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Commitments, Contingencies and Legal Proceedings | 3 Months Ended
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Jul. 02, 2022
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingencies and Legal Proceedings | 12. 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 its agreement to pay the financial institution. The risk of loss from these agreements is significantly reduced by the potential resale value of any products that are subject to repurchase and is spread over numerous retailers. The repurchase price is generally determined by the original sales price of the product less contractually defined curtailment payments. Based on these repurchase agreements and our historical loss experience, we establish an associated loss reserve which was $2.4 million and $2.3 million at July 2, 2022 and April 2, 2022, respectively. Excluding the resale value of the homes, the contingent repurchase obligation as of July 2, 2022 was estimated to b e $373.6 million. Losses incurred on homes repurchased were not significant during the three months ended July 2, 2022 or July 3, 2021. At July 2, 2022, the Company was contingently obligated for $32.1 million under letters of credit, primarily consisting of $12.6 million to support long-term debt, $19.2 million to support the casualty insurance program, and $0.3 million to support bonding agreements. The letters of credit are issued from a sub-facility of the Amended Credit Agreement. The Company was also contingently obligated for $35.5 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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