The Condensed Consolidated Financial Statements include the accounts of REV Group, Inc. (“REV” or “the Company”) and all its subsidiaries. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments, unless otherwise noted) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K of the Company for the year ended October 31, 2018. The interim results are not necessarily indicative of results for the full year. Certain reclassifications have been made to the fiscal 2018 financial statements to conform to the fiscal 2019 presentation.

Equity Sponsor: The Company’s primary equity holders are funds and an investment vehicle associated with AIP CF IV, LLC, which the Company collectively refers to as “American Industrial Partners,” “AIP” or “Sponsor” and which indirectly own approximately 53.8% of REV Group’s voting equity as of April 30, 2019. AIP is an operations and engineering-focused private equity firm headquartered in New York, New York.

Related Party Transactions: During the three months ended April 30, 2019 and April 30, 2018, the Company reimbursed expenses of its primary equity holder in the amount of $0.1 million and $0.1 million, respectively. During the six months ended April 30, 2019 and April 30, 2018, the Company reimbursed expenses of its primary equity holder in the amount of $0.6 million and $0.3 million, respectively. These expenses are included in selling, general and administrative expenses in the Company’s consolidated statements of operations.

Certain production facilities and offices for two of the Company’s subsidiaries are leased from related parties owned by certain members of management. Rent expense under these arrangements totaled $0.5 million and $0.4 million for the three months ended April 30, 2019, and April 30, 2018, respectively. Rent expense under these arrangements totaled $1.0 million and $0.6 million for the six months ended April 30, 2019 and April 30, 2018, respectively.

The following accounting pronouncements did not have a material impact on the Company’s consolidated financial statements:

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ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220)” (“ASU 2018-02”)

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In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which outlines a single comprehensive model for entities to use in accounting for revenue from contracts with customers. The standard superseded most current revenue recognition guidance.

The Company adopted the new guidance on November 1, 2018 and applied the standard to all of its contracts using the modified retrospective approach. Under this method, the Company must recognize the cumulative effect of the changes in retained earnings on the date of adoption. The Company has determined the adoption of ASU 2014-09 did not have a material impact on its financial statements at the date of adoption. Accordingly, no cumulative effect adjustment to retained earnings was required and there are no other financial statement line items that were impacted by the adoption.

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In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases” (Topic 842). Topic 842 is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for the Company beginning November 1, 2019.

The Company has established an implementation plan and is in the process of surveying its businesses, assessing its lease population, and compiling information on its active leases. In addition, the Company is determining needed changes to its policies, business processes, internal controls, and disclosures. While the Company continues to make progress on its implementation, the Company is still evaluating the impact of the adoption on its consolidated financial statements.