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 financial performance
and operating results; the expected effect of certain risks and uncertainties on
the Company's business, financial condition and results of operations; economic
conditions and consumer confidence; operational and legal risks; how the Company
may be affected by the novel coronavirus COVID-19 ("COVID-19") pandemic;
governmental regulations and legal proceedings; the availability of favorable
consumer and wholesale manufactured home financing; market interest rates and
Company investments and the ultimate outcome of the Company's 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 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 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 assumptions and expectations differ from actual results, the Company's
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 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 Annual Report on Form 10-K ("Form 10-K"), which Risk Factors are
incorporated herein.
Introduction
The following should be read in conjunction with Cavco Industries, Inc. and its
subsidiaries' (collectively, 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
Consolidated Financial Statements.
Company Overview
Headquartered in Phoenix, Arizona, the Company designs and produces
factory-built homes primarily distributed through a network of independent and
Company-owned retailers, planned community operators and residential developers.
The Company is 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 also one of the leading producers of park
model RVs, vacation cabins and systems-built commercial structures, as well as
modular homes built primarily under the Nationwide Homes brand. Cavco's finance
subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), is an approved
Federal National Mortgage Association and Federal Home Loan Mortgage Corporation
seller/servicer and a Government National Mortgage Association ("Ginnie Mae")
mortgage-backed securities issuer that offers conforming mortgages,
non-conforming mortgages and home-only loans to purchasers of factory-built
homes. Cavco's insurance subsidiary, Standard Casualty Co., provides property
and casualty insurance to owners of manufactured homes.
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The Company operates 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 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% for the first 8 months of calendar year 2020 compared
to the same period in the prior year. The industry offers solutions to the
affordable housing crisis. 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 products have
traditionally competed with rental housing's monthly payment affordability. With
respect to the general rise in demand for rental housing, during fiscal year
2020, the Company realized a larger proportion of orders and interest from
developers and community owners for new manufactured homes intended for use as
rental homes, alternative dwelling units and seasonal living.
The two largest manufactured housing consumer demographics, young adults and
those who are age 55 and older, are both growing. First-time and "move-up"
buyers of affordable homes are historically among the largest segments of new
manufactured home purchasers. Included in this group are lower-income households
that may be limited in their ability to qualify for a new home loan by their
particular employment status and down payment capability. Consumer confidence,
as an indicator of retirement security, is especially important among
manufactured home buyers interested in our products for seasonal or retirement
living.
The Company seeks out niche market opportunities where its 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 a conservative cost structure in an effort to build added
value into its homes and has worked diligently to maintain a solid financial
position. The balance sheet strength, including the position in cash and cash
equivalents, helps avoid liquidity problems and enable the Company to act
effectively as market opportunities or challenges present themselves.
The Company continues to make certain commercial loan programs available to
members of the Company's independent 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 funds for financing homes (see Note 7 to the Consolidated
Financial Statements). The Company's involvement in commercial loans helps to
increase the availability of manufactured home financing to distributors,
communities and developers. Participation in wholesale financing is helpful to
these customers and provides additional opportunity for product exposure to
potential home buyers. These initiatives support the Company's ongoing efforts
to expand product distribution. However, these initiatives do expose the Company
to risks associated with the creditworthiness of this customer base and the
Company's 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.
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The lack of an efficient secondary market for manufactured home-only loans and
the limited number of institutions providing such loans results in higher
borrowing costs for home-only loans and continues to constrain industry growth.
The Company is working 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
to invest in community-based lending initiatives that provide home-only
financing to new residents of certain manufactured home communities. Our
mortgage subsidiary also develops and invests in home-only lending programs to
grow sales of homes through traditional distribution points. The Company
believes that growing its investment and participation in home-only lending may
provide additional sales growth opportunities for the financial services
segment, as well as provide a means that could lead to increased home sales for
its factory-built housing operations.
COVID-19 Impact and Strategy
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 declined from adjusting home production processes to
comply with health guidelines, managing higher factory employee absenteeism,
limited new-hire availability and certain building material supply shortages.
Accordingly, the Company's total average plant capacity utilization rate was
approximately 65% during the second fiscal quarter of 2021, ending the quarter
at approximately 70%. This is lower than pre-pandemic levels of more than 80%.
Sales order activity has continued to improve during the second fiscal quarter
of 2021 to the point where home sales order rates were nearly 65% higher than
the comparable prior year quarter. Increased order volume is the result of a
higher number of well-qualified home buyers making purchase decisions, supported
by reduced home loan interest rates. Increased orders outpaced the challenging
production environment during the quarter, raising order backlogs 134% to $321
million at September 26, 2020, compared to $137 million at September 28, 2019
and $157 million at June 27, 2020. The backlog of home orders excludes orders
that have been paused or canceled at the request of the customer. Distributors
may cancel orders prior to production without penalty. After production of a
particular home has commenced, the order becomes non-cancelable and the
distributor is obligated to take delivery of the home. Accordingly, until
production of a particular home has commenced, we do not consider order backlog
to be firm orders.
The financial services segment has also maintained operations since the onset of
the COVID-19 pandemic, largely through the implementation of work-from-home
solutions. In addition to accepting and processing new applications for home
loans and insurance policies, the financial services operations continue to
assist customers in need and service existing loans and insurance policies while
complying with state and federal regulations regarding loan forbearance, home
foreclosures and policy cancellations. Because of these economic conditions,
loan loss reserves were increased at the end of fiscal year 2020 and continue to
be adjusted as considered appropriate.
Certain loans serviced by CountryPlace for investors expose the Company to cash
flow decreases if customers do not make contractual monthly payments of
principal and interest in a timely manner. Our primary investor, Ginnie Mae,
permits cash obligations on loans in forbearance from COVID-19 to be offset by
other incoming cash flows from loans such as loan pre-payments. While monthly
collections of principal and interest from borrowers has normally exceeded
scheduled principal and interest payments owed to investors, this could be
negatively impacted given various state and local emergency orders in light of
COVID-19.
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It is difficult to predict the future impacts of the COVID-19 pandemic on
housing demand, employee availability, supply chain and Company performance and
operations. The Company continues 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
workforce 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

($ in thousands, except homes sold and September 26, September 28, revenue per home sold)

                               2020                    2019                 Change               % Change
Net revenue:
Factory-built housing                          $      240,967          $      252,690          $ (11,723)                    (4.6) %
Financial services                                     17,009                  15,985              1,024                      6.4  %
                                               $      257,976          $      268,675          $ (10,699)                    (4.0) %

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

Net factory-built housing revenue per home
sold                                           $       70,314          $       66,832          $   3,482                      5.2  %


                                                           Six Months Ended

($ in thousands, except homes sold and September 26, September 28, revenue per home sold)

                               2020                    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 in Net revenue was primarily
due to 9% and 11% lower home sales volume during the three and six months ended
September 26, 2020, respectively. These declines were partially offset by higher
home selling prices compared to the same periods last year. Note that Destiny
Homes was purchased in August 2019 and Lexington Homes was closed in June 2020.
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"). Wholesale sales prices are primarily comprised of the home and the
cost to ship the home from a manufacturing facility to the home-site. Retail
home prices include these items plus retail markup, as well as items that are
largely subject to home buyer discretion, including, but not limited to,
installation, utility connections, site improvements, landscaping and additional
services. Other factors include fluctuations in product mix, the result of home
buyer tastes and preferences as they select home types/models, as well as
optional home upgrades when purchasing the home.
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As discussed above, changes to the proportion of home sales among the
distribution channels between reporting periods impact the overall net revenue
per home sold. For the three and six months ended September 26, 2020, the
Company sold 2,664 and 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.
Financial services segment revenue increased 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 unrealized gains on marketable equity
securities in the insurance subsidiary's portfolio, compared to $0.2 million in
unrealized gains in each of the prior year periods. These overall increases were
partially offset by lower interest income earned on the acquired consumer loan
portfolios that continue to amortize.
Gross Profit.
                                              Three Months Ended
                                      September 26,       September 28,
 ($ in thousands)                          2020                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
                                      September 26,       September 28,
 ($ in thousands)                          2020                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 for the three
month period was flat as compared to the same period last year, and decreased
for the six months ended September 26, 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 and lower interest income earned on the acquired consumer loan
portfolios that continue to amortize.
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Selling, General and Administrative Expenses.
                                                          Three Months Ended
                                                 September 26,          September 28,
($ in thousands)                                      2020                   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
                                                 September 26,          September 28,
($ in thousands)                                      2020                   2019               $ Change               % Change
Selling, general and administrative expenses:
Factory-built housing                           $      61,462          $      62,331          $     (869)                    (1.4) %
Financial services                                      9,314                  9,016                 298                      3.3  %
                                                $      70,776          $      71,347          $     (571)                    (0.8) %

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


Selling, general and administrative expenses related to factory-built housing
decreased between periods primarily from a reduction in legal expenses,
partially offset by increased corporate-related expenses. During the three
months ended September 26, 2020, the Company incurred $0.5 million in expenses
related to the SEC inquiry. However, the Company also received a $0.8 million
insurance recovery of prior expenses, resulting in a net benefit of $0.3 million
during the period compared to $0.8 million in expense in the second quarter of
fiscal year 2020. For the six months ended September 26, 2020, the Company
recorded a net benefit of $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 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, Interest expense was $0.4
million and $0.8 million, respectively. 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 receivable balances, interest income earned on cash balances and gains and
losses from the sale of property, plant and equipment.
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Other income, net, declined primarily due to a $3.4 million net gain on the sale
of idle land that was recorded in the prior year period, as well as a reduction
in interest earned in the current periods on cash and commercial loan
receivables, given the lower interest rate environment. These declines were
partially offset by increases in unrealized gains on corporate marketable equity
securities.
Income tax expense.
Income tax expense was $4.5 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 last 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.
Liquidity and Capital Resources
The Company believes that cash and cash equivalents at September 26, 2020,
together with cash flow from operations, will be sufficient to fund its
operations and provide for growth for the next 12 months and into the
foreseeable future. The Company maintains cash in U.S. Treasury and other money
market funds, some of which are in excess of federally insured limits. The
Company expects 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 liquidity and capital resources. Because of
the Company's sufficient cash position, the Company has not historically sought
external sources of liquidity, with the exception of certain credit facilities
for its home-only lending programs. However, depending on the Company's
operating results and strategic opportunities, it may need to seek additional or
alternative sources of financing. There can be no assurance that such financing
would be available on satisfactory terms, if at all. If this financing were not
available, it could be necessary for the Company to reevaluate its long-term
operating plans to make more efficient use of its existing capital resources.
The exact nature of any changes to the Company's plans that would be considered
depends on various factors, such as conditions in the factory-built housing
industry and general economic conditions outside of the Company's 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 insurance subsidiary are generally not available to satisfy the claims
of Cavco or its legal subsidiaries. The Company believes that stockholders'
equity at its insurance subsidiary remains sufficient and does not believe that
its ability to pay ordinary dividends to Cavco will be restricted per state
regulations.
The following is a summary of the Company's cash flows for the six months ended
September 26, 2020 and September 28, 2019, respectively:
                                                              Six Months Ended
                                                    September 26,           September 28,
($ in thousands)                                        2020                    2019                $ Change
Cash, cash equivalents and restricted cash at
beginning of the fiscal year                      $      255,607          $      199,869          $   55,738
Net cash provided by operating activities                 74,609                  43,593              31,016
Net cash used in investing activities                        (82)                (18,308)             18,226
Net cash used in financing activities                       (865)                (19,345)             18,480
Cash, cash equivalents and restricted cash at end
of the period                                     $      329,269          $      205,809          $  123,460


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Net cash provided by operating activities increased during the six months ended
September 26, 2020 compared to the six months ended September 28, 2019 primarily
due to more customer deposits received as a result of higher order rates, higher
collections on accounts receivables and commercial loans receivables and the
timing of payments on Accounts payable and Accrued expenses and other current
liabilities.
Consumer loan originations increased by $2.1 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 million
in cash, compared to $77.2 million in the previous year.
Cavco has entered into commercial loan arrangements with certain distributors of
its products under which the Company provides funds for Wholesale purchases. In
addition, the Company has entered into direct commercial loan arrangements with
distributors, communities and developers under which the Company provides funds
for financing homes. The Company has 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 in and developed home-only loan
pools and lending programs to attract third party financier interest in order to
grow sales of new homes through traditional distribution points.
Investing activities consist of buying and selling bonds and marketable equity
securities in our Financial Services segment and funding strategic growth
acquisitions. The Company received $2.1 million more in net proceeds from
investments for the six months ended September 26, 2020 compared to the same
period last year, and Net cash for investing activities in the prior year was
primarily used to fund the acquisition of Destiny Homes.
Financing activities used $18.5 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.
The Company's finance subsidiary entered into secured credit facilities with
independent third-party banks. The proceeds were used to facilitate the
origination of consumer home-only loans to be held for investment, secured by
the manufactured homes which were subsequently pledged as collateral to the
facilities. Upon completion of the draw down periods, these facilities were
converted into an amortizing loan based on a 20-year amortization period with a
balloon payment due upon maturity. As of September 26, 2020, the outstanding
balance of the converted loans was $9.8 million at 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 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 critical accounting policies during the six months ended September 26,
2020, as compared to those disclosed in Part II, Item 7 of the Company's Form
10-K, under the heading "Critical Accounting Policies," which provides a
discussion of the critical accounting policies that management believes affect
its more significant judgments and estimates used in the preparation of the
Company's Consolidated Financial Statements.
Recent Accounting Pronouncements
See Note 1 to the Consolidated Financial Statements for a discussion of recently
issued and adopted accounting pronouncements.
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Other Matters
Related Party Transactions. See Note 19 to the Consolidated Financial Statements
for a discussion of the Company's related party transactions.
Off Balance Sheet Arrangements
See Note 15 to the Consolidated Financial Statements for a discussion of the
Company's off-balance sheet commitments, which discussion is incorporated herein
by reference.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the quantitative and qualitative
disclosures about market risk previously disclosed in the Form 10-K.
Item 4. Controls and Procedures
(a) Disclosure Controls and Procedures
The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including its President and Chief
Executive Officer and its Principal Financial Officer, of the effectiveness of
the Company's 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, 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, which have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
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