Company evaluates~~We evaluate the potential for loss from ~~its~~the commercial loan programs based on the borrower's risk rating, overall financial stability, historical experience and estimates of other economic factors. ~~The Company has~~We have included considerations related to the COVID-19 pandemic when assessing ~~its~~our risk of loan loss and setting reserve amounts for ~~its~~the commercial finance portfolio as of ~~September~~December 26, 2020.

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				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Balance at beginning of period	Balance at beginning of period	$	828	$	191	$	393	$	180	Balance at beginning of period	$	789	$	163	$	393	$	180
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		0		435		0
Change in estimated loan losses, net	Change in estimated loan losses, net	(39)		(28)		(39)		(17)		Change in estimated loan losses, net	(24)		(1)		(63)		(18)
Loans charged off, net of recoveries	Loans charged off, net of recoveries	0		0		0		0		Loans charged off, net of recoveries	0		0		0		0
Balance at end of period	Balance at end of period	$	789	$	163	$	789	$	163	Balance at end of period	$	765	$	162	$	765	$	162

Table of Contents

The following table disaggregates ~~the Company's~~our commercial loans receivable by credit quality indicator and fiscal year of origination (in thousands):


		September 26, 2020															December 26, 2020
		2021		2020		2019		2018		2017		Total		March 28, 2020			2021		2020		2019		2018		2017		Total		March 28, 2020
Risk profile based on payment activity:	Risk profile based on payment activity:															Risk profile based on payment activity:
Performing	Performing	$	18,860	$	14,076	$	5,699	$	2,238	$	1,570	$	42,443	$	47,016	Performing	$	22,708	$	10,394	$	3,954	$	2,180	$	1,522	$	40,758	$	47,016
Watch list	Watch list	0		0		68		0		0		68		186		Watch list	0		0		0		0		0		0		186
Nonperforming	Nonperforming	0		0		0		0		0		0		0		Nonperforming	0		0		0		0		0		0		0
		$	18,860	$	14,076	$	5,767	$	2,238	$	1,570	$	42,511	$	47,202		$	22,708	$	10,394	$	3,954	$	2,180	$	1,522	$	40,758	$	47,202

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

As of ~~September~~December 26, 2020, ~~10.5%~~10.0% of ~~the Company's~~our outstanding commercial loans receivable principal balance was concentrated in ~~Arizona and 10.0% was concentrated in California.~~Arizona. As of March 28, 2020, 11.0% of the ~~Company's~~ 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 ~~September~~December 26, 2020 or March 28, 2020.

~~The Company~~We had concentrations with one independent third-party and its affiliates that equaled ~~17.9%~~16.8% and 21.0% of the net commercial loans ~~receivables~~receivable principal balance outstanding, all of which was secured, as of ~~September~~December 26, 2020 and March 28, 2020, respectively. The risks created by these concentrations have been considered in the determination of the adequacy of the allowance for loan ~~loss.~~losses.

8. Property, Plant and Equipment, net

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


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Property, plant and equipment, at cost:	Property, plant and equipment, at cost:					Property, plant and equipment, at cost:
Land	Land	$	26,804	$	26,827	Land	$	26,862	$	26,827
Buildings and improvements	Buildings and improvements	53,743		52,011		Buildings and improvements	54,710		52,011
Machinery and equipment	Machinery and equipment	32,286		30,984		Machinery and equipment	33,163		30,984
		112,833		109,822			114,735		109,822
Accumulated depreciation	Accumulated depreciation	(34,997)		(32,632)		Accumulated depreciation	(36,242)		(32,632)
		$	77,836	$	77,190		$	78,493	$	77,190

Depreciation expense was $1.4 million ~~and $1.3 million~~ for each of the three ~~months~~month periods ended ~~September~~December 26, 2020 and ~~September~~December 28, ~~2019, respectively.~~2019. Depreciation expense for the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019 was ~~$2.8~~$4.2 million and ~~$2.4~~$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.

9. Leases

~~The Company leases~~We lease certain production and retail locations, office space and equipment. During the period ended ~~September~~December 26, 2020, ~~the Company~~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.

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


		Operating Leases		Finance Leases		Total			Operating Leases		Finance Leases		Total
Remainder of 2021	Remainder of 2021	$	2,116	$	37	$	2,153	Remainder of 2021	$	1,051	$	19	$	1,070
2022	2022	4,154		73		4,227		2022	4,182		73		4,255
2023	2023	3,827		73		3,900		2023	3,854		73		3,927
2024	2024	3,487		73		3,560		2024	3,503		73		3,576
2025	2025	2,706		73		2,779		2025	2,706		73		2,779
2026	2026	2,799		49		2,848		2026	2,799		49		2,848
Thereafter	Thereafter	2,206		0		2,206		Thereafter	2,206		0		2,206
		21,295		378		21,673			20,301		360		20,661
Less amount representing interest	Less amount representing interest	(2,612)		(45)		(2,657)		Less amount representing interest	(2,392)		(41)		(2,433)
		18,683		333		19,016			17,909		319		18,228
Less current portion	Less current portion	(4,081)		(72)		(4,153)		Less current portion	(4,082)		(71)		(4,153)
		$	14,602	$	261	$	14,863		$	13,827	$	248	$	14,075

10. Goodwill and Other Intangibles

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


		September 26, 2020						March 28, 2020							December 26, 2020						March 28, 2020
		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		(6,780)		4,520		11,300		(6,463)		4,837		Customer relationships	11,300		(6,938)		4,362		11,300		(6,463)		4,837
Other	Other	1,424		(1,208)		216		1,424		(1,151)		273		Other	1,424		(1,236)		188		1,424		(1,151)		273
		$	97,814	$	(7,988)	$	89,826	$	97,814	$	(7,614)	$	90,200		$	97,814	$	(8,174)	$	89,640	$	97,814	$	(7,614)	$	90,200

Amortization expense recognized on intangible assets was ~~$187,000~~$186,000 and ~~$151,000~~$188,000 for the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, respectively. Amortization expense recognized on intangible assets was ~~$374,000~~$560,000 and ~~$231,000~~$419,000 for the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, respectively.

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11. Accrued Expenses and Other Current Liabilities

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


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Customer deposits	Customer deposits	$	30,153	$	22,055	Customer deposits	$	34,373	$	22,055
Salaries, wages and benefits	Salaries, wages and benefits	29,375		25,885		Salaries, wages and benefits	32,338		25,885
Company repurchase options on certain loans sold	Company repurchase options on certain loans sold	23,854		7,444		Company repurchase options on certain loans sold	29,104		7,444
Unearned insurance premiums	Unearned insurance premiums	21,907		20,614		Unearned insurance premiums	21,223		20,614
Estimated warranties	Estimated warranties	17,805		18,678		Estimated warranties	17,996		18,678
Accrued volume rebates	Accrued volume rebates	11,040		9,801		Accrued volume rebates	12,063		9,801
Accrued self-insurance						Accrued self-insurance	5,661		5,112
Insurance loss reserves	Insurance loss reserves	6,887		5,582		Insurance loss reserves	5,351		5,582
Accrued self-insurance		5,827		5,112
Operating lease liabilities	Operating lease liabilities	4,081		4,170		Operating lease liabilities	4,082		4,170
Reserve for repurchase commitments						Reserve for repurchase commitments	2,281		2,679
Accrued taxes	Accrued taxes	3,247		1,908		Accrued taxes	2,212		1,908
Reserve for repurchase commitments		2,463		2,679
Other	Other	16,545		16,002		Other	19,342		16,002
		$	173,184	$	139,930		$	186,026	$	139,930

12. Warranties

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


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Balance at beginning of period	Balance at beginning of period	$	18,538	$	17,760	$	18,678	$	17,069	Balance at beginning of period	$	17,805	$	18,563	$	18,678	$	17,069

Purchase accounting additions	Purchase accounting additions	0		1,192		0		1,192		Purchase accounting additions	0		0		0		1,192
Charged to costs and expenses	Charged to costs and expenses	6,232		6,765		12,579		14,586		Charged to costs and expenses	7,724		7,269		20,303		21,855
Payments and deductions	Payments and deductions	(6,965)		(7,154)		(13,452)		(14,284)		Payments and deductions	(7,533)		(7,873)		(20,985)		(22,157)
Balance at end of period	Balance at end of period	$	17,805	$	18,563	$	17,805	$	18,563	Balance at end of period	$	17,996	$	17,959	$	17,996	$	17,959

13. Debt and Finance Lease Obligations

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


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Secured credit facilities	Secured credit facilities	$	9,793	$	10,474	Secured credit facilities	$	8,825	$	10,474
Other secured financings	Other secured financings	3,925		4,113		Other secured financings	3,843		4,113
Finance lease liabilities		333		366
Finance lease obligations						Finance lease obligations	319		366
		14,051		14,953			12,987		14,953
Less current portion	Less current portion	(2,118)		(2,248)		Less current portion	(2,140)		(2,248)
		$	11,933	$	12,705		$	10,847	$	12,705

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~~The Company's finance subsidiary~~CountryPlace 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 ~~by the Company~~ to originate and hold consumer home-only loans secured by manufactured homes, which are pledged as collateral to the facilities. Upon completion of the draw down periods, the facilities were converted into an amortizing loan based on a 20-year amortization period with 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. ~~As of September 26, 2020, the~~The outstanding balance of the converted loans was ~~$9.8~~$8.8 million atas of December 26, 2020 and $10.5 million as of March 28, 2020, with a weighted average interest rate of 4.91%.

See Note 9 of the Notes to the Consolidated Financial Statements included in the Form 10-K for further discussion of the finance lease obligations.

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 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									Three Months Ended
		September 26, 2020				September 28, 2019					December 26, 2020				December 28, 2019
		Written		Earned		Written		Earned			Written		Earned		Written		Earned
Direct premiums	Direct premiums	$	4,915	$	5,145	$	4,179	$	4,653	Direct premiums	$	5,420	$	5,429	$	4,654	$	4,756
Assumed premiums—nonaffiliated	Assumed premiums—nonaffiliated	7,593		7,043		6,760		6,592		Assumed premiums—nonaffiliated	6,541		7,195		5,918		6,676
Ceded premiums—nonaffiliated	Ceded premiums—nonaffiliated	(2,853)		(2,853)		(3,029)		(3,029)		Ceded premiums—nonaffiliated	(3,146)		(3,146)		(3,071)		(3,071)
		$	9,655	$	9,335	$	7,910	$	8,216		$	8,815	$	9,478	$	7,501	$	8,361


		Six Months Ended									Nine Months Ended
		September 26, 2020				September 28, 2019					December 26, 2020				December 28, 2019
		Written		Earned		Written		Earned			Written		Earned		Written		Earned
Direct premiums	Direct premiums	$	10,680	$	10,330	$	9,212	$	9,223	Direct premiums	$	16,100	$	15,759	$	13,866	$	13,979
Assumed premiums—nonaffiliated	Assumed premiums—nonaffiliated	15,246		13,833		14,273		13,027		Assumed premiums—nonaffiliated	21,787		21,028		20,191		19,703
Ceded premiums—nonaffiliated	Ceded premiums—nonaffiliated	(6,055)		(6,055)		(6,016)		(6,016)		Ceded premiums—nonaffiliated	(9,201)		(9,201)		(9,087)		(9,087)
		$	19,871	$	18,108	$	17,469	$	16,234		$	28,686	$	27,586	$	24,970	$	24,595

Typical insurance policies written or assumed by Standard Casualty have a maximum coverage of $300,000 per claim, of which Standard Casualty cedes ~~$175,000~~$150,000 of the risk of loss per reinsurance. Therefore, Standard Casualty's risk of loss is limited to ~~$125,000~~$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 ~~$1.5~~$2 million per occurrence, up to a maximum of ~~$43.5~~$55 million in the aggregate.

15. Commitments and Contingencies

Repurchase Contingencies. The Company is contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for independent distributors of its 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.

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The maximum amount for which ~~the Company was~~we were liable under such agreements approximated ~~$77.6~~$70.8 million and $79.3 million at ~~September~~December 26, 2020 and March 28, 2020, respectively, without a reduction for the resale value of the homes. ~~The Company applies~~We apply ASC 460, Guarantees, and ASC 450-20, Loss Contingencies, to account for ~~its liability for~~the repurchase ~~commitments.~~commitment liability. We ~~The Company~~ had a reserve for repurchase commitments of ~~$2.5~~$2.3 million and $2.7 million at ~~September~~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.

Construction-Period Mortgages. CountryPlace funds construction-period mortgages through periodic advances during home construction. At the time of initial funding, CountryPlace commits 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.

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


		September 26, 2020		March 28, 2020			December 26, 2020		March 28, 2020
Construction loan contract amount	Construction loan contract amount	$	39,094	$	31,136	Construction loan contract amount	$	41,763	$	31,136
Cumulative advances	Cumulative advances	(14,063)		(13,400)		Cumulative advances	(13,923)		(13,400)
		$	25,031	$	17,736		$	27,840	$	17,736

Representations and Warranties of Mortgages Sold. CountryPlace sells loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and finances certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, CountryPlace provides 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 may be required to repurchase the loan or to indemnify a party for incurred losses. ~~The~~During the nine months ended December 26, 2020, the Company ~~maintains~~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. This reserve of $1.3 million as of ~~September~~December 26, 2020 and $1.0 million as of March 28, 2020, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. ~~During the six months ended September 26, 2020, no~~There were 0 claim ~~request~~requests that resulted ~~in the execution of an indemnification agreement or~~ in the repurchase of a ~~loan.~~loan during the nine months ended December 26, 2020.

Interest Rate Lock Commitments. In originating loans for sale, CountryPlace issues 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 ~~the Company~~CountryPlace 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 ~~September~~December 26, 2020, CountryPlace had outstanding IRLCs with a notional amount of ~~$23.2~~$24.5 million, which are recorded at fair value in accordance with ASC 815, Derivatives and Hedging. During the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, ~~the Company~~we recognized gains of $57,000 and losses of ~~$19,000 and $2,000,~~$5,000, respectively, on outstanding IRLCs. During the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, ~~the Company~~we recognized losses of ~~$144,000~~$87,000 and ~~$3,000~~$8,000, respectively, on outstanding IRLCs.

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Forward Sales Commitments. CountryPlace manages the risk profiles of a portion of its outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments. As of ~~September~~December 26, 2020, CountryPlace had ~~$58.8~~$68.9 million in outstanding notional forward sales of MBSs 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.

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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 ~~September~~December 26, 2020 and ~~September~~December 28, 2019, ~~the Com~~we ~~pany~~ recognized losses of $318,000 and gains of ~~$118,000 and $49,000~~$79,000, respectively, on forward sales of MBS and whole loan sale ~~commitments, respectively.~~commitments. During the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, ~~the Company~~we recognized gains of ~~$1.1 million~~$816,000 and ~~$84,000~~$163,000,respectively, on forward sales of MBS and whole loan sale ~~commitments, respectively.~~commitments.

Legal Matters. 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 the SEC staff. ~~The Company has~~We have also made documents and personnel available to the SEC staff and ~~intends~~we intend to continue cooperating with its investigation. ~~The Company has~~We have been exploring the possibility of a settlement with the SEC staff but, at this time, ~~the Company is~~we are unable to assess the probability of that outcome or reasonably estimate the amount of a potential loss, if any.

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. ~~All parties have agreed~~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 ~~jointly mediate both cases. The~~the action in the San Bernardino County Superior Court. A joint mediation ~~is currently scheduled for~~occurred on January 27, ~~2021.~~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~~our 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~~our consolidated financial position, liquidity or results of operations in any future reporting periods.

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16. Stockholders' Equity

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


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

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


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

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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				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Net income	Net income	$	15,049	$	20,885	$	31,723	$	42,167	Net income	$	19,701	$	20,898	$	51,424	$	63,065
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	9,182,945		9,119,835		9,178,609		9,111,260		Basic	9,190,254		9,138,202		9,182,491		9,120,241
Effect of dilutive securities	Effect of dilutive securities	112,464		146,250		101,471		130,574		Effect of dilutive securities	105,299		155,739		102,747		138,962
Diluted	Diluted	9,295,409		9,266,085		9,280,080		9,241,834		Diluted	9,295,553		9,293,941		9,285,238		9,259,203
Net income per share:	Net income per share:									Net income per share:
Basic	Basic	$	1.64	$	2.29	$	3.46	$	4.63	Basic	$	2.14	$	2.29	$	5.60	$	6.91
Diluted	Diluted	$	1.62	$	2.25	$	3.42	$	4.56	Diluted	$	2.12	$	2.25	$	5.54	$	6.81

Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019 were ~~20,582~~26,601 and ~~22,536,~~14,482, respectively. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019 were ~~30,182~~26,357 and ~~42,401,~~29,971, respectively. In addition, ~~14,405 and 11,450~~outstanding restricted share awards ~~were~~ excluded from the calculation of diluted earnings per share ~~for the three and six months ended September 26, 2020 and September 28, 2019, respectively,~~ because the underlying performance criteria had not ~~yet~~ been ~~met.~~met were 14,405 for the three and nine months ended December 26, 2020, and 7,305 for the three and nine months ended December 28, 2019.

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18. Fair Value Measurements

The book value and estimated fair value of ~~the Company's~~our financial instruments were as follows (in thousands):


		September 26, 2020				March 28, 2020					December 26, 2020				March 28, 2020
		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	$	12,676	$	12,676	$	14,774	$	14,774	Available-for-sale debt securities	$	16,673	$	16,673	$	14,774	$	14,774
Marketable equity securities	Marketable equity securities	12,791		12,791		9,829		9,829		Marketable equity securities	13,987		13,987		9,829		9,829
Non-marketable equity investments	Non-marketable equity investments	21,400		21,400		21,536		21,536		Non-marketable equity investments	21,791		21,791		21,536		21,536
Consumer loans receivable	Consumer loans receivable	81,840		98,045		82,304		97,395		Consumer loans receivable	81,592		96,313		82,304		97,395
Interest rate lock commitment derivatives	Interest rate lock commitment derivatives	21		21		164		164		Interest rate lock commitment derivatives	77		77		164		164
Forward loan sale commitment derivatives	Forward loan sale commitment derivatives	123		123		(1,011)		(1,011)		Forward loan sale commitment derivatives	(195)		(195)		(1,011)		(1,011)
Commercial loans receivable	Commercial loans receivable	41,478		41,144		46,565		46,819		Commercial loans receivable	39,746		38,300		46,565		46,819
Securitized financings and other		(14,051)		(13,638)		(14,953)		(15,592)
Secured financings and other										Secured financings and other	(12,987)		(12,493)		(14,953)		(15,592)

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 ~~the Company uses~~we use in determining fair value.

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


		September 26, 2020									December 26, 2020
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3

Residential mortgage-backed securities (1)	Residential mortgage-backed securities (1)	$	3,641	$	0	$	3,641	$	0	Residential mortgage-backed securities (1)	$	5,237	$	0	$	5,237	$	0
State and political subdivision debt securities (1)	State and political subdivision debt securities (1)	4,278		0		4,278		0		State and political subdivision debt securities (1)	6,306		0		6,306		0
Corporate debt securities (1)	Corporate debt securities (1)	4,757		0		4,757		0		Corporate debt securities (1)	5,130		0		5,130		0
Marketable equity securities (2)	Marketable equity securities (2)	12,791		12,791		0		0		Marketable equity securities (2)	13,987		13,987		0		0
Interest rate lock commitment derivatives (3)	Interest rate lock commitment derivatives (3)	21		0		0		21		Interest rate lock commitment derivatives (3)	77		0		0		77
Forward loan sale commitment derivatives (3)	Forward loan sale commitment derivatives (3)	123		0		0		123		Forward loan sale commitment derivatives (3)	(195)		0		0		(195)
Mortgage servicing rights (4)	Mortgage servicing rights (4)	1,058		0		0		1,058		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.

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(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 ~~six~~nine months ended ~~September~~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):


		September 26, 2020									December 26, 2020
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Loans held for investment	Loans held for investment	$	64,043	$	0	$	0	$	64,043	Loans held for investment	$	59,167	$	0	$	0	$	59,167
Loans held for sale	Loans held for sale	19,939		0		0		19,939		Loans held for sale	23,223		0		0		23,223
Construction advances	Construction advances	14,063		0		0		14,063		Construction advances	13,923		0		0		13,923
Commercial loans receivable	Commercial loans receivable	41,144		0		0		41,144		Commercial loans receivable	38,300		0		0		38,300
Securitized financings and other		(13,638)		0		(13,638)		0
Secured financings and other										Secured financings and other	(12,493)		0		(12,493)		0
Non-marketable equity investments	Non-marketable equity investments	21,400		0		0		21,400		Non-marketable equity investments	21,791		0		0		21,791

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
Securitized financings and other (15,592) 0 (15,592) 0
Non-marketable equity investments 21,536 0 0 21,536

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	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 ~~six~~nine months ended ~~September~~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. MSRs are initially recorded at fair value. Changes in fair value subsequent to the initial capitalization are recorded in earnings.


		September 26, 2020			March 28, 2020				December 26, 2020			March 28, 2020
Number of loans serviced with MSRs	Number of loans serviced with MSRs	4,671			4,688			Number of loans serviced with MSRs	4,663			4,688
Weighted average servicing fee (basis points)	Weighted average servicing fee (basis points)	31.81			31.12			Weighted average servicing fee (basis points)	31.81			31.12
Capitalized servicing multiple	Capitalized servicing multiple	56.49		%	67.19		%	Capitalized servicing multiple	44.23		%	67.19		%
Capitalized servicing rate (basis points)	Capitalized servicing rate (basis points)	17.97			20.91			Capitalized servicing rate (basis points)	14.07			20.91
Serviced portfolio with MSRs (in thousands)	Serviced portfolio with MSRs (in thousands)	$	588,955		$	585,777		Serviced portfolio with MSRs (in thousands)	$	590,433		$	585,777
Mortgage servicing rights (in thousands)		$	1,058		$	1,225
MSRs (in thousands)								MSRs (in thousands)	$	831		$	1,225

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19. Related Party Transactions

~~The Company has~~We have non-marketable equity investments in other distribution operations outside of Company-owned retail locations. In the ordinary course of business, ~~the Company sells~~we sell homes and ~~lends~~lend to certain of these operations through ~~its~~our commercial lending programs. For the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, the total amount of sales to related parties was ~~$10.3~~$11.2 million and $~~10.4~~13.3 million, respectively. For the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, the total amount of sales to related parties was ~~$23.0~~$34.2 million and $~~23.8~~37.1 million, respectively. As of ~~September~~December 26, 2020, receivables from related parties included ~~$2.9~~$3.9 million of accounts receivable and ~~$7.3~~$7.5 million of commercial loans outstanding. As of March 28, 2020, receivables from related parties included $1.7 million of accounts receivable and $8.2 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 ~~the Company's~~our reach. ~~The Company~~We finalized the purchase price allocation and ~~has~~have not made any purchase accounting adjustments during fiscal year 2021.

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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				Six Months Ended					Three Months Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Net revenue	Net revenue	$	257,976	$	270,239	$	512,777	$	543,951	Net revenue	$	288,772	$	273,722	$	801,549	$	817,674
Net income	Net income	15,049		21,165		31,723		43,807		Net income	19,701		20,898		51,424		63,868
Diluted net income per share	Diluted net income per share	1.62		2.28		3.42		4.74		Diluted net income per share	2.12		2.25		5.54		6.90

21. Business Segment Information

~~The Company operates~~We operate principally in 2 segments: (1) factory-built housing, which includes wholesale and retail systems-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 by segment (in thousands):

Three Months Ended Six Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Net revenue:
Factory-built housing $ 240,967 $ 252,690 $ 479,057 $ 501,458
Financial services 17,009 15,985 33,720 31,259
$ 257,976 $ 268,675 $ 512,777 $ 532,717
Income before income taxes:
Factory-built housing $ 17,452 $ 22,463 $ 35,902 $ 46,776
Financial services 2,144 4,792 5,374 7,841
$ 19,596 $ 27,255 $ 41,276 $ 54,617

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~~22. Subsequent Events~~

On October 27, 2020, the Company’s Board of Directors approved a $100 million stock repurchase program that may be used to purchase its outstanding common stock. This program replaces a previously standing $10 million authorization, which is now canceled.

The purchases may be made in the open market or one or more privately negotiated transactions in compliance with applicable securities laws and other legal requirements. The actual timing, number and value of shares repurchased under the program will be determined by the Company in its discretion and will depend on a number of factors, including market conditions, applicable legal requirements and other strategic capital needs and opportunities. The plan does not obligate Cavco to acquire any particular amount of common stock and may be suspended or discontinued at any time.


	Three Months Ended				Nine Months Ended
	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Net revenue:
Factory-built housing	$	270,822	$	257,106	$	749,879	$	758,564
Financial services	17,950		16,616		51,670		47,875
	$	288,772	$	273,722	$	801,549	$	806,439

Income before income taxes:
Factory-built housing	$	18,752	$	19,247	$	54,654	$	66,023
Financial services	7,138		5,485		12,512		13,326
	$	25,890	$	24,732	$	67,166	$	79,349

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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; ~~the Company's~~our financial performance and operating results; the expected effect of certain risks and uncertainties on ~~the Company's~~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 ("COVID-19") pandemic; 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 ~~the Company's~~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. ~~The Company does~~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 ~~the Company's~~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 ~~the Company's~~our assumptions and expectations differ from actual results, ~~the Company's~~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 ~~the Company's~~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 ~~the Company's~~our 2020 Annual Report on Form 10-K ("Form 10-K")~~, which Risk Factors are incorporated herein.~~.

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 ~~the Company's~~our Consolidated Financial Statements.

Company Overview

Headquartered in Phoenix, Arizona, ~~the Company designs~~we design and ~~produces~~produce factory-built ~~homes~~housing products primarily distributed through a network of independent and Company-owned retailers, planned community operators and residential developers. ~~The Company is~~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. ~~The Company is~~We are also one of the leading producers of park model RVs, vacation cabins and systems-built commercial structures, as well as modular homes built primarily under the Nationwide Homes brand. ~~Cavco's~~Our finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation 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. ~~Cavco's~~Our insurance subsidiary, Standard Casualty Co., provides property and casualty insurance to owners of manufactured homes.

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~~The Company operates~~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, ~~the Company's~~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, ~~the Company remains~~we remain available to serve wholesale customers previously served by the Lexington facility from ~~its~~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 ~~1.4%~~1.3% for the first 811 months of calendar year 2020 compared to the same period in the prior year. The industry offers solutions to the affordable housing ~~crisis.~~crisis and these shipment numbers have not represented 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, ~~the Company's~~our products have traditionally competed with rental housing's monthly payment affordability. With respect to the general rise in demand for rental housing, during fiscal year 2020, the Company realized a larger proportion of orders and interest from developers and community owners for new manufactured homes intended for use as rental homes, alternative dwelling units and seasonal living.

The two largest manufactured housing consumer demographics, young adults and those who are age 55 and older, are both growing. 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 by their particular employment status and down payment capability. Consumer confidence, as an indicator of retirement security, is especially important among manufactured home buyers interested in our products for seasonal or retirement living.

~~The Company seeks~~We seek out niche market opportunities where ~~its~~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.

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

~~The Company continues~~We continue to make certain commercial loan programs available to members of ~~the Company's independent~~our wholesale distribution chain. Under ~~these programs, the Company provides a significant amount of the~~direct commercial loan arrangements, we provide funds ~~that~~for financed home purchases by distributors, community owners and developers. In addition, we provide loans to independent ~~financiers~~floor plan lenders that then lend to distributors to finance retail inventories of its products. In addition, the Company has entered into direct commercial loan arrangements with distributors, communities and developers under which the Company provides funds for financing homestheir inventory purchases (see Note 7 to the Consolidated Financial Statements). ~~The Company's~~Our involvement in commercial loans helps to increase the availability of manufactured home financing to distributors, ~~communities~~community owners and ~~developers. Participation in wholesale financing is helpful to these customers~~developers and provides additional opportunity for product exposure to potential home buyers. ~~These~~While these initiatives support ~~the Company's~~our ongoing efforts to expand product ~~distribution. However, these initiatives~~distribution, they do expose ~~the Company~~us to risks associated with the creditworthiness of this customer base and ~~the Company's~~our inventory financing partners. ~~The Company has~~We have included considerations related to the COVID-19 pandemic when assessing ~~its~~the risks of loan loss and setting reserve amounts for ~~its~~the commercial finance portfolio.

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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. ~~The Company is working~~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, ~~the Company continues~~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 also develops and invests in home-only lending programs to grow sales of homes through traditional distribution points. ~~The Company believes~~We believe that growing ~~its~~our investment and participation in home-only lending may provide additional sales growth opportunities for ~~the~~our financial services segment, as well as provide a means that could lead to increased home sales for ~~its~~our factory-built housing operations.

COVID-19 Impact and Strategy

In March 2020, the World Health Organization declared COVID-19 a global pandemic. As ~~the~~our business was considered essential, ~~the Company~~we continued to operate substantially all of ~~its~~our homebuilding and retail sales facilities while working to follow COVID-19 health guidelines. ~~The Company has~~We have worked to minimize exposure and transmission risks by implementing enhanced facility cleaning, social distancing and related protocols while continuing to serve ~~its~~our customers. Operational efficiencies declined ~~from adjusting home production processes~~due to ~~comply with health guidelines,~~ managing higher and largely unpredictable factory employee absenteeism, ~~limited new-hire availability~~hiring challenges and ~~certain~~ building material supply shortages. Accordingly, ~~the Company's~~our total average plant capacity utilization rate was approximately 75% during the third fiscal quarter of 2021, which has improved from approximately 65% during the second fiscal quarter of 2021, ~~ending the quarter at approximately 70%. This~~but is lower than pre-pandemic levels of more than 80%.

Sales order activity ~~has continued to improve~~remained exceptionally strong during the ~~second~~third fiscal quarter of 2021 to the point where home sales order rates were nearly 65% 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 ~~134%~~310% to $472 million at December 26, 2020, compared to $115 million at December 28, 2019 and $321 million at September 26, ~~2020, compared to $137 million at September 28, 2019 and $157 million at June 27,~~ 2020. The backlog of home orders excludes orders that have been paused or canceled at the request of the customer. Distributors may cancel orders prior to production without penalty. After production of a particular home has commenced, 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.

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 operations continue to assist customers in need and service existing loans and insurance policies while 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 to cash flow decreases if customers do not make contractual monthly payments of principal and interest in a timely manner. Our primary investor, 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 monthly collections of principal and interest from borrowers has normally exceeded scheduled principal and interest payments owed to investors, this could be negatively impacted given various state and local emergency orders in light of COVID-19.

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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. ~~The Company continues~~We continue to focus on developing order volume growth opportunities by working to improve ~~its~~our production capabilities and adjusting product offerings. ~~The Company strives~~We strive to balance the production levels and workforce size with the demand for ~~its~~our product offerings to maximize efficiencies. ~~The Company~~We continually ~~reviews~~review wage rates of ~~its~~our production employees and ~~has~~have established other monetary incentive programs to ensure competitive compensation. ~~The Company is~~We are also working to more extensively use ~~on-line~~online recruiting tools, update recruitment brochures and improve the appearance and appeal of ~~its~~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 workforce is key to increasing production to meet increased demand. ~~The Company faces~~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 homes sold and revenue per home sold)		September 26, 2020		September 28, 2019		Change		% Change
($ in thousands, except revenue per home sold)										($ in thousands, except revenue per home sold)	December 26, 2020		December 28, 2019		Change
Net revenue:	Net revenue:									Net revenue:
Factory-built housing	Factory-built housing	$	240,967	$	252,690	$	(11,723)	(4.6)	%	Factory-built housing	$	270,822	$	257,106	$	13,716	5.3	%
Financial services	Financial services	17,009		15,985		1,024		6.4	%	Financial services	17,950		16,616		1,334		8.0	%
		$	257,976	$	268,675	$	(10,699)	(4.0)	%		$	288,772	$	273,722	$	15,050	5.5	%

Total homes sold	Total homes sold	3,427		3,781		(354)		(9.4)	%	Total homes sold	3,603		3,865		(262)		(6.8)	%

Net factory-built housing revenue per home sold	Net factory-built housing revenue per home sold	$	70,314	$	66,832	$	3,482	5.2	%	Net factory-built housing revenue per home sold	$	75,166	$	66,522	$	8,644	13.0	%


		Six Months Ended									Nine Months Ended
($ in thousands, except homes sold and revenue per home sold)		September 26, 2020		September 28, 2019		Change		% Change
($ in thousands, except revenue per home sold)										($ in thousands, except revenue per home sold)	December 26, 2020		December 28, 2019		Change
Net revenue:	Net revenue:									Net revenue:
Factory-built housing	Factory-built housing	$	479,057	$	501,458	$	(22,401)	(4.5)	%	Factory-built housing	$	749,879	$	758,564	$	(8,685)	(1.1)	%
Financial services	Financial services	33,720		31,259		2,461		7.9	%	Financial services	51,670		47,875		3,795		7.9	%
		$	512,777	$	532,717	$	(19,940)	(3.7)	%		$	801,549	$	806,439	$	(4,890)	(0.6)	%

Total homes sold	Total homes sold	6,776		7,588		(812)		(10.7)	%	Total homes sold	10,379		11,453		(1,074)		(9.4)	%

Net factory-built housing revenue per home sold	Net factory-built housing revenue per home sold	$	70,699	$	66,086	$	4,613	7.0	%	Net factory-built housing revenue per home sold	$	72,250	$	66,233	$	6,017	9.1	%

In the factory-built housing segment, the ~~decrease~~increase in Net revenue for the three months ended December 26, 2020 was primarily due to ~~9% and 11%~~higher home selling prices resulting from pricing increases implemented because of rising input costs. These gains were partially offset by lower home sales volume during the ~~three and six~~third fiscal quarter, as production inefficiencies from challenges related to the COVID-19 pandemic continue to limit factory delivery volume.

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

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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, ~~communities~~community owners and developers ("Wholesale") and sales of homes to consumers by Company-owned retail centers ("Retail"). Wholesale sales prices are primarily comprised of the home and the cost to ship the home from a manufacturing facility to the home-site. Retail home prices include these items plus 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 in product mix, the result of home buyer tastes and preferences as they select home types/models, as well as optional home upgrades when purchasing the home.

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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 the three and ~~six~~nine months ended ~~September~~December 26, 2020, ~~the Company~~we sold ~~2,664~~2,835 and ~~5,261~~8,096 homes Wholesale, respectively, and ~~763~~768 and ~~1,515~~2,283 homes Retail, respectively. For the three and ~~six~~nine months ended ~~September~~December 28, 2019, ~~the Company~~we sold ~~3,006~~3,158 and ~~6,064~~9,222 homes Wholesale, respectively, and ~~775~~707 and ~~1,524~~2,231 homes Retail, respectively.

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. Also, the three and six months ended September 26, 2020 include $0.7 million and $1.7 million, respectively, of unrealized gains on marketable equity securities in the insurance subsidiary's portfolio, compared to $0.2 million in unrealized gains in each of the prior year ~~periods.~~were positive contributors. These overall increases were partially offset by lower interest income earned on the acquired consumer loan portfolios that continue to amortize.

Gross Profit.


		Three Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	September 26, 2020			September 28, 2019			$ Change		% Change		($ in thousands)	December 26, 2020			December 28, 2019			Change
Gross profit:	Gross profit:											Gross profit:
Factory-built housing	Factory-built housing	$	46,155		$	48,639		$	(2,484)	(5.1)	%	Factory-built housing	$	47,031		$	48,793		$	(1,762)	(3.6)	%
Financial services	Financial services	7,386			9,828			(2,442)		(24.8)	%	Financial services	12,207			11,062			1,145		10.4	%
		$	53,541		$	58,467		$	(4,926)	(8.4)	%		$	59,238		$	59,855		$	(617)	(1.0)	%

Gross profit as % of Net revenue:	Gross profit as % of Net revenue:											Gross profit as % of Net revenue:
Consolidated	Consolidated	20.8		%	21.8		%	N/A		(1.0)	%	Consolidated	20.5		%	21.9		%	N/A		(1.4)	%
Factory-built housing	Factory-built housing	19.2		%	19.2		%	N/A		—	%	Factory-built housing	17.4		%	19.0		%	N/A		(1.6)	%
Financial services	Financial services	43.4		%	61.5		%	N/A		(18.1)	%	Financial services	68.0		%	66.6		%	N/A		1.4	%


		Six Months Ended											Nine Months Ended
($ in thousands)	($ in thousands)	September 26, 2020			September 28, 2019			$ Change		% Change		($ in thousands)	December 26, 2020			December 28, 2019			Change
Gross profit:	Gross profit:											Gross profit:
Factory-built housing	Factory-built housing	$	93,147		$	100,774		$	(7,627)	(7.6)	%	Factory-built housing	$	140,178		$	149,567		$	(9,389)	(6.3)	%
Financial services	Financial services	15,717			17,991			(2,274)		(12.6)	%	Financial services	27,924			29,053			(1,129)		(3.9)	%
		$	108,864		$	118,765		$	(9,901)	(8.3)	%		$	168,102		$	178,620		$	(10,518)	(5.9)	%

Gross profit as % of Net revenue:	Gross profit as % of Net revenue:											Gross profit as % of Net revenue:
Consolidated	Consolidated	21.2		%	22.3		%	N/A		(1.1)	%	Consolidated	21.0		%	22.1		%	N/A		(1.1)	%
Factory-built housing	Factory-built housing	19.4		%	20.1		%	N/A		(0.7)	%	Factory-built housing	18.7		%	19.7		%	N/A		(1.0)	%
Financial services	Financial services	46.6		%	57.6		%	N/A		(11.0)	%	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 ~~month period was flat as compared to the same period last year,~~ and ~~decreased for the six~~nine months ended ~~September~~December 26, 2020 primarily due to higher material costs and lower sales volume ~~and~~resulting from the production inefficiencies caused by the COVID-19 pandemic.

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In the financial services segment, Gross profit as a percentage of Net revenue increased for the three months ended December 26, 2020 due to lower weather-related claims volume and higher 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.

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Selling, General and Administrative Expenses.


		Three Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	September 26, 2020			September 28, 2019			$ Change		% Change		($ in thousands)	December 26, 2020			December 28, 2019			Change
Selling, general and administrative expenses:	Selling, general and administrative expenses:											Selling, general and administrative expenses:
Factory-built housing	Factory-built housing	$	30,725		$	31,580		$	(855)	(2.7)	%	Factory-built housing	$	30,575		$	32,017		$	(1,442)	(4.5)	%
Financial services	Financial services	4,728			4,503			225		5.0	%	Financial services	4,839			4,827			12		0.2	%
		$	35,453		$	36,083		$	(630)	(1.7)	%		$	35,414		$	36,844		$	(1,430)	(3.9)	%

Selling, general and administrative expenses as % of Net revenue:	Selling, general and administrative expenses as % of Net revenue:	13.7		%	13.4		%	N/A		0.3	%	Selling, general and administrative expenses as % of Net revenue:	12.3		%	13.5		%	N/A		(1.2)	%


		Six Months Ended											Nine Months Ended
($ in thousands)	($ in thousands)	September 26, 2020			September 28, 2019			$ Change		% Change		($ in thousands)	December 26, 2020			December 28, 2019			Change
Selling, general and administrative expenses:	Selling, general and administrative expenses:											Selling, general and administrative expenses:
Factory-built housing	Factory-built housing	$	61,462		$	62,331		$	(869)	(1.4)	%	Factory-built housing	$	92,037		$	94,348		$	(2,311)	(2.4)	%
Financial services	Financial services	9,314			9,016			298		3.3	%	Financial services	14,153			13,843			310		2.2	%
		$	70,776		$	71,347		$	(571)	(0.8)	%		$	106,190		$	108,191		$	(2,001)	(1.8)	%

Selling, general and administrative expenses as % of Net revenue:	Selling, general and administrative expenses as % of Net revenue:	13.8		%	13.4		%	N/A		0.4	%	Selling, general and administrative expenses as % of Net revenue:	13.2		%	13.4		%	N/A		(0.2)	%

Selling, general and administrative expenses related to factory-built housing decreased between periods primarily from a reduction in legal expenses and the amortization of the additional director and officer ("D&O") insurance premium, partially offset by increased corporate-related expenses. During the three months ended ~~September~~December 26, 2020, ~~the Company~~we incurred $~~0.5~~0.7 million in expenses related to the SEC ~~inquiry.~~inquiry, but ~~However, the Company~~ also received a ~~$0.8~~$0.4 million insurance recovery of prior expenses, resulting in a net ~~benefit~~expense of $0.3 million during the period compared to $~~0.8~~0.9 million in expense in the ~~second~~third quarter of fiscal year 2020. For the ~~six~~nine months ended ~~September~~December 26, 2020, ~~the Company~~we recorded a net ~~benefit~~expense of $~~0.2~~0.1 million for SEC inquiry related expenses compared to $~~1.6~~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, 2020 contains 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.

In Financial services, Selling, general and administrative expenses ~~related to financial services~~ increased ~~due to increases in salaries~~for the three and ~~employee related expenses.~~nine months ended December 26, 2020 primarily from higher salary and incentive-based compensation expense.

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Interest Expense.

Interest expense was $0.2 million and ~~$0.3~~$0.5 million for the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, respectively. For the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, Interest expense was ~~$0.4~~$0.6 million and ~~$0.8~~$1.3 million, respectively. Interest expense consists primarily of debt service on ~~the CountryPlace~~CountryPlace's 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 ~~the Company~~we exercised ~~its~~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 was $1.7 million and $5.2 million for the three months ended September 26, 2020 and September 28, 2019, respectively.~~ ~~For the six months ended September 26, 2020 and September 28, 2019, Other income, net was~~ ~~$3.6 million~~ ~~and~~ ~~$8.0 million, respectively.~~

Other income primarily consists of realized and unrealized gains and losses on corporate marketable equity investments, interest income related to commercial loans receivable balances, interest income earned on cash balances and gains and losses from the sale of property, plant and equipment.

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Other income, net ~~declined~~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 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 cash and commercial loan receivables, given 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 ~~$4.5~~$6.2 million and ~~$6.4~~$3.8 million for the three months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019, respectively, for an effective income tax rate of ~~23.2%~~23.9% and ~~23.4%~~15.5%, respectively. Income tax expense for the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019 was $~~9.6~~15.7 million and $~~12.5~~16.3 million, respectively, for an effective income tax ~~rate~~rates of ~~23.1% compared to an~~23.4% and 20.5%, respectively. The lower effective tax ~~rate of 22.8%~~rates for ~~the same period last year. The higher effective tax rate for the six month period was~~prior year periods were primarily due to ~~lower~~ tax benefits from the exercise of stock options, which provided a benefit of ~~$0.7~~$0.5 million in the nine months ended December 26, 2020 compared to the ~~$0.9~~$1.3 million in the same period last ~~year.~~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.

Liquidity and Capital Resources

~~The Company believes~~We believe that cash and cash equivalents at ~~September~~December 26, 2020, together with cash flow from operations, will be sufficient to fund ~~its~~our operations and provide for growth for the next 12 months and into the foreseeable future. ~~The Company maintains~~We maintain cash in U.S. Treasury and other money market funds, some of which are in excess of federally insured limits. ~~The Company expects~~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 ~~the Company's~~our liquidity and capital resources. Because of ~~the Company's~~our sufficient cash position, ~~the Company has~~we have not historically sought external sources of liquidity, with the exception of certain credit facilities for ~~its~~ home-only lending programs. However, depending on ~~the Company's~~our operating results and strategic opportunities, itwe may need to seek additional or alternative sources of financing. 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 ~~the Company~~us to reevaluate ~~its~~our long-term operating plans to make more efficient use of ~~its~~our existing capital resources. The exact nature of any changes to the Company's plans that would be considered depends on various factors, such as conditions in the factory-built housing industry and general economic conditions outside of ~~the Company's~~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 ~~the Company's~~our insurance subsidiary are generally not available to satisfy the claims of Cavco or its legal subsidiaries. ~~The Company believes~~We believe that stockholders' equity at ~~its~~our insurance subsidiary remains sufficient and ~~does~~we do not believe that its 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 six months ended September 26, 2020 and September 28, 2019, respectively:~~

Six Months Ended
($ in thousands) September 26,
2020 September 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 74,609 43,593 31,016
Net cash used in investing activities (82) (18,308) 18,226
Net cash used in financing activities (865) (19,345) 18,480
Cash, cash equivalents and restricted cash at end of the period $ 329,269 $ 205,809 $ 123,460

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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 ~~six~~nine months ended ~~September~~December 26, 2020 compared to the ~~six~~nine months ended ~~September~~December 28, 2019 primarily due to more customer deposits received as a result of higher order rates, higher collections on ~~accounts receivables and~~ commercial loans receivables and the timing of payments on Accounts payable and Accrued expenses and other current liabilities.

Consumer loan originations increased by ~~$2.1~~$2.5 million to ~~$82.4~~$124.1 million for the ~~six~~nine months ended ~~September~~December 26, 2020 from ~~$80.3~~$121.6 million for the ~~six~~nine months ended ~~September~~December 28, 2019. Proceeds from sales of consumer loans provided ~~$80.6~~$122.6 million in cash compared to ~~$77.2~~$117.1 million in the previous year.

~~Cavco has~~We have entered into commercial loan arrangements with certain distributors of ~~its~~our products under which ~~the Company provides~~we provide funds for Wholesale purchases. In addition, ~~the Company has~~we have entered into direct commercial loan arrangements with distributors, ~~communities~~community owners and developers under which ~~the Company provides~~we provide funds for financing homes. ~~The Company has~~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, ~~the Company has~~we have invested in and developed 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.

Investing activities consist of buying and selling ~~bonds~~debt and marketable equity securities in our Financial Services segment, purchases of property, plant and equipmentand funding strategic growth acquisitions. ~~The Company received $2.1 million more in net proceeds from investments for the six months ended September 26, 2020 compared to the same period last year, and~~ Net cash for investing activities in the prior year was primarily used to fund the acquisition of Destiny Homes.

Financing activities used ~~$18.5~~$17.6 million less cash during the period compared to the same period last year as ~~the Company~~we repurchased the 2007-1 securitized loan portfolio in August 2019.

~~The Company's finance subsidiary~~CountryPlace entered into secured credit facilities with independent third-party banks. The proceeds were used 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 amortization period with a balloon payment due upon maturity. As of ~~September~~December 26, 2020, the outstanding balance of the converted loans was ~~$9.8~~$8.8 million atwith 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 ~~the Company's~~our Annual Report on Form 10-K.

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Critical Accounting Policies

On March 29, 2020, ~~the Company~~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. ~~The Company~~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 ~~the Company's~~our critical accounting policies during the ~~six~~nine months ended ~~September~~December 26, 2020, as compared to those disclosed in Part II, Item 7 of ~~the Company's~~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.

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Other Matters

Related Party Transactions. See Note 19 to the Consolidated Financial Statements for a discussion of ~~the Company's~~our related party transactions.

Off Balance Sheet Arrangements

See Note 15 to the Consolidated Financial Statements for a discussion of ~~the Company's~~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.

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 ~~the Company's~~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 ~~September~~December 26, 2020, 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 ~~September~~December 26, 2020 which have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding reportable legal proceedings is contained in Part I, Item 3, Legal Proceedings, in the Form 10-K. The following describes legal proceedings, if any, that became reportable during the period ended ~~September~~December 26, 2020, and, if applicable, amends and restates descriptions of previously reported legal proceedings in which there 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 ~~Offices~~Office regarding securities trading in personal and Company accounts directed by the Company's former ~~CEO,~~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. ~~The Company has~~We have also made documents and personnel available to the SEC staff and ~~intends~~we intend to continue cooperating with its investigation. ~~The Company has been exploring the possibility of a settlement with~~

As previously disclosed in September 2020, the SEC staff ~~in connection with the matter, but at this time, the Company is unable to estimate the amount of a potential loss, if any. The Company is hopeful that an amicable resolution can be reached in the coming months. As noted in the Company’s September 24, 2020 Form 8-K filing, the SEC staff that week~~ issued a Wells Notice to Dan Urness, the Company's Chief Financial Officer and ~~prior~~ 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. ~~Paul Bigbee,~~Also, as previously disclosed in November 2020, the ~~Company’s Chief Accounting Officer since June 2020, is now serving as its Principal Financial Officer and Principal Accounting Officer.~~

AsSEC staff issued a ~~result of the ongoing SEC investigation,~~Wells Notice to the Company ~~incurred $1.1 million in expenses and also received a $1.3 million insurance reimbursement of prior expenses, resulting in a net~~ ~~benefit~~ ~~of $0.2 million for the~~ ~~six months ended September 26, 2020 compared~~stating that they intend to ~~$1.6 million~~ ~~in expenses during the six months ended September 28, 2019. The Company expects to continue to incur costs relating to this matter. During the third quarter of fiscal year 2019,~~recommend an enforcement action against the Company ~~also reviewed~~in connection with the ~~sufficiency~~SEC's investigation. We have been exploring the possibility of ~~its insurance coverage and, based on~~a settlement with the SEC staff in connection with the matter but, at this time, we are unable to assess the probability of that ~~work, Cavco's Board~~outcome or reasonably estimate the amount of ~~Directors made~~ a decision to purchase additional director and officer ("D&O") liability insurance coverage with 22-month terms for a total premium of $15.3 million (which cost was evenly amortized over the terms of the policies). As a result, the Company recorded $4.2 million of additional D&O policy premium expense during each of the potential loss, if any~~six months ended September 26, 2020 and September 28, 2019. With the conclusion of the amortization through~~ ~~the second quarter of fiscal year 2021, the additional D&O liability insurance premiums have now been fully amortized. D&O renewal premiums are now in the ordinary course of business.~~.

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. ~~All parties have agreed~~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 ~~jointly mediate both cases. The~~the action in the San Bernardino County Superior Court. A joint mediation ~~is currently scheduled for~~occurred on January 27, ~~2021.~~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.

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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 ~~the Company's~~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 ~~the Company~~us or that itwe currently ~~deems~~deem to be immaterial also may materially adversely affect ~~the Company's~~our business, financial condition and/or operating results.

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Item 5. Other Information

The following disclosure is provided pursuant to Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers) of Form 8-K:

~~Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers~~

~~On October 26, 2020, Paul Bigbee, 52, the Company’s Chief Accounting Officer, was appointed the Company’s Principal Financial Officer and Principal Accounting Officer.~~

Prior to joining the Company, Mr. Bigbee was Vice President, Financial Audit (2018 to 2019) for Caesars Entertainment in Las Vegas, Nevada. From 2006 to 2018, he held various positions of increasing responsibility at Starwood Hotels & Resorts in Scottsdale, Arizona, including: Controller, Global Sales & Marketing; Global Internal Audit Leader; Corporate Audit/Timeshare; and Senior Director, Financial Reporting and Development Support.

As previously disclosed on Form 8-K dated September 25, 2020, Dan Urness, the Company’s Chief Financial Officer and Principal Accounting Officer has taken a leave of absence. As of October 26, 2020, Mr. UrnessThere is no ~~longer designated the Company’s Principal Financial Officer and Principal Accounting Officer.~~other information required to be disclosed under this item which was not previously disclosed.

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.

Table of Contents

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	President and Chief Executive Officer	~~October 30, 2020~~January 29, 2021
William C. Boor	(Principal Executive Officer)

/s/ Paul Bigbee	Chief Accounting Officer	~~October 30, 2020~~January 29, 2021
Paul Bigbee	(Principal Financial and Accounting Officer)


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of ~~September~~December 26, 2020 (unaudited) and March 28, 2020			1
Consolidated Statements of Comprehensive Income (unaudited) for the three and ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019			2
Consolidated Statements of Cash Flows (unaudited) for the ~~six~~nine months ended ~~September~~December 26, 2020 and ~~September~~December 28, 2019			3
Notes to Consolidated Financial Statements			4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			32
Item 4. Controls and Procedures			32
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			33
Item 1A. Risk Factors			3433
Item 5. Other Information			34
Item 6. Exhibits			34
SIGNATURES			35