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Commitments, Contingencies and Legal Proceedings | 3 Months Ended
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Jun. 29, 2019
Commitments And Contingencies Disclosure [Abstract] |
Commitments, Contingencies and Legal Proceedings |
1 5. | Commitments, Contingencies and Legal Proceedings
Repurchase Contingencies and Guarantees The Company is contingently liable under terms of repurchase agreements with lending institutions that provide wholesale floor plan financing to retailers. These arrangements, which are customary in the manufactured housing industry, provide for the repurchase of products sold to retailers in the event of default by the retailer on their agreement to pay the financial institution. The risk of loss from these agreements is spread over numerous retailers. The repurchase price is generally determined by the original sales price of the product and pre-defined curtailment arrangements. The Company accounts for the guarantees under its repurchase agreements with the retailers’ financing institutions by estimating and deferring a portion of the related product sale that represents the estimated fair value of the repurchase obligation. The estimated fair value takes into account the estimate of the loss the Company will incur upon resale of any repurchases. This estimate is based on recent historical experience supplemented by management’s assessment of current economic and other conditions affecting the Company’s retailers. The reserve for estimated losses under repurchase agreements was $0.9 million at June 29, 2019 and $1.0 million at March 30, 2019. Excluding the resale value of the homes, the contingent repurchase obligation as of June 29, 2019 was estimated to be approximately $166.9 million. Losses incurred on homes repurchased were immaterial during each of the three months ended June 29, 2019 and June 30, 2018. In addition to the repurchase agreements, the Company has agreed to guarantee from 3% to 50% of certain retailers’ outstanding loans to a floor plan lender. At June 29, 2019, those guarantees totaled $0.6 million of which $0.5 million was outstanding. At June 29, 2019, the Company was contingently obligated for approximately $28.8 million under letters of credit, primarily consisting of $12.6 million to support long-term debt, $15.7 million to support the casualty insurance program, $0.2 million to support repurchase obligations, and $0.3 million to support bonding agreements. The letters of credit are backed by a sub-facility under the New Credit Agreement. The Company was also contingently obligated for $23.9 million under surety bonds, generally to support performance on long-term construction contracts and license and service bonding requirements. In the normal course of business, the Company’s former subsidiaries that operated in the United Kingdom historically provided certain guarantees to two customers. Those guarantees provide contractual liability for proven construction defects up to 12 years from the date of delivery of certain products. The guarantees remain a contingent liability of the Company which declines over time through October 2027. As of the date of this report, the Company expects few, if any, claims to be reported under the terms of the guarantees. Legal Proceedings The Company has agreed to indemnify counterparties in the ordinary course of its business in agreements to acquire and sell business assets and in financing arrangements. The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. As of the date of this filing, the Company believes the ultimate liability with respect to these contingent obligations will not have, either individually or in the aggregate, a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

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- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI http://asc.fasb.org/topic&trid=2127136 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 + Details
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