What changed in this filing

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Item 1. Financial Statements

2020-10-30 compared with 2020-08-03 · 206 added, 235 removed, 625 unchanged (41% of the section changed)

3 unchanged sentences

(Dollars in thousands, except per share amounts)

September 26,

2020 March 28,

67 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

$ 257,976 $ 268,675 $ 512,777 $ 532,717

9 unchanged sentences

Other income, net

1,702 5,173 3,578 7,987

Income before income taxes

7 unchanged sentences

Applicable income taxes

( 2 ) — ( 7 ) ( 1 )

Net change in unrealized position of investments held

13 unchanged sentences

(Dollars in thousands)

Three Months Ended

2020 June 29,

Six Months Ended

September 26,

2020 September 28,

OPERATING ACTIVITIES

6 unchanged sentences

Non-cash interest income, net ( 2,596 ) ( 694 )

Gain on sale of property, plant and equipment, net 289 —

Loss (gain) on sale or retirement of property, plant and equipment, net 242 ( 3,370 )

Gain on investments and sale of loans, net ( 9,597 ) ( 7,683 )

11 unchanged sentences

Purchases of property, plant and equipment ( 3,773 ) ( 3,944 )

Proceeds from sale of property, plant and equipment and assets held for sale 5 42

Payments for acquisition, net — ( 15,937 )

Proceeds from sale of property, plant and equipment 77 64

Purchases of investments ( 4,440 ) ( 2,751 )

Proceeds from sale of investments 8,054 4,260

Net cash provided by (used in) investing activities 105 ( 1,469 )

Net cash used in investing activities ( 82 ) ( 18,308 )

FINANCING ACTIVITIES

10 unchanged sentences

Supplemental disclosures of noncash activity:

GNMA loans eligible for repurchase $ 16,170 $ 704

Right-of-use assets recognized $ 5,617 $ 13,464

10 unchanged sentences

Certain prior period amounts 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 there were no subsequent events requiring disclosure.

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 22 of the Consolidated Financial Statements Notes ("Notes") of the Company's Quarterly Report on Form 10-Q for the period ended September 26, 2020, there were no subsequent events requiring disclosure.

These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in the Company's 2020 Annual Report on Form 10-K for the year ended March 28, 2020 filed with the SEC on May 27, 2020 ("Form 10-K").

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements ("Notes").

The uncertainty created by the novel coronavirus COVID-19 ("COVID-19") have made such estimates more difficult and subjective.

Accordingly, actual results could differ from those estimates.

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.

11 unchanged sentences

Recently Issued or Adopted Accounting Standards.

On March 29, 2020, the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326):

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.

We adopted the standard by recognizing the cumulative effect of initially applying the new credit loss standard as an adjustment to the opening balance of Retained earnings.

The 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.

5 unchanged sentences

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.

From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted by the Company as of the specified effective dates.

Management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's Consolidated Financial Statements upon adoption.

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

Revenue from Contracts with Customers

The following table summarizes customer contract revenues disaggregated by reportable segment and the source of revenue for the three months ended June 27, 2020 and June 29, 2019 (in thousands):

Three Months Ended

2020 June 29,

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

Three Months Ended Six Months Ended

September 26, 2020 September 28, 2019 September 26,

2020 September 28,

Factory-built housing

11 unchanged sentences

777 274 1,547 1,429

16,232 15,711 32,173 29,830

Net revenue from financial services

2 unchanged sentences

$ 257,976 $ 268,675 $ 512,777 $ 532,717

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

(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") .

1 unchanged sentence

Restricted cash consisted of the following (in thousands):

September 26,

2020 March 28,

2 unchanged sentences

$ 17,026 $ 13,781

Corresponding amounts are recorded in Accounts payable and Accrued expenses and other current liabilities for customer payments and deposits, respectively.

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 June 29,

2020 September 28,

2019 March 30,

5 unchanged sentences

Investments consisted of the following (in thousands):

September 26,

2020 March 28,

4 unchanged sentences

46,867 46,139

Less current portion ( 16,589 ) ( 14,582 )

$ 30,278 $ 31,557

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

As of June 27, 2020 and March 28, 2020, non-marketable equity investments included contributions of $ 15.0 million t o equity-method investments in community-based initiatives that buy and sell the Company's homes and provide home-only financing to residents of certain manufactured home communities.

As of September 26, 2020 and March 28, 2020, non-marketable equity investments included contributions of $ 15.0 million t o equity-method investments in community-based initiatives that buy and sell the Company's homes and provide home-only financing to residents of certain manufactured home communities.

Other non-marketable equity investments included investments in other distribution operations.

The Company records investments in fixed maturity securities classified as available-for-sale at fair value and records the difference between fair value and cost in Accumulated other comprehensive income.

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

June 27, 2020

September 26, 2020

Residential mortgage-backed securities

14 unchanged sentences

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):

June 27, 2020

September 26, 2020

Less than 12 Months 12 Months or Longer Total

21 unchanged sentences

$ 4,481 $ ( 67 ) $ 1,880 $ ( 27 ) $ 6,361 $ ( 94 )

The Company is not aware of any changes to the securities or issuers that would indicate the losses above are indicative of credit impairment as of June 27, 2020, and the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost base.

The Company is 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.

Further, the Company does not intend to sell the investments, and it is more likely than not that the Company will not be required to sell the investments, before recovery of their amortized cost.

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

June 27, 2020

September 26, 2020

Due in less than one year $ 3,506 $ 3,515

5 unchanged sentences

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.

There were no gross gains or losses realized on the sale of available-for-sale debt securities during the three months ended June 27, 2020 or June 29, 2019.

For the three and six months ended September 26, 2020, there were no gross gains realized on the sale of available-for-sale debt securities and g ross losses realized were $ 5,000 .

There were no gross gains or losses realized on the sale of available-for-sale debt securities during the three and six months ended September 28, 2019.

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 for the three months ended June 27, 2020 and June 29, 2019 were as follows (in thousands):

Three Months Ended

2020 June 29,

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,

Marketable equity securities:

Net gains on securities held $ 1,278 $ 350 $ 3,275 $ 1,302

Net gains (losses) on securities sold 33 ( 1 )

Total net gain on marketable equity securities

Net (losses) gains on securities sold ( 27 ) ( 1 ) 6 ( 2 )

$ 1,251 $ 349 $ 3,281 $ 1,300

Inventories consisted of the following (in thousands):

September 26,

2020 March 28,

5 unchanged sentences

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

September 26,

2020 March 28,

3 unchanged sentences

Construction advances 14,063 13,400

Consumer loans receivable 95,104 85,990

88,040 85,990

Deferred financing fees and other, net ( 2,290 ) ( 1,919 )

1 unchanged sentence

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 is developed at the loan level and allocated to specific individual loans or to impaired loans.

A range of probable losses is calculated after giving consideration to, among other things, the loan characteristics and historical loss experience.

The Company then makes a determination of the best estimate within the range of loan losses.

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 that $ 1.7 million of the existing purchase discount for such consumer loans was related to credit factors and was reclassified to the allowance for loan loss upon adoption.

The remaining discount on the acquired consumer loans was determined to be related to non-credit factors and will be accredited into interest income over the life of the loans.

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.

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

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Allowance for loan losses at beginning of period $ 4,012 $ 421 $ 1,767 $ 415

Impact of adoption of ASU 2016-13 — — 2,276 —

Provision for loan losses 161 6

Change in estimated loan losses, net ( 94 ) ( 6 ) 67 —

Charge-offs ( 8 ) — ( 200 ) —

2 unchanged sentences

The consumer loans held for investment had the following characteristics:

September 26,

2020 March 28,

2 unchanged sentences

Weighted average months to maturity 163 164

The Company's policy is to place loans on non-accrual status when interest is past due and remains unpaid 90 days or more or when there is a clear indication that the borrower is unable or unwilling to make payments as they become due.

The Company will resume accrual of interest once these factors have been remedied.

Payments received on non-accrual loans are recorded on a cash basis, first to interest and then to principal.

Charge-offs occur when it becomes probable that outstanding amounts will not be recovered.

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,

4 unchanged sentences

$ 88,040 $ 85,990

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

June 27, 2020

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

September 26, 2020

2021 2020 2019 2018 2017 Prior Total March 28,

9 unchanged sentences

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 June 27, 2020 , 36 % of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and 17 % was concentrated in Florida.

As of September 26, 2020 , 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 % was concentrated in Florida.

Other than Texas and Florida, no state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of June 27, 2020 or March 28, 2020.

Other than Texas and Florida, no state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of September 26, 2020 or March 28, 2020.

Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home less the costs to sell.

1 unchanged sentence

the loan is charged off and the loss is recorded to the allowance for loan losses.

On a monthly basis, the fair value of the collateral is adjusted to the lower of the amount recorded at repossession or the estimated sales price less estimated costs to sell, based on current information.

Repossessed homes totaled approximately $ 842,000 and $ 1.5 million as of June 27, 2020 and March 28, 2020, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

Foreclosure or similar proceedings in progress totaled approximately $ 674,000 and $ 560,000 as of June 27, 2020 and March 28, 2020, respectively.

Repossessed homes totaled approximately $ 931,000 and $ 1.5 million as of September 26, 2020 and March 28, 2020, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

Foreclosure or similar proceedings in progress totaled approximately $ 240,000 and $ 560,000 as of September 26, 2020 and March 28, 2020, respectively.

Commercial Loans Receivable

8 unchanged sentences

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

September 26,

2020 March 28,

4 unchanged sentences

41,478 46,565

Less current portion of commercial loans receivable (including from affiliates), net ( 14,961 ) ( 15,423 )

$ 26,517 $ 31,142

The commercial loans receivable balance had the following characteristics:

September 26,

2020 March 28,

6 unchanged sentences

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 June 27, 2020.

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.

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

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Balance at beginning of period

$ 828 $ 191 $ 393 $ 180

Impact of adoption of ASU 2016-13 — — 435 —

Change in estimated loan losses, net

( 39 ) ( 28 ) ( 39 ) ( 17 )

Loans charged off, net of recoveries

Balance at end of period

$ 789 $ 163 $ 789 $ 163

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

June 27, 2020

September 26, 2020

2021 2020 2019 2018 2017 Total March 28,

5 unchanged sentences

$ 18,860 $ 14,076 $ 5,767 $ 2,238 $ 1,570 $ 42,511 $ 47,202

Loans are subject to regular review and are given management's attention whenever a problem situation appears to be developing.

Loans with indicators of potential performance problems are placed on watch list status and are subject to additional monitoring and scrutiny.

Nonperforming status includes loans accounted for on a non-accrual basis and accruing loans with principal payments 90 days or more past due.

The Company will resume accrual of interest once these factors have been remedied.

At June 27, 2020, there were no commercial loans 90 days or more past due that were still accruing interest.

Payments received on non-accrual loans are recorded on a cash basis, first to interest and then to principal.

At June 27, 2020, the Company was not aware of any potential problem loans that would have a material effect on the commercial loans receivable balance.

Charge-offs occur when it becomes probable that outstanding amounts will not be recovered.

As of June 27, 2020 and March 28, 2020, 10.0 % and 11.0 %, respectively, of the Company's outstanding commercial loans receivable principal balance was concentrated in California.

Other than California, no state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of June 27, 2020 or March 28, 2020.

The Company had concentrations with one independent third-party and its affiliates that equaled 19.8 % and 21.0 % of the net commercial loans receivables principal balance outstanding, all of which was secured, as of June 27, 2020 and March 28, 2020 respectively.

At September 26, 2020, there were no commercial loans 90 days or more past due that were still accruing interest and the Company was 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 % of the Company's outstanding commercial loans receivable principal balance was concentrated in Arizona and 10.0 % was concentrated in California.

As of March 28, 2020, 11.0 % of the Company's outstanding commercial loans receivable principal balance was concentrated in California.

No other state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of September 26, 2020 or March 28, 2020.

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

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

1 unchanged sentence

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

September 26,

2020 March 28,

6 unchanged sentences

$ 77,836 $ 77,190

Depreciation expense was $ 1.4 million and $ 1.2 million for the three months ended June 27, 2020 and June 29, 2019, respectively.

Depreciation expense was $ 1.4 million and $ 1.3 million for the three months ended September 26, 2020 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.

1 unchanged sentence

The Company leases certain production and retail locations, office space and equipment.

The Company determines if a contract or arrangement is, or contains, a lease at inception.

Lease agreements with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet.

Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term by one to three years or more.

Generally, the exercise of lease renewal options is at the Company's discretion.

Some agreements also include options to purchase the leased property.

The estimated life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option that the Company is reasonably certain to exercise.

The following table provides information about the financial statement classification of the Company's lease balances reported within the Consolidated Balance Sheets as of June 27, 2020 and March 28, 2020 (in thousands):

Classification June 27,

2020 March 28,

Operating lease assets Operating lease right-of-use assets

$ 18,378 $ 13,894

Finance lease assets Property, plant and equipment, net (1)

Total lease assets $ 19,393 $ 14,919

Lease Liabilities

Operating lease liabilities Accrued expenses and other current liabilities $ 4,097 $ 4,170

Finance lease liabilities Current portion of secured credit facilities and other

Operating lease liabilities Operating lease liabilities 15,398 10,743

Finance lease liabilities Secured credit facilities and other 275 289

Total lease liabilities $ 19,844 $ 15,279

(1) Recorded net of accumulated amortization of $ 113,000 and $ 103,000 as of June 27, 2020 and March 28, 2020, respectively.

The balance increased from a five-year lease extension at one of our active manufacturing facilities.

The present value of the minimum payments for future fiscal years under non-cancelable leases as of June 27, 2020 were as follows (in thousands):

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.

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

4 unchanged sentences

2025 2,706 73 2,779

2026 2,799 49 2,848

Thereafter 2,206 — 2,206

Total lease payments 22,342 399 22,741

Amount representing interest ( 2,847 ) ( 50 ) ( 2,897 )

Present value of lease liabilities $ 19,495 $ 349 $ 19,844

The following table provides information about the weighted average remaining lease terms and weighted average discount rates as of June 27, 2020:

Remaining Lease Term (Years) Discount Rate

Operating leases 5.8 4.5 %

Finance leases 5.3 5.0 %

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

Goodwill and Other Intangibles

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

June 27, 2020 March 28, 2020

September 26, 2020 March 28, 2020

Amount Accumulated

8 unchanged sentences

1,100 — 1,100 1,100 — 1,100

Total indefinite-lived intangible assets

85,090 — 85,090 85,090 — 85,090

3 unchanged sentences

$ 97,814 $ ( 7,988 ) $ 89,826 $ 97,814 $ ( 7,614 ) $ 90,200

Amortization expense recognized on intangible assets was $ 187,000 and $ 80,000 for the three months ending June 27, 2020 and June 29, 2019, respectively.

Amortization expense recognized on intangible assets was $ 187,000 and $ 151,000 for the three months ended September 26, 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.

Accrued Expenses and Other Current Liabilities

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

September 26,

2020 March 28,

Salaries, wages and benefits $ 23,958 $ 25,885

Customer deposits $ 30,153 $ 22,055

Salaries, wages and benefits 29,375 25,885

Company repurchase options on certain loans sold 23,854 7,444

Unearned insurance premiums 21,907 20,614

1 unchanged sentence

Accrued volume rebates 11,040 9,801

Company repurchase options on certain loans sold 8,714 7,444

Insurance loss reserves 6,887 5,582

1 unchanged sentence

Operating lease liabilities 4,081 4,170

Reserve for repurchase commitments 2,475 2,679

Accrued taxes 3,247 1,908

Reserve for repurchase commitments 2,463 2,679

Other 16,545 16,002

1 unchanged sentence

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

Three Months Ended

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Balance at beginning of period $ 18,538 $ 17,760 $ 18,678 $ 17,069

Purchase accounting additions — 1,192 — 1,192

Charged to costs and expenses 6,232 6,765 12,579 14,586

2 unchanged sentences

Debt and Finance Lease Obligations

Debt and finance lease obligations primarily consisted of secured credit facilities at the Company's finance subsidiary and lease obligations in which it is expected that the Company will obtain ownership of a leased asset at the end of the lease term.

Debt and finance lease obligations primarily consist of secured credit facilities at the Company's finance subsidiary and lease obligations in which it is expected that the Company will obtain ownership of a leased asset at the end of the lease term.

The following table summarizes debt and finance lease obligations (in thousands):

September 26,

2020 March 28,

4 unchanged sentences

14,051 14,953

Less current portion ( 2,118 ) ( 2,248 )

$ 11,933 $ 12,705

The Company's finance subsidiary 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.

2 unchanged sentences

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 June 27, 2020, the outstanding balance of the converted loans was $ 10.2 million at a weighted average interest rate of 4.91 %.

As of September 26, 2020, the outstanding balance of the converted loans was $ 9.8 million at a weighted average interest rate of 4.91 %.

See Note 9 for further discussion of the finance lease obligations.

1 unchanged sentence

Certain of Standard Casualty's premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements.

The ceded reinsurance agreements provide Standard Casualty with increased capacity to write larger risks and maintain its exposure to loss within its capital resources.

Standard Casualty remains obligated for amounts ceded in the event that the reinsurers do not meet their obligations.

2 unchanged sentences

Three Months Ended

June 27, 2020 June 29, 2019

September 26, 2020 September 28, 2019

Written Earned Written Earned

6 unchanged sentences

$ 9,655 $ 9,335 $ 7,910 $ 8,216

Six Months Ended

September 26, 2020 September 28, 2019

Written Earned Written Earned

Direct premiums

$ 10,680 $ 10,330 $ 9,212 $ 9,223

Assumed premiums—nonaffiliated

15,246 13,833 14,273 13,027

Ceded premiums—nonaffiliated

( 6,055 ) ( 6,055 ) ( 6,016 ) ( 6,016 )

$ 19,871 $ 18,108 $ 17,469 $ 16,234

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 of the risk of loss per reinsurance.

1 unchanged sentence

After this limit, amounts are recoverable by Standard Casualty through reinsurance for catastrophic losses in excess of $ 1.5 million per occurrence, up to a maximum of $ 43.5 million in the aggregate.

Purchasing reinsurance contracts protects Standard Casualty from frequency and/or severity of losses incurred on insurance policies issued, such as in the case of a catastrophe that generates a large number of serious claims on multiple policies at the same time.

Under these agreements, the Company may be required to repurchase and reestablish its reinsurance contracts for the remainder of the year to the extent that they have been utilized.

The Company has reinsurance reinstatement premium protection coverage, which will assist in reducing premium repurchase expense in the event of a catastrophic weather claim.

Our tax provision for interim periods is determined by estimating an annual effective tax rate, adjusted for discrete items arising in the fiscal quarters.

Each quarter we update the annual effective tax rate and record a year to date adjustment to the tax provision.

Income taxes totaled $ 5.0 million in the first quarter of fiscal 2021, a 23.1 % reported effective tax rate compared to $ 6.1 million in the first quarter of fiscal 2020, a 22.2 % effective tax rate.

The higher effective tax rate in the current quarter was primarily from lower tax benefits from the exercise of stock options compared to the same period last year.

Commitments and Contingencies

2 unchanged sentences

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.

The risk of loss under these agreements is spread over numerous distributors.

The price the Company is obligated to pay generally declines over the period of the agreement ( generally 18 to 36 months, calculated from the date of sale to the distributor ) and the risk of loss is further reduced by the resale value of the repurchased homes.

The maximum amount for which the Company was liable under such agreements approximated $ 78.8 million and $ 79.3 million at June 27, 2020 and March 28, 2020, respectively, without reduction for the resale value of the homes.

The Company applies ASC 460, Guarantees ("ASC 460"), and ASC 450-20, Loss Contingencies ("ASC 450-20"), to account for its liability for repurchase commitments.

Under the provisions of ASC 460, during the period in which a home is sold (inception of the purchase commitment), the Company records the greater of the estimated value of the non-contingent obligation (accounted for pursuant to ASC 460) or a contingent liability for each repurchase arrangement (accounted for under the provisions of ASC 450-20) as a liability.

The Company had a reserve for repurchase commitments of $ 2.5 million and $ 2.7 million at June 27, 2020 and March 28, 2020, respectively.

The maximum amount for which the Company was liable under such agreements approximated $ 77.6 million and $ 79.3 million at September 26, 2020 and March 28, 2020, respectively, without reduction for the resale value of the homes.

The Company applies ASC 460, 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 million at September 26, 2020 and March 28, 2020, respectively.

Letter of Credit.

To secure certain reinsurance contracts, Standard Casualty maintains an irrevocable letter of credit of $ 11.0 million to provide assurance that Standard Casualty will fulfill its reinsurance obligations.

This letter of credit is secured by certain of Standard Casualty's investments.

There were no amounts outstanding against the letter of credit at either June 27, 2020 or March 28, 2020.

To secure certain reinsurance contracts, Standard Casualty maintained an irrevocable letter of credit of $ 11.0 million to provide assurance that Standard Casualty would fulfill its reinsurance obligations.

The letter of credit was released on July 11, 2020.

Construction-Period Mortgages.

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

September 26,

2020 March 28,

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Cumulative advances ( 14,063 ) ( 13,400 )

Remaining construction contingent commitment $ 19,136 $ 17,736

$ 25,031 $ 17,736

Representations and Warranties of Mortgages Sold .

CountryPlace sells loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and finances certain loans with long-term credit facilities secured by the respective loans.

In connection with these activities, CountryPlace provides to the GSEs, whole-loan purchasers and lenders, representations and warranties related to the loans sold or financed.

These representations and warranties generally relate to the ownership of the loan, the validity of the lien securing the loan, the loan's compliance with the criteria for inclusion in the sale transactions, including compliance with underwriting standards or loan criteria established by the buyer, and CountryPlace's ability to deliver documentation in compliance with applicable laws.

Generally, representations and warranties may be enforced at any time over the life of the loan.

In connection with these activities, CountryPlace provides to the GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed.

Upon a breach of a representation, CountryPlace may be required to repurchase the loan or to indemnify a party for incurred losses.

Repurchase demands and claims for indemnification payments are reviewed on a loan-by-loan basis to validate if there has been a breach requiring repurchase.

CountryPlace manages the risk of repurchase through underwriting and quality assurance practices and by servicing the mortgage loans to investor standards.

The Company maintains a reserve for these contingent repurchase and indemnification obligations.

This reserve of $ 1.1 million as of June 27, 2020 and $ 1.0 million as of March 28, 2020, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss.

CountryPlace considers a variety of assumptions, including borrower performance (both actual and estimated future defaults), historical repurchase demands and loan default rates to estimate the liability for loan repurchases and indemnifications.

During the three months ended June 27, 2020, no claim request resulted in the execution of an indemnification agreement or in the repurchase of a loan.

This reserve of $ 1.3 million as of September 26, 2020 and $ 1.0 million as of March 28, 2020, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss.

During the six months ended September 26, 2020, no claim request resulted in the execution of an indemnification agreement or in the repurchase of a loan .

Interest Rate Lock Commitments .

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These IRLCs bind the Company 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 such, outstanding IRLCs are subject to interest rate risk and related loan sale price risk during the period from the date of the IRLC through the earlier of the loan sale date or IRLC expiration date.

The loan commitments generally range between 30 and 180 days;

however, borrowers are not obligated to close the related loans.

As a result, the Company is subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs unless the commitment is successfully paired with another loan that may mitigate losses from fallout.

As of June 27, 2020, CountryPlace had outstanding IRLCs with a notional amount of $ 27.0 million, which are recorded at fair value in accordance with ASC 815, Derivatives and Hedging ("ASC 815").

ASC 815 clarifies that the expected net future cash flows related to the associated servicing of a loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings.

The estimated fair value of IRLCs is recorded in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

The fair value of IRLCs is based on the value of the underlying loan adjusted for:

(1) estimated cost to complete and originate the loan and (2) the estimated percentage of IRLCs that will result in closed loans.

The initial and subsequent changes in the value of IRLCs are a component of gain (loss) on loans held for sale.

During the three months ended June 27, 2020 and June 29, 2019, the Company recognized losses of $ 125,000 and $ 1,000 , respectively, on outstanding IRLCs.

As of September 26, 2020, CountryPlace had outstanding IRLCs with a notional amount of $ 23.2 million, which are recorded at fair value in accordance with ASC 815, Derivatives and Hedging .

During the three months ended September 26, 2020 and September 28, 2019, the Company recogn ized 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 of $ 144,000 and $ 3,000 , respectively, on outstanding IRLCs.

Forward Sales Commitments .

CountryPlace manages the risk profiles of a portion of its outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments.

As of June 27, 2020, CountryPlace had $ 60.8 million in outstanding notional forward sales of MBSs and forward sales commitments.

As of September 26, 2020, CountryPlace had $ 58.8 million in outstanding notional forward sales of MBSs and forward sales commitments.

Commitments for forward sales of whole loans are typically in an amount proportionate with the amount of IRLCs expected to close in particular time frames, assuming no change in mortgage interest rates, for the respective loan products intended for whole loan sale.

The estimated fair values of forward sales of MBS and forward sale commitments are based on quoted market values and are recorded within Prepaid expenses and other current assets in the Consolidated Balance Sheets.

During the three months ended June 27, 2020 and June 29, 2019 , the Company recognized gains of $ 1.0 million and $ 35,000 on forward sales and whole loan sale commitments, respectively.

The estimated fair values of forward sales of MBS and whole loan sale commitments are based on quoted market values and are recorded within Prepaid expenses and other current assets in the Consolidated Balance Sheets.

During the three months ended September 26, 2020 and September 28, 2019 , the Com pany recognized gains of $ 118,000 and $ 49,000 on forward sales of MBS and whole loan sale commitments, respectively.

During the six months ended September 26, 2020 and September 28, 2019, the Company recognized gains of $ 1.1 million and $ 84,000 on forward sales of MBS and whole loan sale commitments, respectively.

Legal Matters.

Since 2018, the Company has been cooperating with an investigation by the enforcement staff of the SEC regarding trading in personal and Company accounts directed by the 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 in early 2019, the results of the Audit Committee's work were shared with the Company's auditors, listing exchange and the SEC staff.

The Company continues to make documents and personnel available to the SEC staff and intends to continue cooperating with its investigation.

Since 2018, the Company has been cooperating with an investigation by the enforcement staff of the SEC's Los Angeles Regional Office regarding securities trading in personal and Company accounts directed by the Company's former Chief Executive Officer, Joseph Stegmayer.

The Audit Committee of the Board conducted an internal investigation led by independent legal counsel and other advisers and, following the completion of its work in early 2019, the Audit Committee shared the results of its work with the Company's auditors, listing exchange and the SEC staff.

The Company has 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, but at this time, the Company is unable to estimate the amount of a potential loss, if any.

Cavco Industries, Inc., was filed in the Superior Court for the State of California, Riverside on June 25, 2019 and Malik Griffin v.

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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, which reserves are included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

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 .

Stockholders' Equity

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

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

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Balance, June 27, 2020 9,177,064 $ 92 $ 252,672 $ 371,085 $ 158 $ 624,007

The following table represents changes in stockholders' equity during the three months ended June 29, 2019 (dollars in thousands):

Net income — — — 15,049 — 15,049

Issuance of common stock under stock incentive plans 11,098 — 522 — — 522

Stock-based compensation — — 1,103 — — 1,103

Other comprehensive income, net — — — — 7 7

Balance, September 26, 2020 9,188,162 $ 92 $ 254,297 $ 386,134 $ 165 $ 640,688

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

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Balance, June 29, 2019 9,111,624 $ 91 $ 248,825 $ 301,360 $ 61 $ 550,337

Net income — — — 20,885 — 20,885

Issuance of common stock under stock incentive plans 15,842 — 941 — — 941

Stock-based compensation — — 818 — — 818

The Company maintains stock incentive plans whereby stock option grants or awards of restricted stock may be made to certain officers, directors and key employees.

The plans, which are shareholder approved, permit the award of up to 1,650,000 shares of the Company's common stock, of which 246,157 shares were still available for grant as of June 27, 2020.

Upon option exercise, new shares of the Company's common stock are issued and when restricted stock vests, restricted stock shares issued become unrestricted.

Awards may not be granted below 100 % of the fair market value of the Company's common stock at the date of grant and generally expire seven years from the date of grant.

Stock options and awards of restricted stock vest over a defined period or based on certain performance criteria, as determined by the plan administrator (the Compensation Committee of the Board of Directors, which consists of independent directors), but typically is no more than five years .

The stock incentive plans provide for accelerated vesting of stock options and removal of restrictions on restricted stock awards upon a change in control (as defined in the plans).

Stock-based compensation charged against income for the three months ended June 27, 2020 and June 29, 2019 was $ 945,000 and $ 630,000 , respectively.

As of June 27, 2020, total unrecognized compensation cost related to stock options was approximately $ 5.7 million and the related weighted-average period over which it is expected to be recognized is approximately 2.49 years.

Stock Options.

The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes-Merton option pricing model, which requires the input of assumptions.

The Company estimates the risk-free interest rate based on the U.S.

Treasury security rate in effect at the time of the grant.

The expected life of the options, volatility and dividend rates are estimated based on historical data.

The following table summarizes stock option activity for the three months ended June 27, 2020:

Outstanding at March 28, 2020 364,174

Granted 15,250

Exercised ( 9,100 )

Canceled or expired ( 6,200 )

Outstanding at June 27, 2020 364,124

Exercisable at June 27, 2020 194,058

Restricted Stock Awards.

The fair value of restricted stock awards is estimated as the closing price of the Company's common stock on the date of grant.

A summary of restricted stock award activity is as follows:

Number of Shares

Performance-Based Awards Service-Based Awards Total

Outstanding at March 28, 2020 7,305 4,500 11,805

Awarded 7,300 — 7,300

Released — — —

Canceled or expired ( 350 ) — ( 350 )

Outstanding at June 27, 2020 14,255 4,500 18,755

Unvested target stock awards that vest based upon performance conditions through fiscal year 2022 6,955

Unvested target stock awards that vest based upon performance conditions through fiscal year 2023 7,300

Other comprehensive loss, net — — — — 23 23

Balance, September 28, 2019 9,127,466 $ 91 $ 250,584 $ 322,245 $ 84 $ 573,004

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

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

$ 15,049 $ 20,885 $ 31,723 $ 42,167

7 unchanged sentences

$ 1.62 $ 2.25 $ 3.42 $ 4.56

Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended June 27, 2020 and June 29, 2019 were 39,996 and 60,600 , respectively.

In addition, 14,255 and 7,600 outstanding restricted share awards were excluded from the calculation of diluted earnings per share for both the three months ended June 27, 2020 and June 29, 2019, respectively, because the underlying performance criteria had not yet been met.

Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended September 26, 2020 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 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.

Fair Value Measurements

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

June 27, 2020 March 28, 2020

September 26, 2020 March 28, 2020

Value Estimated

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( 14,051 ) ( 13,638 ) ( 14,953 ) ( 15,592 )

See Note 19, Fair Value Measurements and the Fair Value of Financial Instruments caption in Note 1, Summary of Significant Accounting Policies in our 2020 Form 10-K for more information on the input levels and methodologies we use in determining fair value.

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 in determining fair value.

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

June 27, 2020

September 26, 2020

Total Level 1 Level 2 Level 3

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

(3) Gains or losses on derivatives are recognized in current period earnings through Cost of sales.

(4) Changes in the fair value of mortgage servicing rights are recognized in the current period earnings through Net revenue.

No transfers between Level 1, Level 2 or Level 3 occurred during the three months ended June 27, 2020.

The Company's policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period.

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

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

No 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):

June 27, 2020

September 26, 2020

Total Level 1 Level 2 Level 3

3 unchanged sentences

19,939 — — 19,939

Loans held—construction advances

12,240 — — 12,240

Construction advances 14,063 — — 14,063

Commercial loans receivable

10 unchanged sentences

15,492 — — 15,492

Loans held—construction advances

13,400 — — 13,400

Construction advances 13,400 — — 13,400

Commercial loans receivable

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21,536 — — 21,536

No recent sales have been executed in an orderly market of manufactured home loan portfolios with comparable product features, credit characteristics or performance.

Therefore, loans held for investment are measured using Level 3 inputs that are calculated using estimated discounted future cash flows from the evaluation of loan credit quality and performance history to determine expected prepayments and defaults on the portfolio, discounted with rates considered to reflect current market conditions.

Loans held for sale are measured at the lower of cost or fair value using inputs that consist of quoted market prices for mortgage-backed securities or investor purchase commitments for similar types of loan commitments on hand from investors.

These loans are held for relatively short periods, typically no more than 45 days.

As a result, changes in loan-specific credit risk are not a significant component of the change in fair value and changes are largely driven by changes in interest rates or investor yield requirements.

The cost of loans held for sale was lower than the fair value as of June 27, 2020.

As noted above, activity in the manufactured housing asset-backed securities market is infrequent with no reliable market price information.

As such, to determine the fair value of securitized financings, management evaluates the credit quality and performance history of the underlying loan assets to estimate the expected prepayment of the debt and credit spreads, based on market activity for similar rated bonds from other asset classes with similar durations.

The Company records impairment losses on long-lived assets held for sale when the fair value of such long-lived assets is below their carrying values.

The Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts.

No impairment charges were recorded during the three months ended June 27, 2020.

No impairment charges were recorded during the six months ended September 26, 2020.

Mortgage Servicing .

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MSRs are initially recorded at fair value.

Changes in fair value subsequent to the initial capitalization are recorded in the Company's results of operations.

The Company recognizes MSRs on all loans sold to investors that meet the requirements for sale accounting and for which servicing rights are retained.

The Company applies fair value accounting to MSRs, with all changes in fair value recorded to Net revenue in accordance with ASC 860-50, Servicing Assets and Liabilities .

The fair value of MSRs is based on the present value of the expected future cash flows related to servicing these loans.

The revenue components of the cash flows are servicing fees, interest earned on custodial accounts and other ancillary income.

The expense components include operating costs related to servicing the loans (including delinquency and foreclosure costs) and interest expenses on servicer advances that are consistent with the assumptions major market participants use in valuing MSRs.

The expected cash flows are primarily impacted by prepayment estimates, delinquencies and market discounts.

Generally, the value of MSRs is expected to increase when interest rates rise and decrease when interest rates decline, due to the effect those changes in interest rates have on prepayment estimates.

Other factors noted above as well as the overall market demand for MSRs may also affect the valuation.

Changes in fair value subsequent to the initial capitalization are recorded in earnings.

September 26,

2020 March 28,

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In the ordinary course of business, the Company sells homes and lends to certain of these operations through its commercial lending programs.

For the three months ended June 27, 2020 and June 29, 2019, the total amount of sales to related parties were $ 12.7 million and $ 13.2 million, respectively.

As of June 27, 2020, receivables from related parties included $ 2.5 million of accounts receivable and $ 10.3 million of commercial loans outstanding.

For the three months ended September 26, 2020 and September 28, 2019, the total amount of sales to related parties was $ 10.3 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 million and $ 23.8 million, respectively.

As of September 26, 2020, receivables from related parties included $ 2.9 million of accounts receivable and $ 7.3 million of commercial loans outstanding.

As of March 28, 2020, receivables from related parties incl uded $ 1.7 million of accounts receivable and $ 8.2 million of commercial loans outstanding.

1 unchanged sentence

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 transaction was accounted for as a business combination and the results of operations have been included in the accompanying Consolidated Financial Statements since the date of acquisition.

The Company has not made any purchase accounting adjustments during the quarter.

However, the allocation of the purchase price is still preliminary and will be finalized upon completion of the analysis of the fair values of Destiny Home's assets and specified liabilities.

The Company will finalize the amounts recognized as we obtain the information necessary to complete the analysis.

We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date.

Destiny Homes contributed Net revenue of $ 9.8 million and increased consolidated Net income on the Company's Consolidated Statements of Comprehensive Income by $ 125,000 for the three months ended June 27, 2020.

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

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

$ 257,976 $ 270,239 $ 512,777 $ 543,951

1 unchanged sentence

Diluted net income per share

1.62 2.28 3.42 4.74

Business Segment Information

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The following table details Net revenue and Income before income taxes by segment (in thousands):

Three Months Ended

2020 June 29,

Three Months Ended Six Months Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Factory-built housing $ 240,967 $ 252,690 $ 479,057 $ 501,458

5 unchanged sentences

$ 19,596 $ 27,255 $ 41,276 $ 54,617

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements