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 26, 2020~~July 3, 2021


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

For the transition period from to

Commission File Number 000-08822

CAVCO INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Delaware

56-2405642

(State or other jurisdiction of
incorporation or organization)

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

3636 North Central Ave, Ste 1200

Phoenix

Arizona

85012

(Address of principal executive offices, including zip code)

(602) 256-6263

(Registrant's telephone number, including area code)

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


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of ~~October 23, 2020, 9,188,162~~July 30, 2021, 9,187,030 shares of the registrant's Common Stock, $.01 par value, were outstanding.

CAVCO INDUSTRIES, INC.

FORM 10-Q

~~September 26, 2020~~July 3, 2021

TABLE OF CONTENTS


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

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

CAVCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

September 26,
2020 March 28,
2020
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 312,243 $ 241,826
Restricted cash, current 16,691 13,446
Accounts receivable, net 36,852 42,800
Short-term investments 16,589 14,582
Current portion of consumer loans receivable, net 39,023 32,376
Current portion of commercial loans receivable, net 13,261 14,657
Current portion of commercial loans receivable from affiliates, net 1,700 766
Inventories 111,872 113,535
Prepaid expenses and other current assets 49,193 42,197
Total current assets 597,424 516,185
Restricted cash 335 335
Investments 30,278 31,557
Consumer loans receivable, net 42,817 49,928
Commercial loans receivable, net 20,946 23,685
Commercial loans receivable from affiliates, net 5,571 7,457
Property, plant and equipment, net 77,836 77,190
Goodwill 75,090 75,090
Other intangibles, net 14,736 15,110
Operating lease right-of-use assets 17,477 13,894
Total assets $ 882,510 $ 810,431
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,919 $ 29,924
Accrued expenses and other current liabilities 173,184 139,930
Current portion of secured credit facilities and other 2,118 2,248
Total current liabilities 208,221 172,102
Operating lease liabilities 14,602 10,743
Secured credit facilities and other 11,933 12,705
Deferred income taxes 7,066 7,295
Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; NaN shares issued or outstanding 0 0
Common stock, $0.01 par value; 40,000,000 shares authorized; Outstanding 9,188,162 and 9,173,242 shares, respectively 92 92
Additional paid-in capital 254,297 252,260
Retained earnings 386,134 355,144
Accumulated other comprehensive income 165 90
Total stockholders' equity 640,688 607,586
Total liabilities and stockholders' equity $ 882,510 $ 810,431


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

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
Net revenue	Net revenue	$	257,976	$	268,675	$	512,777	$	532,717	Net revenue		$	330,422	$	254,801
Cost of sales	Cost of sales	204,435		210,208		403,913		413,952		Cost of sales		256,409		199,478
Gross profit	Gross profit	53,541		58,467		108,864		118,765		Gross profit		74,013		55,323
Selling, general and administrative expenses	Selling, general and administrative expenses	35,453		36,083		70,776		71,347		Selling, general and administrative expenses		40,832		35,323
Income from operations	Income from operations	18,088		22,384		38,088		47,418		Income from operations		33,181		20,000
Interest expense	Interest expense	(194)		(302)		(390)		(788)		Interest expense		(164)		(196)
Other income, net	Other income, net	1,702		5,173		3,578		7,987		Other income, net		2,461		1,876
Income before income taxes	Income before income taxes	19,596		27,255		41,276		54,617		Income before income taxes		35,478		21,680
Income tax expense	Income tax expense	(4,547)		(6,370)		(9,553)		(12,450)		Income tax expense		(8,432)		(5,006)
Net income	Net income	$	15,049	$	20,885	$	31,723	$	42,167	Net income		$	27,046	$	16,674

Comprehensive income:
Comprehensive income										Comprehensive income
Net income	Net income	$	15,049	$	20,885	$	31,723	$	42,167	Net income		$	27,046	$	16,674
Reclassification adjustment for securities sold or matured		7		0		33		2
Reclassification adjustment for securities sold										Reclassification adjustment for securities sold		1		26
Applicable income taxes	Applicable income taxes	(2)		0		(7)		(1)		Applicable income taxes		0		(5)
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		(18)		59
Applicable income taxes	Applicable income taxes	(1)		(6)		(13)		(29)		Applicable income taxes		4		(12)
Comprehensive income		$	15,056	$	20,908	$	31,798	$	42,279
												$	27,033	$	16,742
Net income per share:

Net income per share										Net income per share
Basic	Basic	$	1.64	$	2.29	$	3.46	$	4.63	Basic		$	2.94	$	1.82
Diluted	Diluted	$	1.62	$	2.25	$	3.42	$	4.56	Diluted		$	2.92	$	1.80
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		9,198,229		9,174,182
Diluted	Diluted	9,295,409		9,266,085		9,280,080		9,241,834		Diluted		9,276,529		9,264,661

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	31,723	$	42,167	Net income	$	27,046	$	16,674
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities						Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	3,182		2,648		Depreciation and amortization	1,576		1,613
Provision for credit losses	Provision for credit losses	223		30		Provision for credit losses	(239)		(884)
Deferred income taxes	Deferred income taxes	(18)		1,011		Deferred income taxes	(783)		406
Stock-based compensation expense	Stock-based compensation expense	2,048		1,448		Stock-based compensation expense	1,100		945
Non-cash interest income, net	Non-cash interest income, net	(2,596)		(694)		Non-cash interest income, net	(394)		(2,186)
Loss (gain) on sale or retirement of property, plant and equipment, net		242		(3,370)
Gain (loss) on sale or retirement of property, plant and equipment, net						Gain (loss) on sale or retirement of property, plant and equipment, net	(35)		289
Gain on investments and sale of loans, net	Gain on investments and sale of loans, net	(9,597)		(7,683)		Gain on investments and sale of loans, net	(5,579)		(4,982)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities						Changes in operating assets and liabilities
Accounts receivable	Accounts receivable	5,948		(3,300)		Accounts receivable	(3,659)		4,629
Consumer loans receivable originated	Consumer loans receivable originated	(82,352)		(80,259)		Consumer loans receivable originated	(42,706)		(47,356)
Proceeds from sales of consumer loans	Proceeds from sales of consumer loans	80,589		77,182		Proceeds from sales of consumer loans	49,631		39,271
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	3,929		3,261
Inventories	Inventories	1,663		6,506		Inventories	(19,683)		7,139
Prepaid expenses and other current assets	Prepaid expenses and other current assets	11,536		322		Prepaid expenses and other current assets	2,801		7,128
Commercial loans receivable	Commercial loans receivable	4,691		(1,409)		Commercial loans receivable	(243)		2,556
Accounts payable and accrued expenses and other current liabilities	Accounts payable and accrued expenses and other current liabilities	20,353		4,235		Accounts payable and accrued expenses and other current liabilities	11,513		7,189
Net cash provided by operating activities	Net cash provided by operating activities	74,609		43,593		Net cash provided by operating activities	24,275		35,692
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(3,773)		(3,944)		Purchases of property, plant and equipment	(2,593)		(1,856)
Payments for acquisition, net		0		(15,937)

Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	77		64		Proceeds from sale of property, plant and equipment	38		5
Purchases of investments	Purchases of investments	(4,440)		(2,751)		Purchases of investments	(4,429)		(1,160)
Proceeds from sale of investments	Proceeds from sale of investments	8,054		4,260		Proceeds from sale of investments	3,368		3,116
Net cash used in investing activities		(82)		(18,308)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(3,616)		105
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Payments for exercise of stock options		(11)		(311)
Proceeds from (payments for) exercise of stock options						Proceeds from (payments for) exercise of stock options	136		(533)
Proceeds from secured financings and other	Proceeds from secured financings and other	64		75		Proceeds from secured financings and other	0		64
Payments on securitized financings and other		(918)		(19,109)
Payments on secured financings and other						Payments on secured financings and other	(444)		(453)
Payments for common stock repurchases						Payments for common stock repurchases	(12,842)		0
Net cash used in financing activities	Net cash used in financing activities	(865)		(19,345)		Net cash used in financing activities	(13,150)		(922)
Net increase in cash, cash equivalents and restricted cash	Net increase in cash, cash equivalents and restricted cash	73,662		5,940		Net increase in cash, cash equivalents and restricted cash	7,509		34,875
Cash, cash equivalents and restricted cash at beginning of the fiscal year	Cash, cash equivalents and restricted cash at beginning of the fiscal year	255,607		199,869		Cash, cash equivalents and restricted cash at beginning of the fiscal year	339,307		255,607
Cash, cash equivalents and restricted cash at end of the period	Cash, cash equivalents and restricted cash at end of the period	$	329,269	$	205,809	Cash, cash equivalents and restricted cash at end of the period	$	346,816	$	290,482
Supplemental disclosures of cash flow information:
Supplemental disclosures of cash flow information						Supplemental disclosures of cash flow information
Cash paid for income taxes	Cash paid for income taxes	$	7,865	$	13,073	Cash paid for income taxes	$	4,774	$	2,536
Cash paid for interest	Cash paid for interest	$	251	$	473	Cash paid for interest	$	100	$	127
Supplemental disclosures of noncash activity:
GNMA loans eligible for repurchase		$	16,170	$	704
Right-of-use assets recognized		$	5,617	$	13,464
Operating lease obligations incurred		$	5,617	$	13,489
Supplemental disclosures of noncash activity						Supplemental disclosures of noncash activity
Change in GNMA loans eligible for repurchase						Change in GNMA loans eligible for repurchase	$	(6,607)	$	1,242
Right-of-use assets recognized and operating lease obligations incurred						Right-of-use assets recognized and operating lease obligations incurred	$	708	$	5,559

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

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

In the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, that ~~the Company believes~~ are necessary to fairly state the results for the periods presented. ~~Certain prior period amounts~~We have ~~been reclassified to conform to current period classification. The Company has~~ evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC; and except for the events set forth in Note 2220 of the Notes to Consolidated Financial Statements ~~Notes~~ ("Notes") of the Company's Quarterly Report on Form 10-Q for the period ended ~~September 26, 2020,~~July 3, 2021, there were no subsequent events requiring disclosure. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in ~~the Company's 2020~~our 2021 Annual Report on Form 10-K for the year ended ~~March 28, 2020~~April 3, 2021, filed with the SEC ~~on May 27, 2020~~ ("Form 10-K").

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes. The uncertainty created by the novel coronavirus COVID-19 pandemic ("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.~~2, 2022 and will include 52 weeks.

~~The Company operates principally~~We operate in 2 segments: (1) factory-built housing, which includes wholesale and retail ~~systems-built~~factory-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. ~~The 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.~~Company ("Standard Casualty"). CountryPlace is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation seller/servicer and a Government National Mortgage Association ("GNMA") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Standard Casualty provides property and casualty insurance primarily to owners of manufactured homes.

~~Recently Issued or Adopted Accounting Standards.~~

~~On March 29, 2020, the Company 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 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 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 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.

Table of Contents

2. Revenue from Contracts with Customers

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


		Three Months Ended				Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
Factory-built housing	Factory-built housing									Factory-built housing
U.S. Housing and Urban Development code homes	U.S. Housing and Urban Development code homes	$	197,723	$	207,556	$	387,169	$	410,035	U.S. Housing and Urban Development code homes		$	262,390	$	189,446
Modular homes	Modular homes	20,483		19,412		41,266		38,819		Modular homes		26,617		20,783
Park model RVs	Park model RVs	9,027		11,751		22,749		24,612		Park model RVs		9,671		13,722
Other (1)		13,734		13,971		27,873		27,992
Net revenue from factory-built housing		240,967		252,690		479,057		501,458
Other										Other		13,605		14,139
												312,283		238,090
Financial services	Financial services									Financial services
Insurance agency commissions received from third-party insurance companies	Insurance agency commissions received from third-party insurance companies	777		274		1,547		1,429		Insurance agency commissions received from third-party insurance companies		873		770
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
Other										Other		17,266		15,941
												18,139		16,711
												$	330,422	$	254,801

~~(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")~~.

~~Table of Contents~~

3. Restricted Cash

Restricted cash consisted of the following (in thousands):


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Cash related to CountryPlace customer payments to be remitted to third parties	Cash related to CountryPlace customer payments to be remitted to third parties	$	15,818	$	12,740	Cash related to CountryPlace customer payments to be remitted to third parties	$	15,928	$	16,049
Other restricted cash	Other restricted cash	1,208		1,041		Other restricted cash	1,135		979
		$	17,026	$	13,781		17,063		17,028
Less current portion						Less current portion	(16,728)		(16,693)
							$	335	$	335

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

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


		September 26, 2020		March 28, 2020		September 28, 2019		March 30, 2019			July 3, 2021		April 3, 2021
Cash and cash equivalents	Cash and cash equivalents	$	312,243	$	241,826	$	190,478	$	187,370	Cash and cash equivalents	$	329,753	$	322,279
Restricted cash, current		16,691		13,446		14,981		12,148
Restricted cash	Restricted cash	335		335		350		351		Restricted cash	17,063		17,028
Cash, cash equivalents and restricted cash per statement of cash flows		$	329,269	$	255,607	$	205,809	$	199,869
											$	346,816	$	339,307

Table of Contents

4. Investments

Investments consisted of the following (in thousands):


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Available-for-sale debt securities	Available-for-sale debt securities	$	12,676	$	14,774	Available-for-sale debt securities	$	17,962	$	14,946
Marketable equity securities	Marketable equity securities	12,791		9,829		Marketable equity securities	17,550		17,600
Non-marketable equity investments	Non-marketable equity investments	21,400		21,536		Non-marketable equity investments	22,429		21,960
		46,867		46,139			57,941		54,506
Less current portion	Less current portion	(16,589)		(14,582)		Less current portion	(19,749)		(19,496)
		$	30,278	$	31,557		$	38,192	$	35,010

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

As of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, non-marketable equity investments included contributions of $15.0 million to equity-method investments in community-based initiatives that buy and sell ~~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									July 3, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Residential mortgage-backed securities	Residential mortgage-backed securities	$	3,605	$	55	$	(19)	$	3,641	Residential mortgage-backed securities	$	2,609	$	26	$	(11)	$	2,624
State and political subdivision debt securities	State and political subdivision debt securities	4,116		162		0		4,278		State and political subdivision debt securities	8,265		109		(19)		8,355
Corporate debt securities	Corporate debt securities	4,746		15		(4)		4,757		Corporate debt securities	6,982		12		(11)		6,983
		$	12,467	$	232	$	(23)	$	12,676		$	17,856	$	147	$	(41)	$	17,962


		March 28, 2020									April 3, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Residential mortgage-backed securities	Residential mortgage-backed securities	$	5,400	$	69	$	(26)	$	5,443	Residential mortgage-backed securities	$	2,787	$	30	$	(13)	$	2,804
State and political subdivision debt securities	State and political subdivision debt securities	4,239		134		(3)		4,370		State and political subdivision debt securities	7,239		125		(19)		7,345
Corporate debt securities	Corporate debt securities	5,021		5		(65)		4,961		Corporate debt securities	4,797		11		(11)		4,797

		$	14,660	$	208	$	(94)	$	14,774		$	14,823	$	166	$	(43)	$	14,946

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
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 $ 462 $ (8) $ 567 $ (11) $ 1,029 $ (19)
State and political subdivision debt securities 250 0 0 0 250 0
Corporate debt securities 1,117 (4) 0 0 1,117 (4)
$ 1,829 $ (12) $ 567 $ (11) $ 2,396 $ (23)

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 26, 2020.~~July 3, 2021. 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					July 3, 2021
		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	$	1,518	$	1,519
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	11,033		11,028
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	1,391		1,450
Due after ten years	Due after ten years	1,315		1,371		Due after ten years	1,305		1,341
Mortgage-backed securities	Mortgage-backed securities	3,605		3,641		Mortgage-backed securities	2,609		2,624
		$	12,467	$	12,676		$	17,856	$	17,962

~~The Company recognizes investment gains and losses on available-for-sale debt securities when it sells or otherwise disposes of securities using the specific identification method. For the~~ ~~three and six months ended September 26, 2020, there were 0 gross gains realized~~ ~~on the sale of available-for-sale debt securities~~ ~~and gross losses realized were~~ ~~$5,000.~~There were 0 gross gains or losses realized on the sale of available-for-sale debt securities during ~~the~~the three ~~and six~~ months ended ~~September 28, 2019.~~July 3, 2021 or June 27, 2020.

The Company recognizes 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
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Marketable equity securities:
Net gains on securities held $ 1,278 $ 350 $ 3,275 $ 1,302
Net (losses) gains on securities sold (27) (1) 6 (2)
$ 1,251 $ 349 $ 3,281 $ 1,300


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

5. Inventories

Inventories consisted of the following (in thousands):


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Raw materials	Raw materials	$	41,907	$	35,691	Raw materials	$	69,123	$	54,336
Work in process	Work in process	15,723		13,953		Work in process	20,426		19,149
Finished goods	Finished goods	54,242		63,891		Finished goods	61,368		57,749
		$	111,872	$	113,535		$	150,917	$	131,234

Table of Contents

6. Consumer Loans Receivable

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

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

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


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

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


		Three Months Ended				Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
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		$	3,188	$	1,767
Impact of adoption of ASU 2016-13		0		0		2,276		0
Impact of adoption of Financial Accounting Standards Board's Accounting Standards Update 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13")										Impact of adoption of Financial Accounting Standards Board's Accounting Standards Update 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13")		0		2,276
Change in estimated loan losses, net	Change in estimated loan losses, net	(94)		(6)		67		0		Change in estimated loan losses, net		(267)		161
Charge-offs	Charge-offs	(8)		0		(200)		0		Charge-offs		(3)		(192)
Recoveries		0		0		0		0
Allowance for loan losses at end of period	Allowance for loan losses at end of period	$	3,910	$	415	$	3,910	$	415	Allowance for loan losses at end of period		$	2,918	$	4,012

The consumer loans held for investment had the following characteristics:

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

~~Table of Contents~~


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

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


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Current	Current	$	84,852	$	83,861	Current	$	68,258	$	76,378
31-to-60 days		1,200		547
61-to-90 days		26		307
31 to 60 days						31 to 60 days	192		508
61 to 90 days						61 to 90 days	3,112		21
91+ days	91+ days	1,962		1,275		91+ days	408		3,120
		$	88,040	$	85,990		$	71,970	$	80,027

Table of Contents

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


		September 26, 2020																	July 3, 2021
		2021		2020		2019		2018		2017		Prior		Total		March 28, 2020			2022		2021		2020		2019		2018		Prior		Total
Prime- FICO score 680 and greater	Prime- FICO score 680 and greater	$	14,707	$	8,496	$	2,315	$	1,523	$	1,848	$	25,991	$	54,880	$	55,513	Prime- FICO score 680 and greater	$	5,068	$	10,500	$	2,970	$	1,578	$	770	$	24,028	$	44,914
Near Prime- FICO score 620-679	Near Prime- FICO score 620-679	8,684		6,216		1,864		1,146		779		11,496		30,185		27,767		Near Prime- FICO score 620-679	2,312		6,528		2,159		1,676		1,360		10,353		24,388
Sub-Prime- FICO score less than 620	Sub-Prime- FICO score less than 620	100		89		0		0		86		1,991		2,266		2,142		Sub-Prime- FICO score less than 620	0		260		53		0		0		1,605		1,918
No FICO score	No FICO score	152		0		29		0		0		528		709		568		No FICO score	150		149		0		27		0		424		750
		$	23,643	$	14,801	$	4,208	$	2,669	$	2,713	$	40,006	$	88,040	$	85,990		$	7,530	$	17,437	$	5,182	$	3,281	$	2,130	$	36,410	$	71,970


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

Loan contracts secured by geographically concentrated collateral could experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically dispersed. As of ~~September 26, 2020~~July 3, 2021 and April 3, 2021, 35% ~~of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and 19% 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%~~20% was concentrated in Florida. Other than Texas and Florida, no ~~state~~state had concentrations in excess of 10% of the principal balance of the consumer loans receivable as of ~~September 26, 2020~~July 3, 2021 or ~~March 28, 2020.~~April 3, 2021.

Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home less the costs to sell. At repossession, the fair value of the collateral is determined based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is recorded to the allowance for loan losses. Repossessed homes totaled approximately ~~$931,000~~$493,000 and ~~$1.5 million~~$518,000 as of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately ~~$240,000~~$1.0 million and ~~$560,000~~$1.1 million as of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, 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;~~developers and ~~(ii)~~ amounts loaned by ~~the Company~~us under participation financing programs.

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

~~Table of Contents~~

Under the terms of the participation programs, the Company provides 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			July 3, 2021		April 3, 2021
Direct loans receivable		$	42,336	$	47,058
Participation loans receivable		175		144
Loans receivable						Loans receivable	$	45,620	$	45,377
Allowance for loan losses	Allowance for loan losses	(789)		(393)		Allowance for loan losses	(785)		(816)
Deferred financing fees, net	Deferred financing fees, net	(244)		(244)		Deferred financing fees, net	(247)		(247)
		41,478		46,565			44,588		44,314
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	(18,613)		(19,232)
		$	26,517	$	31,142		$	25,975	$	25,082

Table of Contents

The commercial loans receivable balance had the following characteristics:

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

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


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

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


		Three Months Ended				Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
Balance at beginning of period	Balance at beginning of period	$	828	$	191	$	393	$	180	Balance at beginning of period		$	816	$	393
Impact of adoption of ASU 2016-13	Impact of adoption of ASU 2016-13	0		0		435		0		Impact of adoption of ASU 2016-13		0		435
Change in estimated loan losses, net	Change in estimated loan losses, net	(39)		(28)		(39)		(17)		Change in estimated loan losses, net		(31)		0
Loans charged off, net of recoveries		0		0		0		0
Balance at end of period	Balance at end of period	$	789	$	163	$	789	$	163	Balance at end of period		$	785	$	828

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

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

September 26, 2020
2021 2020 2019 2018 2017 Total March 28,
2020
Risk profile based on payment activity:
Performing $ 18,860 $ 14,076 $ 5,699 $ 2,238 $ 1,570 $ 42,443 $ 47,016
Watch list 0 0 68 0 0 68 186
Nonperforming 0 0 0 0 0 0 0
$ 18,860 $ 14,076 $ 5,767 $ 2,238 $ 1,570 $ 42,511 $ 47,202


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


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

At ~~September 26, 2020,~~July 3, 2021, 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 26, 2020, 10.5%~~July 3, 2021, 14% of ~~the Company's~~our outstanding commercial loans receivable principal balance was concentrated in Arizona and ~~10.0%~~13% was concentrated in California. As of ~~March 28, 2020,~~ ~~11.0%~~April 3, 2021, 13% of ~~the Company's~~our outstanding commercial loans receivable principal balance was concentrated in ~~California.~~ Arizona. No other state had concentrations in excess of 10% of the principal balance of the consumer loans receivable as of ~~September 26, 2020~~July 3, 2021 or ~~March 28, 2020.~~April 3, 2021.

~~The Company~~We had concentrations with one independent third-party and its affiliates that equaled ~~17.9% and 21.0%~~18% of the net commercial loans ~~receivables~~receivable principal balance outstanding, all of which was secured, as of ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020 respectively. T~~April 3, 2021.

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

8. Property, Plant and Equipment, net

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


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Property, plant and equipment, at cost:
Property, plant and equipment, at cost						Property, plant and equipment, at cost
Land	Land	$	26,804	$	26,827	Land	$	28,314	$	28,314
Buildings and improvements	Buildings and improvements	53,743		52,011		Buildings and improvements	73,415		71,827
Machinery and equipment	Machinery and equipment	32,286		30,984		Machinery and equipment	35,075		34,146
		112,833		109,822			136,804		134,287
Accumulated depreciation	Accumulated depreciation	(34,997)		(32,632)		Accumulated depreciation	(38,823)		(37,493)
		$	77,836	$	77,190		$	97,981	$	96,794

Depreciation expense was $1.4 million ~~and $1.3 million~~ for each of the three ~~months~~month periods ended ~~September 26, 2020~~July 3, 2021 and ~~September 28, 2019, respectively. Depreciation expense for the six months ended September 26, 2020 and September 28, 2019 was $2.8 million and $2.4 million, respectively.~~

~~Included in the amounts above are certain assets under finance leases. See Note 9 for additional information.~~June 27, 2020.

9. ~~Leases~~

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

~~Table of Contents~~

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

Operating Leases Finance Leases Total
Remainder of 2021 $ 2,116 $ 37 $ 2,153
2022 4,154 73 4,227
2023 3,827 73 3,900
2024 3,487 73 3,560
2025 2,706 73 2,779
2026 2,799 49 2,848
Thereafter 2,206 0 2,206
21,295 378 21,673
Less amount representing interest (2,612) (45) (2,657)
18,683 333 19,016
Less current portion (4,081) (72) (4,153)
$ 14,602 $ 261 $ 14,863

~~10.~~ Goodwill and Other Intangibles

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


		September 26, 2020						March 28, 2020							July 3, 2021						April 3, 2021
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived:
Indefinite-lived														Indefinite-lived
Goodwill	Goodwill	$	75,090	$	—	$	75,090	$	75,090	$	—	$	75,090	Goodwill	$	75,090	$	—	$	75,090	$	75,090	$	—	$	75,090
Trademarks and trade names	Trademarks and trade names	8,900		—		8,900		8,900		—		8,900		Trademarks and trade names	8,900		—		8,900		8,900		—		8,900
State insurance licenses	State insurance licenses	1,100		—		1,100		1,100		—		1,100		State insurance licenses	1,100		—		1,100		1,100		—		1,100
		85,090		—		85,090		85,090		—		85,090			85,090		—		85,090		85,090		—		85,090
Finite-lived:
Finite-lived														Finite-lived
Customer relationships	Customer relationships	11,300		(6,780)		4,520		11,300		(6,463)		4,837		Customer relationships	11,300		(7,255)		4,045		11,300		(7,097)		4,203
Other	Other	1,424		(1,208)		216		1,424		(1,151)		273		Other	1,424		(1,279)		145		1,424		(1,264)		160
		$	97,814	$	(7,988)	$	89,826	$	97,814	$	(7,614)	$	90,200		$	97,814	$	(8,534)	$	89,280	$	97,814	$	(8,361)	$	89,453

Amortization expense recognized on intangible assets was ~~$187,000~~$173,000 and ~~$151,000~~$187,000 for the three months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019, respectively. Amortization expense recognized on intangible assets was $374,000 and $231,000 for the six months ended September 26, 2020 and September 28, 2019,~~ respectively.

1311

Table of Contents

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

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


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Customer deposits	Customer deposits	$	30,153	$	22,055	Customer deposits	$	48,989	$	41,835
Salaries, wages and benefits	Salaries, wages and benefits	29,375		25,885		Salaries, wages and benefits	37,176		37,737
Unearned insurance premiums						Unearned insurance premiums	24,125		22,643
Company repurchase options on certain loans sold	Company repurchase options on certain loans sold	23,854		7,444		Company repurchase options on certain loans sold	19,432		25,938
Unearned insurance premiums		21,907		20,614
Estimated warranties	Estimated warranties	17,805		18,678		Estimated warranties	19,344		18,032
Accrued volume rebates	Accrued volume rebates	11,040		9,801		Accrued volume rebates	14,097		12,132
Insurance loss reserves		6,887		5,582
Accrued self-insurance		5,827		5,112
Operating lease liabilities		4,081		4,170
Accrued taxes		3,247		1,908
Reserve for repurchase commitments		2,463		2,679

Other	Other	16,545		16,002		Other	47,027		44,816
		$	173,184	$	139,930		$	210,190	$	203,133

~~12.~~11. Warranties

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


		Three Months Ended				Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
Balance at beginning of period	Balance at beginning of period	$	18,538	$	17,760	$	18,678	$	17,069	Balance at beginning of period		$	18,032	$	18,678

Purchase accounting additions		0		1,192		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		9,125		6,347
Payments and deductions	Payments and deductions	(6,965)		(7,154)		(13,452)		(14,284)		Payments and deductions		(7,813)		(6,487)
Balance at end of period	Balance at end of period	$	17,805	$	18,563	$	17,805	$	18,563	Balance at end of period		$	19,344	$	18,538

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

Debt and finance lease obligations primarily consist of secured ~~credit facilities~~financings at ~~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 lease term. The following table summarizes debt and finance lease obligations (in thousands):


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Secured credit facilities		$	9,793	$	10,474
Secured term loan						Secured term loan	$	7,980	$	8,210
Other secured financings	Other secured financings	3,925		4,113		Other secured financings	3,473		3,672
Finance lease liabilities		333		366
Finance lease obligations						Finance lease obligations	296		304
		14,051		14,953			11,749		12,186
Less current portion	Less current portion	(2,118)		(2,248)		Less current portion	(1,822)		(1,851)
		$	11,933	$	12,705		$	9,927	$	10,335

~~Table of Contents~~

~~The Company's finance subsidiary~~We entered into secured credit facilities with independent third-party banks ~~with draw periods from one to fifteen months and maturity dates of ten years after the expiration of the draw periods, which have now expired. The proceeds were used by the Company~~ to originate and hold consumer home-only loans secured by manufactured homes, which ~~are~~were pledged as collateral to the facilities. ~~Upon completion of the draw down periods, the~~Those facilities ~~were~~have since been converted into an amortizing loan with maturity dates starting in 2028 and payments based on a ~~20-year~~20 or 25-year amortization period, ~~with~~resulting in a balloon payment due upon maturity. The ~~maximum advance for loans under this program was 80% of the outstanding collateral principal balance, with the Company providing the remaining funds. As of September 26, 2020, the~~ outstanding balance of the converted loans was ~~$9.8~~$8.0 million atas of July 3, 2021 and $8.2 million as of April 3, 2021 with a weighted average interest rate of ~~4.91%~~4.9%.

~~See Note 9 for further discussion~~

Table of ~~the finance lease obligations.~~Contents

13. Reinsurance and Insurance Loss Reserves

~~14. Reinsurance~~

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

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

Three Months Ended
September 26, 2020 September 28, 2019
Written Earned Written Earned
Direct premiums $ 4,915 $ 5,145 $ 4,179 $ 4,653
Assumed premiums—nonaffiliated 7,593 7,043 6,760 6,592
Ceded premiums—nonaffiliated (2,853) (2,853) (3,029) (3,029)
$ 9,655 $ 9,335 $ 7,910 $ 8,216


		Six Months Ended									Three Months Ended
		September 26, 2020				September 28, 2019					July 3, 2021				June 27, 2020
		Written		Earned		Written		Earned			Written		Earned		Written		Earned
Direct premiums	Direct premiums	$	10,680	$	10,330	$	9,212	$	9,223	Direct premiums	$	6,839	$	5,996	$	5,765	$	5,185
Assumed premiums—nonaffiliated	Assumed premiums—nonaffiliated	15,246		13,833		14,273		13,027		Assumed premiums—nonaffiliated	8,574		7,378		7,653		6,790
Ceded premiums—nonaffiliated	Ceded premiums—nonaffiliated	(6,055)		(6,055)		(6,016)		(6,016)		Ceded premiums—nonaffiliated	(3,647)		(3,647)		(3,202)		(3,202)
		$	19,871	$	18,108	$	17,469	$	16,234		$	11,766	$	9,727	$	10,216	$	8,773

Typical insurance policies written or assumed ~~by Standard Casualty~~ have a maximum coverage of $300,000 per claim, of which ~~Standard Casualty cedes $175,000~~we cede $150,000 of the risk of loss per reinsurance. Therefore, ~~Standard Casualty's~~our 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.~~aggregate for that occurrence.

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


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

~~15.~~14. Commitments and Contingencies

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

~~Table of Contents~~

The maximum amount for which ~~the Company was~~we were liable under such agreements approximated ~~$77.6~~$80.9 million and ~~$79.3~~$74.2 million at ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020,~~April 3, 2021, respectively, without reduction for the resale value of the ~~homes. The Company applies ASC 460,~~homes that are repurchased. We ~~Guarantees, and ASC 450-20,~~ ~~Loss Contingencies, to account for its liability for repurchase commitments.~~ ~~The Company~~ had a reserve for repurchase commitments of ~~$2.5 million and $2.7~~$2.3 million at ~~September 26, 2020~~July 3, 2021 and ~~March 28, 2020, respectively.~~

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

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

Table of Contents

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


		September 26, 2020		March 28, 2020			July 3, 2021		April 3, 2021
Construction loan contract amount	Construction loan contract amount	$	39,094	$	31,136	Construction loan contract amount	$	28,204	$	37,628
Cumulative advances	Cumulative advances	(14,063)		(13,400)		Cumulative advances	(10,479)		(13,801)
		$	25,031	$	17,736		$	17,725	$	23,827

Representations and Warranties of Mortgages Sold. ~~CountryPlace sells~~ We sell loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and ~~finances~~finance certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, ~~CountryPlace provides~~we provide to ~~the~~ GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed. Upon a breach of a representation, ~~CountryPlace~~we may be required to ~~repurchase~~repurchase the loan or to indemnify a party for incurred losses. ~~The Company maintains~~We maintain a reserve for these contingent repurchase and indemnification ~~obligations.~~obligations. This reserve of $1.3 million as of ~~September 26, 2020~~July 3, 2021 and ~~$1.0~~$1.2 million as of ~~March 28, 2020,~~April 3, 2021, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. ~~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 three months ended July 3, 2021.

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

As of ~~September 26, 2020, CountryPlace~~July 3, 2021, we had outstanding IRLCs with a notional amount of ~~$23.2~~$32.1 million ~~which are recorded at fair value~~ and recognized a gain of $47,000 in ~~accordance with ASC 815,~~the ~~Derivatives~~2022first quarter and ~~Hedging~~a ~~. During the three months ended September 26, 2020 and September 28, 2019, the Company recognized losses of $19,000 and $2,000, respectively, on outstanding IRLCs. During the six months ended September 26, 2020 and September 28, 2019, the Company recognized losses~~loss of ~~$144,000 and $3,000~~$125,000 in the 2021, ~~respectively, on outstanding IRLCs.~~first quarter.

Forward Sales Commitments. ~~CountryPlace manages~~We manage the risk profiles of a portion of ~~its~~the outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale ~~commitments.~~commitments (collectively "Commitments"). As of ~~September 26, 2020, CountryPlace~~July 3, 2021, we had ~~$58.8~~$42.9 million in outstanding ~~notional forward sales~~Commitments and recognized a non-cash loss 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.

~~Table of Contents~~

~~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~~$347,000 in the ~~Consolidated Balance Sheets. During the three months ended September 26, 2020 and~~ ~~September 28, 2019, the Company recognized gains of $118,000 and $49,000~~2022 ~~on forward sales~~first quarter and gain of ~~MBS and whole loan sale commitments, respectively. During~~$1.0 million in the ~~six months ended September 26, 2020 and September 28, 2019, the Company recognized gains of~~ ~~$1.1 million and $84,000~~2021 ~~on forward sales of MBS and whole loan sale commitments, respectively.~~first quarter.

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

~~Joseph D. Robles v. Cavco Industries, Inc.,~~ ~~was filed in the Superior Court for the State of California, Riverside on June 25, 2019 and~~ ~~Malik Griffin v. Fleetwood Homes, Inc~~., was filed in the Superior Court for the State of California, San Bernardino on September 19, 2019, 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 to jointly mediate both cases. The mediation is currently scheduled for January 27, 2021.

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

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15. Stockholders' Equity

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


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

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


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

Table of Contents

16. ~~Stockholders' Equity~~

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

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

~~Table of Contents~~

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

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

~~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
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
Net income	Net income	$	15,049	$	20,885	$	31,723	$	42,167	Net income		$	27,046	$	16,674
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		9,198,229		9,174,182
Effect of dilutive securities	Effect of dilutive securities	112,464		146,250		101,471		130,574		Effect of dilutive securities		78,300		90,479
Diluted	Diluted	9,295,409		9,266,085		9,280,080		9,241,834		Diluted		9,276,529		9,264,661
Net income per share:
Net income per share										Net income per share
Basic	Basic	$	1.64	$	2.29	$	3.46	$	4.63	Basic		$	2.94	$	1.82
Diluted	Diluted	$	1.62	$	2.25	$	3.42	$	4.56	Diluted		$	2.92	$	1.80

~~Anti-dilutive~~There were 8,366 anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended ~~September 26, 2020~~July 3, 2021 and September 28, 2019 were 20,582 and 22,536, respectively. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the six months ended September 26, 2020 and September 28, 2019 were 30,182 and 42,401, respectively. In addition, 14,405 and 11,450~~outstanding restricted share awards were excluded from the calculation of diluted earnings per share~~39,996 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.~~

June 27, 2020.

~~Table of Contents~~

~~18.~~17. 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					July 3, 2021				April 3, 2021
		Book Value		Estimated Fair Value		Book Value		Estimated Fair Value			Book Value		Estimated Fair Value		Book Value		Estimated Fair Value
Available-for-sale debt securities	Available-for-sale debt securities	$	12,676	$	12,676	$	14,774	$	14,774	Available-for-sale debt securities	$	17,962	$	17,962	$	14,946	$	14,946
Marketable equity securities	Marketable equity securities	12,791		12,791		9,829		9,829		Marketable equity securities	17,550		17,550		17,600		17,600
Non-marketable equity investments	Non-marketable equity investments	21,400		21,400		21,536		21,536		Non-marketable equity investments	22,429		22,429		21,960		21,960
Consumer loans receivable	Consumer loans receivable	81,840		98,045		82,304		97,395		Consumer loans receivable	67,524		76,466		74,798		86,209
Interest rate lock commitment derivatives		21		21		164		164
Forward loan sale commitment derivatives		123		123		(1,011)		(1,011)

Commercial loans receivable	Commercial loans receivable	41,478		41,144		46,565		46,819		Commercial loans receivable	44,588		42,586		44,314		42,379
Securitized financings and other		(14,051)		(13,638)		(14,953)		(15,592)
Secured financings other										Secured financings other	(11,749)		(11,810)		(12,186)		(12,340)

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

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

September 26, 2020
Total Level 1 Level 2 Level 3
Residential mortgage-backed securities (1)
$ 3,641 $ 0 $ 3,641 $ 0
State and political subdivision debt securities (1)
4,278 0 4,278 0
Corporate debt securities (1)
4,757 0 4,757 0
Marketable equity securities (2)
12,791 12,791 0 0
Interest rate lock commitment derivatives (3)
21 0 0 21
Forward loan sale commitment derivatives (3)
123 0 0 123
Mortgage servicing rights (4)
1,058 0 0 1,058

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.~~

~~Table of Contents~~

~~(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 months ended September 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
Total Level 1 Level 2 Level 3
Loans held for investment $ 64,043 $ 0 $ 0 $ 64,043
Loans held for sale 19,939 0 0 19,939
Construction advances 14,063 0 0 14,063
Commercial loans receivable 41,144 0 0 41,144
Securitized financings and other (13,638) 0 (13,638) 0
Non-marketable equity investments 21,400 0 0 21,400

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

~~NaN impairment charges were recorded during the six months ended September 26, 2020.~~

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


		September 26, 2020			March 28, 2020				July 3, 2021			April 3, 2021
Number of loans serviced with MSRs	Number of loans serviced with MSRs	4,671			4,688			Number of loans serviced with MSRs	4,614			4,647
Weighted average servicing fee (basis points)	Weighted average servicing fee (basis points)	31.81			31.12			Weighted average servicing fee (basis points)	33.86			33.57
Capitalized servicing multiple	Capitalized servicing multiple	56.49		%	67.19		%	Capitalized servicing multiple	67.3		%	45.9		%
Capitalized servicing rate (basis points)	Capitalized servicing rate (basis points)	17.97			20.91			Capitalized servicing rate (basis points)	22.78			15.42
Serviced portfolio with MSRs (in thousands)	Serviced portfolio with MSRs (in thousands)	$	588,955		$	585,777		Serviced portfolio with MSRs (in thousands)	$	594,373		$	593,939
Mortgage servicing rights (in thousands)		$	1,058		$	1,225
MSRs (in thousands)								MSRs (in thousands)	$	1,354		$	916

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~~19.~~18. Related Party Transactions

~~The Company has~~We have non-marketable equity investments in other distribution operations outside of Company-owned retail ~~locations.~~stores. 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 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ the total amount of sales to related parties was ~~$10.3~~$14.8 million and $~~10.4 million, respectively. For the six months ended September 26, 2020 and September 28, 2019, the total amount of sales to related parties was $23.0 millionand$23.8~~12.7 million, respectively. As of ~~September 26, 2020,~~July 3, 2021, receivables from related parties included ~~$2.9~~$4.3 million of accounts receivable and ~~$7.3~~$6.8 million of commercial loans outstanding. As of ~~March 28, 2020,~~April 3, 2021, receivables from related parties ~~included $1.7~~included $4.7 million of accounts receivable and ~~$8.2~~$9.5 million of commercial loans outstanding.

~~20. Acquisition of Destiny Homes~~

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

~~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
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Net revenue $ 257,976 $ 270,239 $ 512,777 $ 543,951
Net income 15,049 21,165 31,723 43,807
Diluted net income per share 1.62 2.28 3.42 4.74

~~21.~~19. Business Segment Information

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


		Three Months Ended				Six Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				July 3, 2021		June 27, 2020
Net revenue:
Net revenue										Net revenue
Factory-built housing	Factory-built housing	$	240,967	$	252,690	$	479,057	$	501,458	Factory-built housing		$	312,283	$	238,090
Financial services	Financial services	17,009		15,985		33,720		31,259		Financial services		18,139		16,711
		$	257,976	$	268,675	$	512,777	$	532,717			$	330,422	$	254,801

Income before income taxes:
Income before income taxes										Income before income taxes
Factory-built housing	Factory-built housing	$	17,452	$	22,463	$	35,902	$	46,776	Factory-built housing		$	33,559	$	18,450
Financial services	Financial services	2,144		4,792		5,374		7,841		Financial services		1,919		3,230
		$	19,596	$	27,255	$	41,276	$	54,617			$	35,478	$	21,680

20. Subsequent Event

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

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

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~~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.

~~Table of Contents~~

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 pandemic ("COVID-19") ~~pandemic;~~or any other pandemic or outbreak; governmental regulations and legal proceedings; the availability of favorable consumer and wholesale manufactured home financing; market interest rates and Company investments and the ultimate outcome of ~~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 2020~~our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("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~~factory-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 ("Freddie Mac") seller/servicer and a Government National Mortgage Association ("Ginnie Mae") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. ~~Cavco's~~Our insurance subsidiary, Standard Casualty ~~Co.~~Company ("Standard Casualty"), 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 available to serve wholesale customers previously served by the Lexington facility from its 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%~~increased 14.9% for the first 85 months of calendar year ~~2020~~2021 compared to the same period in the prior ~~year.~~year, which was impacted by shutdowns related to COVID-19. However, we did not experience any significant factory shutdowns in the prior year period like some other industry participants did.

The industry offers solutions to the affordable housing ~~crisis.~~crisis and these industry shipment numbers do not represent demand; instead, they represent the industry's ability to produce in the current environment. The average price per square foot for a manufactured home is lower than a site-built home. Also, based on the relatively low cost associated with manufactured home ownership, ~~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~~First-time" and "move-up" buyers of affordable homes are historically among the largest segments of new manufactured home purchasers. Included in this group are lower-income households that ~~may be limited in their ability to qualify for a new home loan~~are particularly affected by ~~their particular~~periods of low employment ~~status~~rates and ~~down payment capability.~~underemployment. Consumer confidence ~~as an indicator of retirement security,~~ is especially important among manufactured home buyers interested in our products for seasonal or retirement living.

~~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 funds that independent financiers 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~~we provide funds for ~~financing homes~~financed home purchases by distributors, community owners and developers (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 do~~distribution, they 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 included considerations related to the COVID-19 pandemic when assessing its risks of loan loss and setting reserve amounts for its commercial finance portfolio.~~

~~Table of Contents~~

The lack of an efficient secondary market for manufactured home-only loans and the limited number of institutions providing such loans results in higher borrowing costs for home-only loans and continues to constrain industry growth. ~~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~~We also ~~develops~~develop and ~~invests~~invest 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~~

Table of Contents

In March 2020, the World Health Organization declared COVID-19 a global pandemic. As the business was considered essential, the Company continued to operate substantially all of its homebuilding and retail sales facilities while working to follow COVID-19 health guidelines. The Company has worked to minimize exposure and transmission risks by implementing enhanced facility cleaning, social distancing and related protocols while continuing to serve its customers. Operational efficiencies have declined from ~~adjusting home production processes to comply with health guidelines, managing~~hiring challenges, higher and largely unpredictable factory employee absenteeism ~~limited new-hire availability~~ and ~~certain~~other inefficiencies from building material supply shortages. Accordingly, ~~the Company's~~our total average plant capacity utilization rate was approximately ~~65%~~75% during the ~~second~~first fiscal quarter of ~~2021, ending the~~2022, which remains consistent with that of our fourth quarter ~~at approximately 70%. This is lower than pre-pandemic levels~~ of ~~more than 80%.~~fiscal 2021.

Sales order activity ~~has continued to improve~~remained exceptionally strong during the ~~second~~first fiscal quarter of ~~2021 to the point where home sales order rates were~~2022 and was nearly ~~65%~~50% higher than the comparable prior year quarter. Increased order volume is the result of a higher number of well-qualified home buyers making purchase decisions, supported by reduced home loan interest rates. Increased orders outpaced the challenging production environment during the quarter, raising order backlogs ~~134%~~ to ~~$321~~$792 million at ~~September 26, 2020,~~July 3, 2021, up 31.3% compared to ~~$137~~$603 million at ~~September 28, 2019~~April 3, 2021 and up 404.5% compared to $157 million at June 27, 2020. ~~The backlog of~~Backlog excludes home ~~orders excludes~~ orders that have been paused or canceled at the request of the customer. ~~Distributors~~

Key housing building materials include wood and wood products, gypsum wallboard, steel, windows, appliances, insulation and other petroleum-based products. Pricing and availability of certain raw materials have recently been volatile due to a number of factors in the current environment. We continue to monitor and react to inflation in these materials by maintaining a focus on our product pricing in response to higher materials costs, but such increases may ~~cancel orders prior~~lag behind the escalation of such costs. Availability of these products has not caused a production halt in the current period, but we have experienced periodic shutdowns in other periods and shortages of primary building materials have caused production inefficiencies as we have needed to change processes in response to the delay in materials.

While it is difficult to predict the future of housing demand, employee availability, supply chain and Company performance and operations, maintaining an appropriately sized and well-trained workforce is key to increasing production ~~without penalty. After~~to meet increased demand, and we face challenges in overcoming labor-related difficulties in the current environment to increase home production. We continually review the wage rates of our production employees, and have established other monetary incentive and benefit programs, with a goal of ~~a particular home has commenced,~~providing competitive compensation. We also provide leadership training to new managers and other employees in supervisory roles to enhance communication and improve the ~~order becomes non-cancelable~~oversight and motivation of other employees, more extensively use online recruiting tools, update our recruitment brochures and improve the ~~distributor is obligated~~appearance and appeal of our manufacturing facilities to ~~take delivery~~improve the recruitment and retention of qualified production employees and reduce annualized turnover rates. Regardless, we believe our ability to recruit the ~~home. Accordingly, until production of a particular home has commenced,~~workforce we ~~do not consider order backlog~~need to ~~be firm orders.~~meet the overall need for affordable housing continues to improve.

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

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

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It is difficult to predict the future impacts of the COVID-19 pandemic on housing demand, employee availability, supply chain and Company performance and operations. The Company continues to focus on developing order volume growth opportunities by working to improve its production capabilities and adjusting product offerings. The Company strives to balance the production levels and workforce size with the demand for its product offerings to maximize efficiencies. The Company continually reviews wage rates of its production employees and has established other monetary incentive programs to ensure competitive compensation. The Company is also working to more extensively use on-line recruiting tools, update recruitment brochures and improve the appearance and appeal of its manufacturing facilities in order to improve the recruitment and retention of qualified production employees and reduce annualized turnover rates. Maintaining an appropriately sized and well-trained workfor~~ce is key to increasing production to meet increased demand. The Company faces 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
Net revenue:
($ in thousands, except revenue per home sold)										($ in thousands, except revenue per home sold)	July 3, 2021		June 27, 2020		Change
Factory-built housing	Factory-built housing	$	240,967	$	252,690	$	(11,723)	(4.6)	%	Factory-built housing	$	312,283	$	238,090	$	74,193	31.2	%
Financial services	Financial services	17,009		15,985		1,024		6.4	%	Financial services	18,139		16,711		1,428		8.5	%
		$	257,976	$	268,675	$	(10,699)	(4.0)	%		$	330,422	$	254,801	$	75,621	29.7	%

Total homes sold		3,427		3,781		(354)		(9.4)	%

Factory-built homes sold										Factory-built homes sold
by Company-owned retail sales centers										by Company-owned retail sales centers	723		752		(29)		(3.9)	%
to independent retailers, builders, communities & developers										to independent retailers, builders, communities & developers	2,977		2,597		380		14.6	%
											3,700		3,349		351		10.5	%
Net factory-built housing revenue per home sold	Net factory-built housing revenue per home sold	$	70,314	$	66,832	$	3,482	5.2	%	Net factory-built housing revenue per home sold	$	84,401	$	71,093	$	13,308	18.7	%

Six Months Ended
($ in thousands, except homes sold and revenue per home sold) September 26,
2020 September 28,
2019 Change % Change
Net revenue:
Factory-built housing $ 479,057 $ 501,458 $ (22,401) (4.5) %
Financial services 33,720 31,259 2,461 7.9 %
$ 512,777 $ 532,717 $ (19,940) (3.7) %
Total homes sold 6,776 7,588 (812) (10.7) %
Net factory-built housing revenue per home sold $ 70,699 $ 66,086 $ 4,613 7.0 %

In the factory-built housing segment, the ~~decrease~~increase in Net ~~revenue~~ revenues was primarily due to 9%a 10.5% increase in units sold and ~~11% lower~~18.7% increase in the average sales price. The higher home prices were driven by product price increases and a shift toward more multi-section homes. Home sales volume increased from higher factory capacity utilization. On a sequential basis, adjusting for the extra week of production in the fourth quarter of fiscal year 2021, home sales volume ~~during the three and six months ended September 26, 2020, respectively. These declines were partially offset by~~would have also increased from slightly 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.~~factory capacity utilization.

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

~~Table of Contents~~

~~As discussed above, changes to the proportion of home sales among the distribution channels between reporting periods impact the overall net revenue per home sold. For~~homes shipped for the three ~~and six~~ months ended ~~September 26, 2020, the Company sold 2,664~~July 3, 2021 and June 27, 2020:~~5,261 homes Wholesale, respectively, and 763 and 1,515~~ ~~homes Retail, respectively. For the three and six months ended September 28, 2019, the Company sold 3,006 and 6,064 homes Wholesale, respectively, and 775 and 1,524 homes Retail, respectively.~~


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

Financial services segment revenue increased primarily due to 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~~These gains were partially offset by lower unrealized gains on marketable equity securities in the insurance subsidiary's portfolio, ~~compared to $0.2~~which were $0.4 million ~~in unrealized gains in each of the prior year periods. 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
($ in thousands) September 26,
2020 September 28,
2019 $ Change % Change
Gross profit:
Factory-built housing $ 46,155 $ 48,639 $ (2,484) (5.1) %
Financial services 7,386 9,828 (2,442) (24.8) %
$ 53,541 $ 58,467 $ (4,926) (8.4) %
Gross profit as % of Net revenue:
Consolidated 20.8 % 21.8 % N/A (1.0) %
Factory-built housing 19.2 % 19.2 % N/A — %
Financial services 43.4 % 61.5 % N/A (18.1) %

Six Months Ended
($ in thousands) September 26,
2020 September 28,
2019 $ Change % Change
Gross profit:
Factory-built housing $ 93,147 $ 100,774 $ (7,627) (7.6) %
Financial services 15,717 17,991 (2,274) (12.6) %
$ 108,864 $ 118,765 $ (9,901) (8.3) %
Gross profit as % of Net revenue:
Consolidated 21.2 % 22.3 % N/A (1.1) %
Factory-built housing 19.4 % 20.1 % N/A (0.7) %
Financial services 46.6 % 57.6 % N/A (11.0) %

~~Factory-built housing Gross profit as a percentage of Net revenue~~and $1.0 million for the three ~~month period was flat as compared to the same period last year, and decreased for the six~~ months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~primarily due to lower sales volume and production inefficiencies caused by the COVID-19 pandemic.~~

~~In the financial services segment, Gross profit as a percentage of Net revenue decreased as a result of higher weather-related claims volume at our insurance subsidiary~~respectively, and lower interest income earned on the acquired consumer loan portfolios that continue to amortize.

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Gross Profit.


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

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

Financial services gross profit decreased due to higher weather-related claims volume and lower unrealized gains on marketable equity securities.

Selling, General and Administrative Expenses.

Three Months Ended
($ in thousands) September 26,
2020 September 28,
2019 $ Change % Change
Selling, general and administrative expenses:
Factory-built housing $ 30,725 $ 31,580 $ (855) (2.7) %
Financial services 4,728 4,503 225 5.0 %
$ 35,453 $ 36,083 $ (630) (1.7) %
Selling, general and administrative expenses as % of Net revenue: 13.7 % 13.4 % N/A 0.3 %


		Six Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	September 26, 2020			September 28, 2019			$ Change		% Change		($ in thousands)	July 3, 2021			June 27, 2020			Change
Selling, general and administrative expenses:
Factory-built housing	Factory-built housing	$	61,462		$	62,331		$	(869)	(1.4)	%	Factory-built housing	$	35,497		$	30,737		$	4,760	15.5	%
Financial services	Financial services	9,314			9,016			298		3.3	%	Financial services	5,335			4,586			749		16.3	%
		$	70,776		$	71,347		$	(571)	(0.8)	%		$	40,832		$	35,323		$	5,509	15.6	%

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

Selling, general and administrative expenses related to factory-built housing ~~decreased~~increased between periods primarily from higher salary and incentive-based compensation expense. This was partially offset by a reduction in ~~legal expenses, partially offset by increased corporate-related expenses. During~~ the ~~three months ended September 26, 2020,~~amortization of the ~~Company incurred~~ ~~$0.5 million in expenses related~~ ~~to the SEC inquiry.~~ ~~However, the Company also received a $0.8 million~~additional Director and Officer insurance ~~recovery of prior expenses, resulting in a net~~ ~~benefit of~~ ~~$0.3 million during the period~~ ~~compared to~~ ~~$0.8 million in expense~~premium, added in the ~~second~~third quarter of fiscal year ~~2020. For the six months ended September 26, 2020, the Company recorded a net benefit of~~2019, which was $~~0.2 million~~ ~~for SEC inquiry related expenses compared to~~ ~~$1.6 million~~ ~~in expense in the comparable prior year period.~~

~~Selling, general and administrative expenses related to financial services increased due to increases in salaries and employee related expenses.~~

~~Interest Expense.~~

~~Interest expense was $0.2 million and $0.3~~2.1 million for the three months ended ~~September 26,~~June 27, 2020, with no expense in the current period.

In Financial services, Selling, general and ~~September 28, 2019, respectively. For the six months ended September 26, 2020~~administrative expenses increased primarily from greater expensing of deferred origination costs on higher loan sales and ~~September 28, 2019, Interest expense was $0.4 million and $0.8 million, respectively.~~ higher compensation expense.

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Other Components of Net Income.


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

Interest expense consists primarily of debt service on the ~~CountryPlace~~ 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 exercised its 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~~loan 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~~ The increase is driven by more interest income ~~net, declined primarily due to a $3.4 million net gain~~earned on ~~the sale of idle land that was recorded in the prior year period, as well as a reduction in interest earned in the current periods on~~larger cash and commercial loan receivables ~~given~~than the ~~lower interest rate environment. These declines were partially offset by increases in unrealized gains on corporate marketable equity securities.~~

~~Income tax expense.~~

~~Income tax expense was $4.5 million and $6.4 million for the three months ended September 26, 2020~~ ~~and September 28, 2019, respectively, for an effective income tax rate of 23.2% and 23.4%, respectively.~~ ~~Income tax expense for the six months ended September 26, 2020 and~~ ~~September 28, 2019 was~~ ~~$9.6 million~~ ~~and~~ ~~$12.5 million, respectively, for an effective income tax rate of 23.1% compared to an effective tax rate of 22.8% for the same period la~~st year. The higher effective tax rate for the six month period was primarily due to lower tax benefits from the exercise of stock options, which provided a benefit of $0.7 million compared to the $0.9 million in the same period last year.prior year period.

Liquidity and Capital Resources

~~The Company believes~~We believe that cash and cash equivalents at ~~September 26, 2020,~~July 3, 2021, 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~~the home-only lending programs. ~~However,~~Regardless, depending on ~~the Company's~~our operating results and strategic opportunities, itwe may need to seek additional or alternative sources of ~~financing.~~financing in the future. There can be no assurance that such financing would be available on satisfactory terms, if at all. If this financing were not available, it could be necessary for ~~the Company~~us to reevaluate ~~its~~our long-term operating plans to make more efficient use of ~~its~~our existing capital ~~resources.~~resources at such time. The exact nature of any changes to ~~the Company's~~our plans that would be considered depends on various factors, such as conditions in the factory-built housing industry and general economic conditions outside of ~~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~~the insurance subsidiary remains sufficient and ~~does~~do not believe that ~~its~~the ability to pay ordinary dividends to Cavco will be restricted per state regulations.

The following is a summary of the Company's cash flows for the ~~six~~three months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ respectively:


		Six Months Ended							Three Months Ended
($ in thousands)		September 26, 2020		September 28, 2019		$ Change
(in thousands)								(in thousands)	July 3, 2021		June 27, 2020		$ Change
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	$	55,738	Cash, cash equivalents and restricted cash at beginning of the fiscal year	$	339,307	$	255,607	$	83,700
Net cash provided by operating activities	Net cash provided by operating activities	74,609		43,593		31,016		Net cash provided by operating activities	24,275		35,692		(11,417)
Net cash used in investing activities		(82)		(18,308)		18,226
Net cash (used in) provided by investing activities								Net cash (used in) provided by investing activities	(3,616)		105		(3,721)
Net cash used in financing activities	Net cash used in financing activities	(865)		(19,345)		18,480		Net cash used in financing activities	(13,150)		(922)		(12,228)
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	$	123,460	Cash, cash equivalents and restricted cash at end of the period	$	346,816	$	290,482	$	56,334

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

~~Consumer~~proceeds from consumer loan ~~originations increased by $2.1 million to $82.4 million for the six months ended September 26, 2020 from $80.3 million for the six months ended September 28, 2019. Proceeds from~~ sales of ~~consumer loans provided $80.6~~$49.6 million ~~in cash,~~ compared to ~~$77.2~~$39.3 million in the previous year.

~~Cavco has entered into commercial~~Consumer loan ~~arrangements with certain distributors of its products under which~~originations decreased $4.7 million to $42.7 million for the ~~Company provides funds~~three months ended July 3, 2021 from $47.4 million for ~~Wholesale purchases. In addition,~~ the ~~Company has entered~~three months ended June 27, 2020 due to origination personnel shortages.

We enter into ~~direct~~ commercial loan arrangements with distributors, communities and developers under which the Company provides funds for financing homes. ~~The~~In addition, we enter into commercial loan arrangements with certain distributors of our products under which the Company ~~has~~provides funds for wholesale purchases. 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 invested~~we invest in and ~~developed~~develop home-only loan pools and lending programs to attract third party financier interest in order to grow sales of new homes through traditional distribution points. Increased lending activity resulted in a net use of $0.2 million while the prior period net activity provided $2.6 million.

~~Investing~~Net cash used in or provided by investing activities consist of buying and selling ~~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~~Greater cash was used in ~~net proceeds from investments~~the current period for the ~~six months ended September 26, 2020 compared to the same period last year, and~~ purchase of debt securities.

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

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

~~The Company's finance subsidiary~~We entered into secured credit facilities with independent third-party ~~banks. The proceeds were used~~banks to facilitate the origination of consumer home-only loans to be held for investment, secured by the manufactured homes which were subsequently pledged as collateral to the facilities. Upon completion of the draw down periods, these facilities were converted into an amortizing loan based on a ~~20-year~~20 or 25-year amortization period with a balloon payment due upon maturity. As of ~~September 26, 2020,~~July 3, 2021, the outstanding balance of the converted loans was ~~$9.8~~$8.0 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.

Critical Accounting Policies

~~On March 29, 2020, the Company 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 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~~three months ended ~~September 26, 2020,~~July 3, 2021, 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 1918 to the Consolidated Financial Statements for a discussion of ~~the Company's~~our related party transactions.

Off Balance Sheet Arrangements

See Note 1514 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.

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Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its President and Chief Executive Officer and its Principal Financial Officer, of the effectiveness of ~~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 26, 2020,~~July 3, 2021, its disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended ~~September 26, 2020,~~July 3, 2021 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~~See the information under the "Legal Matters" caption in ~~Part I, Item 3,~~Note ~~Legal Proceedings~~14, in the Form 10-K. The following describes legal proceedings, if any, that became reportable during the period ended September 26, 2020, and, if applicable, amends and restates descriptions of previously reported legal proceedings in which th~~ere have been material developments during such quarter.~~

Since 2018, the Company has been cooperating with an investigation by the enforcement staff of the SEC's Los Angeles Regional Offices regarding securities trading in personal and Company accounts directed by the Company's former CEO, 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 also made documents and personnel available to the ~~SEC staff and intends to continue cooperating with its investigation. The Company has been exploring the possibility of a settlement with the SEC staff in connection with the matter, but at this time, the Company~~Consolidated Financial Statements, which 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, 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, the Company’s Chief Accounting Officer since June 2020, is now serving as its Principal Financial Officer and Principal Accounting Officer.incorporated herein by reference.

~~As a result of the ongoing SEC investigation, 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 to~~ ~~$1.6 million~~ ~~in e~~xpenses 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, the Company also reviewed the sufficiency of its insurance coverage and, based on that work, Cavco's Board 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 ~~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.,~~ ~~was filed in the Superior Court for the State of California, Riverside on June 25, 2019 and~~ ~~Malik Griffin v. Fleetwood Homes, Inc~~., was filed in the Superior Court for the State of California, San Bernardino on September 19, 2019, 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 to jointly mediate both cases. The mediation is currently scheduled for January 27, 2021.

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.

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

Issuer Purchases of Equity Securities

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


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

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.

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Item 6. Exhibits


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

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

(1) Filed herewith.

(2) Furnished herewith.

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SIGNATURES

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


Cavco Industries, Inc.
Registrant

Signature	Title	Date

/s/ William C. Boor	Director, President and Chief Executive Officer	~~October 30, 2020~~August 6, 2021
William C. Boor	(Principal Executive Officer)

/s/ Paul Bigbee	Chief Accounting Officer	~~October 30, 2020~~August 6, 2021
Paul Bigbee	(Principal Financial and Accounting Officer)

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


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


	Operating Leases		Finance Leases		Total
Remainder of 2021	$	2,116	$	37	$	2,153
2022	4,154		73		4,227
2023	3,827		73		3,900
2024	3,487		73		3,560
2025	2,706		73		2,779
2026	2,799		49		2,848
Thereafter	2,206		0		2,206
	21,295		378		21,673
Less amount representing interest	(2,612)		(45)		(2,657)
	18,683		333		19,016
Less current portion	(4,081)		(72)		(4,153)
	$	14,602	$	261	$	14,863


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


	September 26, 2020
	Total		Level 1		Level 2		Level 3

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