Cavco Industries Annual Report 2017

FY2017 Annual Report · Cavco Industries

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2017

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investor.cavco.comANNUAL REPORTCavco Industries, Inc.About Cavco Industries, Inc.

Cavco is the second largest designer and builder of manufactured homes, modular homes,
commercial buildings, park model RVs and vacation cabins. We produce and sell some of
the most widely recognized brand names in the industry including Cavco Homes, Fleetwood
Homes, Palm Harbor Homes, Fairmont Homes, Friendship Homes, Chariot Eagle and Lexington
Homes. Standard Casualty Company offers a range of insurance products for manufactured
home owners and CountryPlace Mortgage supplies a variety of homebuyer financing options.

Commitment, Experience, Stability and Strength

Cavco is publicly traded on the Nasdaq Global Select Market (symbol CVCO). We are
committed to increasing the value of our shareholders’ investment, providing quality,
affordable housing to our customers and offering a rewarding work environment for our
associates. Forbes Magazine selected Cavco as one of the 100 Best Managed Companies in
the U.S. and the company has been listed as one of America’s Best Small Companies. Cavco
Industries is a seven time recipient of the prestigious MHI Manufacturer of the Year Award in
recognition of its innovation, customer service and long-term stability.

Excellence in Innovation, Quality and Value

Cavco precision builds in controlled indoor environments at an attractive value and within
shorter completion times than on-site construction methods. Homes are sold through both
independent and company-owned retail centers. We offer a vast array of styles and will custom
build to home buyers’ specifications. The company also designs models for the exclusive use of
land/lease communities, subdivision developers, resort properties and workforce housing.

Building Green, Energy Efficient and Sustainable Homes

The processes and systems we utilize to build homes in our factories is inherently more
efficient and environmentally beneficial than on-site construction methods. In addition, we can
build homes with substantial utilization of renewable materials and high-tech energy saving
features, and that are designed for the use of solar and wind power.

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11 12

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1 Fleetwood Pacific Northwest

WOODBURN, OR

2 Palm Harbor Northwest

MILLERSBURG, OR
3 Fleetwood Northwest/

Mountain
NAMPA, ID
4 Fleetwood West
RIVERSIDE, CA

5 Cavco West

GOODYEAR, AZ

6 Durango Homes by Cavco

PHOENIX, AZ

7 Palm Harbor Ft. Worth

FT. WORTH, TX

8 Fleetwood Southwest

WACO, TX

9 Palm Harbor Austin

AUSTIN, TX

10 Cavco Homes of Texas

SEGUIN, TX

11 Friendship Homes - I
MONTEVIDEO, MN
12 Friendship Homes - II
MONTEVIDEO, MN
13 Fairmont Homes
NAPPANEE, IN

14 Fleetwood Midwest/Central

LAFAYETTE, TN
15 Lexington Homes
LEXINGTON, MS
16 Fleetwood East
ROCKY MT., VA
17 Nationwide Homes
MARTINSVILLE, VA
18 Fleetwood South
DOUGLAS, GA
19 Chariot Eagle
OCALA, FL

20 Palm Harbor Florida
PLANT CITY, FL

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Directors, Officers and Corporate Information

Headquarters

Investor Relations

Board of Directors

Officers

Cavco Industries, Inc.

investor_relations@cavco.com

William C. Boor

Joseph H. Stegmayer

1001 North Central Avenue

Suite 800

Phoenix, Arizona 85004

Telephone: (602) 256-6263

www.cavco.com

The Company’s filings with

the Securities and Exchange

Commission can be found in

the SEC EDGAR database at

www.sec.gov

Transfer Agent and Registrar

Computershare Investor

Services

250 Royall Street

Canton, MA 02021

Chief Executive Officer

Chairman, President & Chief

Great Lakes Brewing Company

Executive Officer

Steven G. Bunger

Chief Executive Officer &

President

Daniel L. Urness

Executive Vice President

Chief Financial Officer &

Pro Box Storage, Inc.

Treasurer

David A. Greenblatt

Charles E. Lott

Former Senior Vice President

President

& Deputy General Counsel

Fleetwood Homes, Inc.

Eagle Materials, Inc.

Steven K. Like

Senior Vice President

James P. Glew

General Counsel & Secretary

Telephone: (888) 525-8755

www.computershare.com

Jack Hanna

Principal

Jack Hanna Productions

Stock Trading

Joseph H. Stegmayer

The Company’s common stock

Chairman, President & Chief

is listed on the Nasdaq Global

Executive Officer

Select Market and is traded

Cavco Industries, Inc.

under the Symbol CVCO

Stock Price Range

Year ended April 1, 2017

High

Low

4th Quarter

$121.70

$93.65

3rd Quarter

$105.75

$88.65

2nd Quarter

$110.67

$90.63

1st Quarter

$102.53

$85.56

Year ended April 2, 2016

High

Low

4th Quarter

$95.25

$70.28

3rd Quarter

$106.55

$66.71

2nd Quarter

$78.28

$66.22

1st Quarter

$78.75

$64.54

CVAR_2017.indd 2-3

6/12/2017 9:24:02 AM

Dear Fellow Shareholders:

Fiscal year 2017 was another solid year for Cavco Industries. We generated $774 million in net
revenue this fiscal year, up 9% from fiscal year 2016 and marking the highest revenue earned in
the Company’s history. Manufactured housing industry home shipments grew 15% nationally to
81,169 homes in 2016 from 70,519 homes in 2015. We sold 13,820 homes in fiscal year 2017
compared to 12,339 homes in fiscal year 2016, a 12% increase.

We believe the positive trend in industry shipments is reflective of a discernable need for
affordable housing. In the United States, the average cost of a new home built on site is more than
$350,000—out of reach for many prospective homeowners. The efficiencies of building homes
using systems in a controlled factory environment produces high quality homes for consumers,
generally for less than $150,000.

Unfortunately, the U.S. housing market is still recovering and new home construction remains
below historical averages despite substantial population and job growth in recent years. Over time,
we think that pent up demand and further improvement in employment levels will provide the
opportunity for increased home sales, particularly for the affordable homes we build.

As a homebuilder, we endeavor to offer homes that appeal to customers in the diverse markets that
we serve. Cavco works closely with retailers, communities, and developers to design homes to
meet the tastes and particular requirements of buyers in specific geographic areas throughout North
America. Equally important to our success is our commitment to make every effort to see that the
customer’s quality and service requirements are met.

In addition to planned organic growth, we will continue to look for strategic growth opportunities.
During the first quarter of fiscal year 2018 we acquired Lexington Homes, Inc. in Mississippi. This
established operation will enable Cavco to participate in the historically strong manufactured
housing markets in Alabama, Louisiana, Mississippi, and nearby states. We are in the process of
applying resources and support to expand and improve this operation’s product offerings and
distribution. Cavco now has twenty manufacturing facilities and is well positioned to contribute
to and benefit from the housing needs of homebuyers throughout the country.

We remain convinced that financial strength provides enhanced ability to pursue both internal
growth and acquisition opportunities. Accordingly, your company maintains a conservative capital
structure and healthy balance sheet. While we are not adverse to the judicious use of leverage,
currently our factory built housing segment operates free of debt. At April 1, 2017, current assets
were 2.5 times current liabilities and cash and cash equivalents were $133 million compared to
$98 million at April 2, 2016. At fiscal year-end, stockholder equity was $394 million.

We are grateful for the 4,300 Cavco people who build, sell, finance and insure our family of homes.
Thank you as well to our customers, shareholders, and supply partners for your continued
confidence and support.

June 13, 2017

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended April 1, 2017

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 000-08822

Cavco Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

56-2405642
(I.R.S. Employer
Identification No.)

1001 North Central Avenue, Suite 800
Phoenix, Arizona 85004
(Address of principal executive offices, including zip code)
602-256-6263
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $0.01

Name of each exchange on which registered
The Nasdaq Stock Market LLC
(Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this Chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting
company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in
Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
Non-accelerated filer
Emerging growth company

(Do not check if a smaller reporting company)

Accelerated filer
Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of voting and non-voting common equity held by non-affiliates as of October 1, 2016 (based on the closing price
on the Nasdaq Stock Market, LLC on October 1, 2016) was $379,959,564. Shares of Common Stock held by each officer, director and holder
of 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other purposes.
As of June 9, 2017, 9,015,820 shares of Registrant’s Common Stock, $.01 par value, were outstanding.

Portions of Cavco Industries, Inc.’s Definitive Proxy Statement relating to its 2017 Annual Meeting of Stockholders are incorporated by
reference into Part III hereof.

DOCUMENTS INCORPORATED BY REFERENCE

CAVCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED APRIL 1, 2017

TABLE OF CONTENTS

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Supplemental Item:

Executive Officers of the Registrant

PART I

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Item 6. Selected Financial Data

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits, Financial Statement Schedules

Signatures

Index to Consolidated Financial Statements

Page

F-1

ITEM 1. BUSINESS

General

PART I

Cavco Industries, Inc., a Delaware corporation, was formed on June 30, 2003 as a successor corporation to

previous Cavco entities operating since 1965. 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. We are the second largest producer of
manufactured homes in the United States, based on reported wholesale shipments, marketed under a variety of
brand names, which include Cavco Homes, Fleetwood Homes, Palm Harbor Homes, Fairmont Homes, Friendship
Homes, Chariot Eagle and Lexington Homes. The Company is also a leading builder 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 mortgage subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), is an approved
Federal National Mortgage Association ("FNMA" or "Fannie Mae") and Federal Home Loan Mortgage Corporation
("FHLMC" or "Freddie Mac") seller/servicer, and a Government National Mortgage Association ("GNMA" or
"Ginnie Mae") mortgage-backed securities issuer which offers conforming mortgages, non-conforming mortgages
and chattel loans to purchasers of factory-built and site-built homes. Our insurance subsidiary, Standard Casualty
Co. ("Standard Casualty"), provides property and casualty insurance primarily to owners of manufactured homes.
The terms "Cavco," "us," "we," "our," the "Company," and any other similar terms refer to Cavco Industries, Inc.
and its consolidated subsidiaries, unless otherwise indicated in this Annual Report on Form 10-K ("Annual
Report").

We construct our homes using an assembly-line process in which each module or floor section is assembled in
stages. Our assembly-line process is designed to be flexible enough to accommodate significant customization, as
requested by our customers. The Company operates 20 homebuilding facilities located in the Northwest, Southwest,
South, Southeast, Midwest and Mid-Atlantic regions. These factories range in size from 79,000 to 341,000 square
feet.

We distribute our homes through 43 Company-owned U.S. retail outlets and a network of independent

distribution points in 48 states, Canada, Japan and Mexico. A significant number of these independent distribution
points are located in Arizona, Texas, California, Florida, and Oregon. Thirty-two of our Company-owned retail
stores are located in Texas. See "Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Industry and Company Outlook."

CountryPlace originates single-family residential mortgages and chattel loans, and services, for itself and
others, conforming mortgages, non-conforming land-home mortgages and manufactured home chattel loans.
CountryPlace is authorized by the U.S. Department of Housing and Urban Development ("HUD") to directly
endorse Federal Housing Administration ("FHA") Title I and Title II mortgage insurance, is an approved lender
with the U.S. Department of Veteran Affairs ("VA") and the U.S. Department of Agriculture ("USDA") under its
Single Family Housing Guaranteed Loan Program, is approved by the GNMA to issue GNMA-insured mortgage-
backed securities and is authorized to sell mortgages to, and service mortgages for, the FNMA and the FHLMC. A
conforming mortgage or loan is one that conforms to the guidelines of a Government-Sponsored Enterprise
("GSE"), such as Fannie Mae, Freddie Mac or a government agency, such as FHA; a non-conforming mortgage or
loan does not conform to these guidelines (see Note 5 to the Consolidated Financial Statements).

Standard Casualty is domiciled in Texas and is primarily a specialty writer of manufactured home physical
damage insurance. Standard Casualty holds insurance licenses in multiple states; however, a significant portion of
its writings occur in Texas and Arizona. In addition to writing direct policies, Standard Casualty assumes and cedes
reinsurance in the ordinary course of business (see Note 12 to the Consolidated Financial Statements).

See Note 20 to the Consolidated Financial Statements for financial information regarding our business

segments (factory-built housing and financial services), both of which are discussed below.

Industry Overview

General. Manufactured housing provides an alternative in urban, suburban and rural areas to other forms of
new low-cost housing such as site-built housing and condominiums, and to existing housing such as pre-owned
homes and apartments. According to statistics published by the Institute for Building Technology and Safety
("IBTS") and the United States Department of Commerce, Bureau of the Census, for the 2016 calendar year,
manufactured housing wholesale shipments of homes constructed in accordance with the National Manufactured
Home Construction and Safety Standards promulgated by HUD ("HUD code") accounted for an estimated 12.6% of
all new single-family homes sold.

According to data reported by the Manufactured Housing Institute ("MHI"), during calendar year 2016, our

industry shipped approximately 81,000 HUD code manufactured homes. This followed approximately 71,000
homes shipped in 2015, 64,000 in 2014, 60,000 in 2013 and 55,000 shipped in calendar year 2012, among the
lowest levels since industry shipment statistics began to be recorded in 1959. Annual home shipments from 2009 to
2016 were less than the annual home shipments for each of the 40 years from 1969 to 2008. While industry HUD
code manufactured home shipments improved modestly these recent years, the manufactured housing industry
continues to operate at relatively low levels compared to historical shipment statistics.

We believe the segment of the housing market in which manufactured housing is most competitive includes
consumers with household incomes under $60,000. This segment has a high representation of young single persons
and young married couples, as well as persons age 55 and older. The comparatively low cost of fully-equipped
manufactured housing is attractive to these consumers. Persons in rural areas and those who presently live in
manufactured homes also make up a significant portion of the demand for new manufactured housing. Innovative
engineering and design, as well as efficient production techniques, continue to position manufactured homes to
meet the demand for affordable housing in markets such as rural areas and manufactured housing communities. The
markets for affordable factory-built housing are very competitive as well as cyclical and seasonal. The industry is
sensitive to employment levels, consumer confidence, availability of financing and general economic conditions.

Protracted Industry Downturn. Since mid-1999, the manufactured housing industry has experienced a
prolonged and significant downturn. This downturn has resulted in part from the fact that, beginning in 1999,
consumer lenders in the sector began to tighten underwriting standards and curtail credit availability in response to
higher than anticipated rates of loan defaults and significant losses upon the repossession and resale of the
manufactured homes securing defaulted loans. From 2004 to 2007, the industry’s downturn was exacerbated by the
aggressive financing methods available to customers of developers and marketers of standard site-built homes,
which had the effect of diverting potential manufactured housing buyers to more expensive site-built homes.
Beginning in 2008, the global credit crisis and general deterioration of economic conditions have extended the
depressed market conditions in which our industry operates. These factors have resulted in low wholesale shipment
levels and underutilized manufacturing and retail locations. However, while the industry continues to operate at
generally low levels, as discussed above, industry shipment numbers have been increasing over the past seven
years.

Business Strategies

Our marketing strategy is to offer a line of manufactured homes that appeal to a wide range of home buyers.
Our principal focus is on the sale of high-value homes to entry-level and move-up buyers and to persons age 55 and
older. We also market to special niches such as subdivision developers and vacation home buyers.

Our production strategy is to develop and maintain the resources necessary to build varied and unique customer
specifications in an efficient factory production environment. This enables us to attract retailers and consumers who
want the flexibility to build homes to meet their specific needs, but still seek the value created by building a home
on a factory production line.

Our competitive strategy is to build homes of superior quality, offer innovative designs and floor plans,

demonstrate exceptional value and provide the engineering and technical resources to enable custom home building
and be responsive and efficient in servicing the customer after the sale. We strive to maintain a competitive
advantage by reacting quickly to changes in the marketplace and to the specific needs of our retailers and
consumers.

Beginning in 2007, the overall housing industry experienced a multi-year decline, which included the

manufactured housing industry. Since this downturn, Cavco strategically expanded its factory operations and related
business initiatives primarily through the acquisition of industry competitor operations. This development has
enabled the Company to effectively participate in the ensuing housing industry recovery.

The purchase of the Fleetwood Homes, Inc. ("Fleetwood") and Palm Harbor Homes, Inc. ("Palm Harbor")
assets in August 2009 and April 2011, respectively, increased home production capabilities and distribution and
entry into financial and insurance businesses specific to the Company’s industry, allowing the Company to be
vertically integrated. The transactions further expanded the Company’s geographic reach at a national level by
adding factories and retail locations serving the Northwest, West, South, South Central and Mid-Atlantic regions.

The purchase of Chariot Eagle, LLC ("Chariot Eagle") and Fairmont Homes, LLC ("Fairmont Homes"), in

March 2015 and May 2015, respectively, provides for further operating capacity, increased home production
capabilities and distribution into new markets such as the Midwest, the western Great Plains states, the Northeast
and several provinces in Canada. These acquired operations included manufacturing facilities in Ocala, Florida;
Nappanee, Indiana; and two factories in Montevideo, Minnesota.

The April 3, 2017 purchase of Lexington Homes, Inc. ("Lexington Homes") in Lexington, Mississippi further

increased home production capabilities and distribution in the Southeastern United States market.

Products

We are the second largest producer of manufactured homes in the United States, based on reported wholesale

shipments, marketed under a variety of brand names including Cavco Homes, Fleetwood Homes, Palm Harbor
Homes, Fairmont Homes, Friendship Homes, Chariot Eagle and Lexington Homes. The Company is also a leading
producer of modular homes, built primarily under the Nationwide Homes brand, as well as park model RVs,
vacation cabins and systems-built commercial structures.

A majority of our products are constructed in accordance with the HUD code. We also build park model RVs,
constructed to standards approved by the American National Standards Institute, a private, non-profit organization
that administers and coordinates a voluntary standardization and conformity program. Park model RVs are less than
400 square feet in size, are primarily used as vacation dwellings and seasonal living, and are placed in planned
communities, recreational home parks and resorts. We also produce a wide variety of modular homes, which
include single and multi-section/modular ranch-style dwellings, split-level homes, Cape Cod style homes, two and
three story homes and multi-family units. We also build commercial modular structures, including apartment
buildings, condominiums, hotels, workforce housing, schools and housing for U.S. military troops (e.g., barracks).
Commercial buildings are constructed in the same facilities in which we build our residential homes using similar
assembly line processes and techniques. These commercial projects are generally engineered to the purchaser’s
specifications. The buildings are transported to the customer’s site in the same manner as homes and are often set
by crane and finished at the site.

We produce our residential homes in a variety of floor plans. Most of these homes are single-story and
generally range in size from approximately 500 to 3,300 square feet, but may be larger in the case of multi-level
modular homes. In fiscal years 2017 and 2016, we sold 13,820 and 12,339 homes, respectively.

Each home typically contains a living room, dining area, kitchen, one to five bedrooms and one or more
bathrooms, and is equipped with central heating and hot water systems, kitchen appliances, carpeting and window
treatments. Feature upgrades include fireplaces, central air conditioning, tile roofs, high ceilings, skylights,
hardwood floors, custom cabinetry, granite countertops and energy conservation elements. We also offer a variety of
structural and decorative customizations to meet the home buyer's specifications. With manufacturing centers
strategically positioned across the nation, we utilize local market research to design homes to meet the demands of
our customers. We have the ability to react and modify floor plans and designs to consumers’ specific needs. By
offering a full range of homes from entry-level models to large custom homes and with the ability to engineer
designs in-house, we can accommodate virtually any customer request.

We are focused on building quality, energy efficient homes for the modern home buyer. Green building involves

the creation of an energy efficient envelope, including higher utilization of renewable materials. These homes
provide environmentally-friendly maintenance requirements, generally lower utility costs, specially designed
ventilation systems, best use of space and passive solar orientation.

Our manufactured homes are constructed and equipped at our factories. The finished home is then primarily

transported by independent trucking companies either to a retail sales center, planned community, housing
development, work site or the customer's site. Retailers or other independent installers are responsible for placing
the home on site and, in most instances, arranging for connections to utilities and providing installation and finish-
out services. Although our manufactured homes are designed to be transportable, very few are moved from their
original site after installation.

We are constantly introducing new floor plans, decors, exteriors, features and accessories to appeal to changing

trends in different regions of the country. Our factory-built homes are designed after extensive field research and
consumer feedback. We have developed engineering systems which, through the use of computer-aided technology,
permit customization of homes and assist with product development and enhancement. We work with a variety of
partners, meeting an expanding range of housing needs from a home buyer’s private land to planned neighborhoods
to recreational or resort properties to accommodations for workforces in agriculture and industry.

Factory-built Housing

Manufacturing Operations. Our homes are constructed in plant facilities using an assembly-line process
employing from 123 to 351 employees at each facility. Most of our homes are constructed in one or more sections
(also known as floors or modules) on a permanently affixed steel or wood support chassis. Each section is
assembled in stages beginning with the construction of the chassis, followed by the addition of other constructed
and purchased components and ending with a final quality control inspection. The efficiency of the assembly-line
process and the benefits of constructing homes in a controlled factory environment enables us to produce quality
homes in less time and at a lower cost per square foot than building homes on individual sites.

We operate 20 manufacturing facilities 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; Lexington, Mississippi; Martinsville and Rocky Mount, Virginia;
Douglas, Georgia; and Ocala and Plant City, Florida. These manufacturing facilities range from approximately
79,000 to 341,000 square feet of floor space. The production schedules for our manufacturing facilities are based on
wholesale orders received from independent and Company-owned retailers, which fluctuate from week to week. In
general, however, our facilities are structured to operate on a one shift per day, five days per week basis, and we
currently manufacture a typical home in approximately six production days.

Manufactured housing is a regional business and the primary geographic market for a typical manufacturing
facility is within a 350-mile radius. Each of our manufacturing facilities serves multiple retailers along with a large
number of one-time purchasers. Because we produce homes to fill existing wholesale orders, our manufacturing
plants generally do not carry finished goods inventories, except for homes awaiting delivery.

The principal materials used in the production of our manufactured homes include wood, wood products, steel,

aluminum, gypsum wallboard, windows, doors, fiberglass insulation, carpet, vinyl, fasteners, plumbing materials,
appliances and electrical items. We buy these materials from various third-party manufacturers and distributors. The
inability to obtain any materials used in the production of our homes, whether resulting from material shortages,
limitation of supplier facilities or other events affecting production of component parts, may affect our ability to
meet or maintain production requirements.

At April 1, 2017, we had a backlog of home orders with wholesale sales values of approximately $88.8 million,

compared to a backlog of $47.9 million at April 2, 2016. Retailers may cancel orders prior to production without
penalty. After production of a particular home has commenced, the order becomes noncancelable and the retailer is
obligated to take delivery of the home. Accordingly, until production of a particular home has commenced, we do
not consider our order backlog to be firm orders. Because of the seasonality of the housing market, the level of our
order backlog historically declines during the winter months.

Revenue and Distribution. The Company sold 13,820, 12,339 and 9,999 homes in fiscal years 2017, 2016 and

2015, respectively, through Company-owned and independent distribution channels.

As of April 1, 2017, we had a total of 43 Company-owned retail centers, located in Oregon, Arizona, New
Mexico, Texas, Oklahoma, Louisiana and Florida. Thirty-two of the Company-owned retail stores are located in
Texas. Our Company-owned sales centers are generally located on main roads or highways for high visibility. Each
of our Company-owned retail sales centers has a sales office, which is generally a factory-built structure, and a
variety of model homes of various sizes, floor plans, features and prices. Customers may order a home that will be
built at a manufacturing facility or they may purchase a home from an inventory of homes maintained at the
location, including a model home. Model homes may be displayed in a residential setting with sidewalks and
landscaping. Each sales center usually employs a manager and one to five salespersons, who are compensated
through a combination of salary and commission. We internally finance our home inventories.

As of April 1, 2017, we had a network of independent distribution points, of which 13% were in Arizona, 10%
in Texas, 8% in California, 7% in Florida, and 7% in Oregon. The remaining 55% were in 43 other states, Canada,
Mexico and Japan. As is common in the industry, our independent distributors typically sell manufactured homes
produced by other manufacturers in addition to those we produce. Some independent retailers operate multiple sales
outlets. No independent retailer accounted for 10% or more of our factory-built housing revenue during any fiscal
year within the three-year period ended April 1, 2017.

We continually seek to increase our wholesale shipments by growing sales at our existing independent retailers
and by finding new independent retailers to sell our homes. We provide comprehensive sales training to retail sales
associates and bring them to our manufacturing facilities for product training and to view new product designs as
they are developed. These training seminars facilitate the sale of our homes by increasing the skill and knowledge
of the retail sales consultants. In addition, we display our products in trade shows and support our retailers through
the distribution of floor plan literature, brochures, decor selection displays, point of sale promotional material, as
well as internet-based marketing assistance.

Independent retailers frequently finance a portion of their home purchases through wholesale floor plan
financing arrangements. In most cases, we receive a deposit or a commitment from the retailer's lender for each
home ordered. We then manufacture the home and it is shipped at the retailer's expense. Payment is due from the
lender upon shipment of the product. For a description of wholesale floor plan financing arrangements used by
independent retailers and our obligations in connection with these arrangements, see "Financing—Commercial
Financing" below.

Financial Services

Finance. We provide a source of home buyer financing to our customers on competitive terms through our
subsidiary, CountryPlace. CountryPlace offers conforming mortgages, non-conforming mortgages and chattel loans
to purchasers of numerous brands of factory-built homes sold by Company-owned retail sales centers and certain
independent retailers, builders, communities and developers. CountryPlace is authorized to directly endorse FHA
Title I and Title II mortgage insurance, is an approved lender with the VA and the USDA under its Single Family
Housing Guaranteed Loan Program, is approved to issue GNMA-insured mortgage-backed securities, and is
authorized to sell mortgages to, and service mortgages for Fannie Mae and Freddie Mac. Most loans originated
through CountryPlace are sold to investors. CountryPlace also provides various loan servicing functions for non-
affiliated entities under contract.

All of CountryPlace’s loan contracts held are fixed rate and have monthly scheduled payments of principal and

interest. The scheduled payments for each contract would, if made on their respective due dates, result in a full
amortization of the contract. Loan contracts secured by collateral that is geographically concentrated could
experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that
is more geographically dispersed. CountryPlace has loan contracts secured by factory-built homes located in 30
states, including Texas, Florida, New Mexico and Arizona.

We believe that providing financing alternatives to our customers improves our responsiveness to the financing
needs of prospective home purchasers and provides us with opportunities for additional sources of loan origination
and servicing revenues. CountryPlace has expanded its chattel lending programs, partially with the support of
independent third party financiers. Chattel loans originated will either be sold outright, grouped and sold as a pool
of loans or held for investment.

Insurance. Standard Casualty specializes in homeowner property and casualty insurance products for the
manufactured housing industry. Standard Casualty is domiciled in Texas and is primarily a specialty writer of
manufactured home physical damage insurance. Standard Casualty holds insurance licenses in multiple states;
however, a significant portion of its writings occur in Texas and Arizona. In addition to writing direct policies,
Standard Casualty assumes and cedes reinsurance in the ordinary course of business. In Texas, the policies are
written through one affiliated managing general agent, which produces all premiums, except surety, and through
local agents, most of which are manufactured home retailers. All business outside the state of Texas is written on a
direct basis through local agents.

Financing

Commercial Financing. Certain of our wholesale factory-built housing sales to independent retailers were
purchased through wholesale floor plan financing arrangements. Under a typical floor plan financing arrangement,
an independent financial institution specializing in this line of business provides the retailer with a loan for the
purchase price of the home and maintains a security interest in the home as collateral. The financial institution
customarily requires us, as the manufacturer of the home, to enter into a separate repurchase agreement with the
financial institution under which we are obligated, upon default by the retailer and under certain other
circumstances, to repurchase the financed home at declining prices over the term of the repurchase agreement
(which in most cases is 18 to 36 months). The price at which we may be obligated to repurchase a home under these
agreements is based upon the amount financed, plus certain administrative and shipping expenses. Our obligation
under these repurchase agreements ceases upon the purchase of the home by the retail customer. The maximum
amount of our contingent obligations under such repurchase agreements was approximately $46.3 million as of
April 1, 2017 compared to $46.6 million as of April 2, 2016. The risk of loss under these agreements is spread over
many retailers and is further reduced by the resale value of the homes.

The availability of inventory financing for the industry’s wholesale distribution chain continues to improve.
Faced with illiquid capital markets in late calendar year 2008, each of the manufactured housing sector’s remaining
inventory finance companies (floor plan lenders) initiated significant changes and one company ceased lending
activities in the industry entirely. Other finance programs are subject to more restrictive terms that continue to
evolve, and in some cases, require the financial involvement of the Company. As a result, the Company has entered
into certain commercial loan programs whereby the Company provides a significant amount of the funds that
independent financiers lend to distributors to finance retail inventories of our products. In addition, the Company
has entered into direct commercial loan arrangements with distributors of our products under which the Company
provides funds for financing purchases (see Note 6 to the Consolidated Financial Statements). The Company’s
involvement in commercial loans has increased the availability of manufactured home financing to distributors,
communities and developers. We believe that our taking part in the wholesale financing of homes is helpful to the
borrowers and allows our homes continued exposure to potential home buyers. These initiatives support the
Company’s ongoing efforts to expand our distribution base in all of our markets with existing and new customers.
However, the initiatives expose the Company to risks associated with the creditworthiness of certain customers and
business partners, including independent retailers, developers, communities and inventory financing partners, many
of whom may be adversely affected by volatile conditions in the economy and financial markets.

Consumer Financing. Sales of factory-built homes are significantly affected by the availability and cost of
consumer financing. There are three basic types of consumer financing in the factory-built housing industry: chattel
or personal property loans for purchasers of a home with no real estate involved (generally HUD code homes); non-
conforming mortgages for purchasers of the home and the land on which the home is placed; and conforming
mortgage loans which comply with the requirements of FHA, VA, USDA or GSE loans.

Beginning in mid-1999, lenient credit standards for chattel loans originated in prior years resulted in increased
numbers of repossessions of manufactured homes and excessive inventory levels at that time. The poor performance
of manufactured home loan portfolios made it difficult for consumer finance companies in the industry to obtain
long-term capital in the asset-backed securitization market. As a result, many consumer finance companies curtailed
their lending or exited the manufactured housing loan industry entirely. Since then, the lenders who remained in the
business tightened their credit standards and, in some cases, increased fees and interest rates for chattel loans, which
reduced lending volumes and lowered sales volumes of manufactured homes.

Changes in laws or other events that adversely affect liquidity in the secondary mortgage market could hurt our
business. The GSEs, principally Fannie Mae, Freddie Mac, and Ginnie Mae, as well as the FHA, play a significant
role in buying home mortgages and creating investment securities that are either sold to investors or held in their
portfolios. These organizations provide essential liquidity to the secondary mortgage market. Any new federal laws
or regulations that restrict or curtail their activities, or any other events or conditions that prevent or restrict these
enterprises from continuing their historic businesses, could affect the ability of our customers to obtain loans or
could increase home loan interest rates, fees and credit standards. This could reduce demand for our homes and/or
the loans that we originate and adversely affect our results of operations.

Consumer financing for the retail purchase of manufactured homes needs to become generally more available
before marked emergence from current low home shipment levels can occur. Restrictive underwriting guidelines,
irregular appraisal processes, higher interest rates compared to site-built homes, regulatory burdens, a limited
number of institutions lending to manufactured home buyers and limited secondary market availability for
manufactured home loans are significant constraints to industry growth. We are working directly with other industry
participants to develop manufactured home consumer financing models to attract industry financiers interested in
furthering or expanding lending opportunities in the industry. We have invested in community-based lending
initiatives that provide home-only financing to new residents of certain manufactured home communities.
CountryPlace has developed chattel lending programs to grow sales of homes through traditional distribution points
as well. We believe that growing our participation in chattel lending may provide additional sales growth
opportunities for our factory-built housing operation.

We are also working through industry trade associations to encourage favorable legislative and GSE action to

address the mortgage financing needs of potential buyers of affordable homes. Federal law requires the GSEs to
issue a regulation to implement the "Duty to Serve" requirements specified in the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008. On
May 8, 2017, FNMA and FHLMC released their Underserved Markets Plan that describes, with specificity, the
actions they will take over a three-year period to fulfill the "Duty to Serve" obligation. The focus of each of the
three-year plans is to establish steps to ensure chattel loans can be purchased in bulk prior to proceeding with a
chattel loan pilot. Expansion of the secondary market for chattel lending through the GSEs could provide further
demand for housing, as lending options would likely become more available to home buyers. Although some
limited progress has been made in the area, meaningful positive impact in the form of increased home orders has yet
to be realized.

Competition

The manufactured housing industry is highly competitive at both the manufacturing and retail levels, with
competition based upon several factors, including price, product features, reputation for service and quality, depth
of distribution, promotion, merchandising and the terms of retail customer financing. We compete with
approximately 33 other producers of manufactured homes, as well as companies offering for sale homes
repossessed from wholesalers or consumers. In addition, manufactured homes compete with new and existing site-
built homes, as well as apartments, townhouses and condominiums.

There are a number of other national manufacturers competing for a significant share of the manufactured
housing market in the United States, including Clayton Homes, Inc., Champion Home Builders, Inc. and Skyline
Corporation. Certain of these competitors possess greater financial, manufacturing, distribution and marketing
resources.

Although many lenders to factory-built home buyers have reduced their volume or exited the business, there are

significant competitors to CountryPlace in the markets we serve. These competitors include national, regional and
local banks, independent finance companies, mortgage brokers and mortgage banks, such as: 21st Mortgage
Corporation, an affiliate of Clayton Homes, Inc. and Berkshire Hathaway, Inc.; Triad Finance Corporation; and CU
Factory Built Lending, LP. Certain of these competitors are larger than CountryPlace and have access to
substantially more capital and cost efficiencies.

The market for homeowners insurance is highly competitive. Standard Casualty competes principally in
property and casualty insurance for owners of manufactured homes with companies such as National Lloyds and
Columbia Lloyds. We compete based on price, the breadth of our product offerings, product features, customer
service, claim handling and use of technology.

Government Regulation

Our manufactured homes are subject to a number of federal, state and local laws, codes and regulations.

Construction of manufactured housing is governed by the National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended, or the Home Construction Act. In 1976, HUD issued regulations under the
Home Construction Act establishing comprehensive national construction standards. In 1994, the codes were
amended and expanded to, among other things, address specific requirements for homes destined for geographic
areas subject to severe weather conditions. The HUD regulations, known collectively as the Federal Manufactured
Home Construction and Safety Standards, cover all aspects of manufactured home construction, including structural
integrity, fire safety, wind loads, thermal protection and ventilation. Such regulations preempt conflicting state and
local regulations on such matters, and are subject to periodic change. Our manufacturing facilities, and the plans
and specifications of the HUD code manufactured homes they produce, have been approved by a HUD-certified
inspection agency. Further, an independent HUD-certified third-party inspector regularly reviews our manufactured
homes for compliance with HUD regulations during construction. Failure to comply with applicable HUD
regulations could expose us to a wide variety of sanctions, including mandated closings of our manufacturing
facilities. We believe our manufactured homes are in substantial compliance with all present HUD requirements.
Our park model RVs are not subject to HUD regulations, but we believe that our park model RVs meet all present
standards of the American National Standards Institute.

Manufactured and site-built homes are all typically built with wood products that contain formaldehyde resins.
HUD regulates the allowable concentrations of formaldehyde in certain products used in manufactured homes and
requires manufacturers to warn purchasers about formaldehyde-associated risks. The Environmental Protection
Agency ("EPA") and other governmental agencies have in the past evaluated the effects of formaldehyde. We use
materials in our manufactured homes that meet HUD standards for formaldehyde emissions and believe we comply
with HUD and other applicable government regulations in this regard.

The transportation of manufactured homes on highways is subject to regulation by various federal, state and
local authorities. Such regulations may prescribe size and road use limitations and impose lower than normal speed
limits and various other requirements.

We have leased space for our manufacturing facility in Goodyear, Arizona since 1993. The leased premises is

part of what is referred to as the Phoenix-Goodyear Airport (South) Superfund Site ("PGAS"), which was
designated as a National Priorities List ("NPL") site under the authority of the Comprehensive Environmental
Response, Compensation and Liability Act in 1983. The reason for the site's NPL designation was because of
extensive soil and groundwater contamination (trichloroethylene, chromium and cadmium) that resulted from
historic manufacturing by the Goodyear Tire and Rubber Company ("Goodyear Tire") and the United States
Department of Defense. Pursuant to a consent decree entered into with the EPA, Goodyear Tire is responsible for
taking certain remedial actions at the PGAS site.

On September 30, 2015, the EPA issued its Third Five-Year Review Report for Phoenix Goodyear Airport
(North and South Areas) Superfund Site (the "Third Five-Year Report") and reported that "[t]he remedy at PGAS is
currently protective of human health and environment because there is no complete exposure pathway to
contaminated groundwater or soil. Soil contamination has been addressed and the vapor intrusion pathway is not
complete. Monitoring of COG [City of Goodyear] production wells continues to ensure that the public is not being
exposed to contaminated groundwater that exceeds the MCLs [maximum contaminant levels]." In order to ensure
the remedy will be protective in the long-term, the EPA has recommended that the following action be taken:
modify the sampling plans to include all contaminants of concern, assess the need for new cleanup level for arsenic,
and determine the necessity of institutional controls. The next five year review is due within five years of
September 30, 2015. The preceding summary of the Third Five-Year Report does not purport to be complete, and is
qualified in its entirety by reference to the report itself, which is available on the EPA website.

Our lease specifically refers to the consent decree with the EPA and provides that, as between our Landlord

(now JRC Goodyear, LLC) and us, the Landlord will be responsible for any liabilities resulting from the existing
contamination at the site and that the Landlord will indemnify, defend, and hold us, our directors, our officers, our
employees, our agents, and our successors, harmless for such liabilities. During the 24 years that we have conducted
manufacturing operations at the Goodyear, Arizona facility, we have never received any inquiry or notice from the
EPA or the Arizona Department of Environmental Quality suggesting that we may be liable for any costs associated
with the remediation of the PGAS site. There are no underground storage tanks at the Goodyear, Arizona facility.

Our manufactured homes are subject to local zoning and housing regulations. In certain cities and counties in
areas where our homes are sold, local governmental ordinances and regulations have been enacted which restrict the
placement of manufactured homes on privately-owned land or which require the placement of manufactured homes
in manufactured home communities. Such ordinances and regulations may adversely affect our ability to sell homes
for installation in communities where they are in effect. A number of states have adopted procedures governing the
installation of manufactured homes. Utility connections are subject to state and local regulations which must be
complied with by the retailer or other person installing the home.

Certain warranties we issue may be subject to the Magnuson-Moss Warranty Federal Trade Commission
Improvement Act ("Magnuson-Moss Warranty Act"), which regulates the descriptions of warranties on consumer
products. In the case of warranties subject to the Magnuson-Moss Warranty Act, the Company is subject to a
number of additional regulatory requirements. For example, warranties that are subject to the Magnuson-Moss
Warranty Act must be included in a single easy-to-read document that is generally made available prior to purchase.
The Magnuson-Moss Warranty Act also prohibits certain attempts to disclaim or modify implied warranties and the
use of deceptive or misleading terms. A claim for a violation of the Magnuson-Moss Warranty Act can be the
subject of an action in federal court in which consumers may be able to recover attorneys' fees. The description and
substance of our warranties are also subject to a variety of state laws and regulations. A number of states require
manufactured home producers to post bonds to ensure the satisfaction of consumer warranty claims.

A variety of laws affect the financing of the homes we manufacture. The Federal Consumer Credit Protection
Act ("Truth-in-Lending Act") and Regulation Z promulgated thereunder require written disclosure of information
relating to such financing, including the amount of the annual percentage interest rate and the finance charge. The
Federal Fair Credit Reporting Act also requires certain disclosures to potential customers concerning credit
information used as a basis to deny credit. The Federal Equal Credit Opportunity Act and Regulation B promulgated
thereunder prohibit discrimination against any credit applicant based on certain specified grounds. The Real Estate
Settlement Procedures Act ("RESPA") and Regulation X promulgated thereunder require certain disclosures
regarding the nature and costs of real estate settlements. The Consumer Financial Protection Bureau ("CFPB") has
adopted or proposed various Trade Regulation Rules dealing with unfair credit and collection practices and the
preservation of consumers' claims and defenses. Direct loans and mortgage loans eligible for inclusion in a Ginnie
Mae program are subject to the credit underwriting requirements of the FHA. A variety of state laws also regulate
the form of financing documents and the allowable deposits, finance charge and fees chargeable pursuant to
financing documents.

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") was passed into

law. The Dodd-Frank Act is a sweeping piece of legislation, and the financial services industry continues to assess
its implications and implement necessary changes in procedures and business practices. The Dodd-Frank Act
established the CFPB to regulate consumer financial products and services. Although many rules have been
implemented, the full impact will not be known for years as revisions and the development of additional rules
continue, and Congress and the new President consider amending part of the Act. Enforcement actions are in the
early stages and the effects of possible litigation related to the regulations remains unknown.

In 2014, certain CFPB mortgage finance rules required under the Dodd-Frank Act became effective. The rules

apply to consumer credit transactions secured by a dwelling, which include real property mortgages and chattel
loans (financed without land) secured by manufactured homes. The rules defined standards for origination of
"Qualified Mortgages," established specific requirements for lenders to prove borrowers' ability to repay loans and
outlined the conditions under which Qualified Mortgages are subject to safe harbor limitations on liability to
borrowers. The rules also established interest rates and other cost parameters for determining which Qualified
Mortgages fall under safe harbor protection. Among other issues, Qualified Mortgages with interest rates and other
costs outside the limits are deemed "rebuttable" by borrowers and expose the lender and its assignees (including
investors in loans, pools of loans, and instruments secured by loans or loan pools) to possible litigation and
penalties.

While many manufactured homes are currently financed with agency-conforming mortgages in which the
ability to repay is verified, and interest rates and other costs are within the safe harbor limits established under the
CFPB mortgage finance rules, certain loans to finance the purchase of manufactured homes, especially chattel loans
and non-conforming land-home loans, may fall outside the safe harbor limits. The CFPB rules have caused some
lenders to curtail underwriting such loans, and some investors are reluctant to own or participate in owning such
loans because of the uncertainty of potential litigation and other costs. As a result, some prospective buyers of
manufactured homes may be unable to secure the financing necessary to complete purchases. In addition,
compliance with the law and ongoing rule implementation has caused lenders to incur additional costs to implement
new processes, procedures, controls and infrastructure required to comply with the regulations. Compliance may
constrain lenders' ability to profitably price certain loans. Failure to comply with these regulations, changes in these
or other regulations, or the imposition of additional regulations, could affect our earnings, limit our access to capital
and have a material adverse effect on our business and results of operations.

The CFPB rules amending the Truth-in-Lending Act ("TILA") and RESPA expand the types of mortgage loans

that are subject to the protections of the Home Ownership and Equity Protections Act of 1994 ("HOEPA"), revise
and expand the tests for coverage under HOEPA, and impose additional restrictions on mortgages that are covered
by HOEPA. As a result, certain manufactured home loans are now subject to HOEPA limits on interest rates and
fees. Loans with rates or fees in excess of the limits are deemed High Cost Mortgages and provide additional
protections for borrowers, including with respect to determining the value of the home. Most loans for the purchase
of manufactured homes have been written at rates and fees that would not appear to be considered High Cost
Mortgages under the new rule. Although some lenders may continue to offer loans that are now deemed High Cost
Mortgages, the rate and fee limits appear to have deterred some lenders from offering loans to certain borrowers
and may continue to make them reluctant to enter into loans subject to the provisions of HOEPA. As a result, some
prospective buyers of manufactured homes may be unable to secure financing necessary to complete manufactured
home purchases.

Additionally, the Dodd-Frank Act amended provisions of TILA to require rules for appraisals on principal
residences securing higher-priced mortgage loans ("HPML"). Certain loans secured by manufactured homes,
primarily chattel loans, could be considered HPMLs. Among other things, the rules require creditors to provide
copies of appraisal reports to borrowers prior to loan closing. To implement these amendments, the CFPB adopted
the HPML Appraisal Rule effective December 30, 2014 and loans secured by new manufactured homes were
exempt from the rule until July 18, 2015. While effects of these new requirements are not fully known, some
prospective home buyers may be deterred from completing a manufactured home purchase as a result of appraised
values.

The Dodd-Frank Act also required integrating disclosures provided by lenders to borrowers under TILA and

RESPA. The final rule became effective October 3, 2015. The TILA-RESPA Integrated Disclosure ("TRID")
mandated extensive changes to the mortgage loan closing process and necessitated significant changes to mortgage
origination systems. Since its implementation, technical ambiguities in the rule have resulted in lender and investor
uncertainty regarding acceptable cures and tolerances for disclosure and estimate errors. It is not yet fully known
how the GSEs and HUD will view TRID compliance, how they will apply their own interpretations of TRID to
their repurchase and claims review processes, or how the market for private-label securitizations may be impacted.

Regulation C of the Home Mortgage Disclosure Act ("HMDA") enacted in 1975 requires certain financial

institutions, including non-depository institutions, to collect, record, report and disclose information about their
mortgage lending activity. The data-related requirements in the HMDA and Regulation C are used to identify
potential discriminatory lending patterns and enforce anti-discrimination statutes. The Dodd-Frank Act transferred
rulemaking authority for HMDA to the CFPB, effective in 2011. It also amended the HMDA to require financial
institutions to report additional data points and to collect, record and report additional information. The CFPB
issued a final rule amending Regulation C, which becomes effective on January 1, 2018. Regulation C generally
applies to consumer-purpose, closed-end loans and open-end lines of credit that are secured by a dwelling. Non-
depository financial institutions are subject to Regulation C if they originate at least 25 covered closed-end
mortgage loans or at least 100 covered open-end lines of credit in each of the two preceding calendar years.
Violations of Regulation C, including incomplete, inaccurate, or omitted data are subject to administrative
sanctions, including civil money penalties and compliance can be enforced by the Federal Reserve Board, Federal
Deposit Insurance Corporation, the Office of the Comptroller of Currency, the National Credit Union
Administration, HUD or the CFPB.

New Federal Housing Administration ("FHA") Title I program guidelines became effective on June 1, 2010 and
provide Ginnie Mae the ability to securitize manufactured home FHA Title I loans. These guidelines were intended
to allow lenders to obtain new capital, which can then be used to fund new loans for our customers. Chattel loans
have languished for several years and these changes were meant to broaden chattel financing availability for
prospective homeowners. However, we are aware of only a small number of loans currently being securitized under
the Ginnie Mae program.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act") established requirements
for the licensing and registration of all individuals that are Mortgage Loan Originators ("MLOs"). MLOs must be
registered or licensed by the states. Traditionally, manufactured housing retailers have assisted home buyers with
securing financing for the purchase of homes. This assistance may have included assisting with loan applications
and presenting terms of loans. Under the SAFE Act, these activities are prohibited unless performed by a registered
or licensed MLO. Although the definition of an MLO contains exemptions for administrative and other specific
functions and industries, manufactured housing retailers are no longer able to negotiate rates and terms for loans
unless they are licensed as MLOs. Compliance may have required manufactured housing retailers to alter business
practices related to assisting home buyers in securing financing. This may have resulted in penalties assessed
against or litigation costs incurred by retailers found to be in violation, reduced home sales from home buyers’
inability to secure financing without retailer assistance, or increased costs to home buyers or reduced transaction
profitability for retailers as a result of the additional cost of mandatory MLO involvement.

The Housing and Economic Recovery Act of 2008 requires the GSEs to facilitate a secondary market for

mortgages on housing for very low, low and moderate-income families in under-served markets, including
manufactured housing. On January 30, 2017, the Federal Housing Finance Agency issued a final rule specifying the
scope of GSE activities that are eligible to receive credit for compliance with the "Duty to Serve" rule after January
2018. On May 8, 2017, FNMA and FHLMC released their Underserved Markets Plan, which established steps to
ensure chattel loans can be purchased in bulk prior to proceeding with a chattel loan pilot. Both GSEs have
expressed interest in pursuing such pilot programs for manufactured housing; however, it is uncertain whether
either GSE will conduct a pilot program or launch a chattel loan program.

If passed by Congress and signed into law, the proposed Preserving Access to Manufactured Housing Act of
2017 (House of Representatives Bill 1699) would amend some Dodd-Frank Act provisions that affect manufactured
housing financing. The bill would revise the triggers by which small-sized manufactured home loans are considered
"High-Cost" under HOEPA and clarify the MLO licensing requirements for manufactured home retailers and their
employees.

Our sale of insurance products is subject to various state insurance laws and regulations which govern

allowable charges and other insurance practices. Standard Casualty’s insurance operations are regulated by the state
insurance boards where it underwrites its policies. Underwriting, premiums, investments and capital reserves
(including dividend payments to stockholders) are subject to the rules and regulations of these state agencies.

In 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education

Reconciliation Act (collectively, the "Affordable Care Act"), was passed into law. As enacted, the Affordable Care
Act reforms, among other things, certain aspects of health insurance. The Affordable Care Act could continue to
increase our healthcare costs, adversely impacting the Company's earnings. On March 6, 2017, the American Health
Care Act of 2017 (House of Representatives Bill 1628) passed the vote of the House of Representatives, which
would repeal and replace the Affordable Care Act. At this time, it is uncertain how the changes would impact our
results of operations.

Governmental authorities have the power to enforce compliance with their regulations, and violations may

result in the payment of fines, the entry of injunctions or both. Although we believe that our operations are in
substantial compliance with the requirements of all applicable laws and regulations, these requirements have
generally become more strict in recent years. Accordingly, we are unable to predict the ultimate cost of compliance
with all applicable laws and enforcement policies.

See also "Regulatory Developments" in Part II, Item 7 of this Annual Report.

Seasonality

The housing industry is subject to seasonal fluctuations based on new home buyer purchasing patterns. Still,
diversification among Cavco’s product lines and operations have served to partially offset the extent of seasonal
fluctuations. Demand for our core single-family new home products typically peaks each spring and summer before
declining in the winter, consistent with the overall housing industry. Demand patterns for park model RVs and
homes used primarily for retirement seasonal living partially offset the general housing seasonality. Cabins used for
camping and vacation use are placed in a variety of climates that further mitigates the effects of seasonality on our
sales volume. Cavco’s Company-owned retail stores experience decreased home buyer traffic during holidays and
popular vacation periods; however, the one to three month retail sales process tends to somewhat mitigate the
impact of these irregular traffic patterns.

Cavco’s mortgage subsidiary experiences minimal seasonal fluctuation in its mortgage origination activities as a

result of the time needed for loan application approval processes and subsequent home loan closing activities. The
mortgage subsidiary realizes no seasonal impacts from its mortgage servicing operations. Revenue for the home
insurance subsidiary is not impacted by seasonality as it recognizes revenue from policy sales ratably over each
policy’s term year. The insurance subsidiary is subject to the effects of seasonal storms in Texas, where most of its
policies are underwritten. Spring storm activity typically spikes each April and May, the prime season for Texas
weather events. Where applicable, losses from catastrophic events are somewhat limited by reinsurance contracts in
place as part of the Company’s loss mitigation structure. While the severity of weather events has and can be
expected to vary over time, the insurance subsidiary is a well-established and time-tested business. The entity has
been a solid performer for the Company over time despite occasional periods of high claims experience.

Employees

We have approximately 4,300 employees. We believe that our relationship with our employees is good.

Available Information

We make available free of charge through our Internet site, www.cavco.com, the following filings as soon as

reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange
Commission ("SEC"): the Annual Report on Form 10-K, the Quarterly Reports on Form 10-Q, the Conflict
Minerals Report on Form SD, the Current Reports on Form 8-K and amendments to those Reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act").

ITEM 1A. RISK FACTORS

Our business involves a number of risks and uncertainties. You should carefully consider the following risks,
together with the information provided elsewhere in this Annual Report. The items described below are not the only
risks facing us. Additional risks that are currently unknown to us or that we currently consider to be immaterial may
also impair our business or adversely affect our financial condition or results of operations.

We operate in an industry that is currently experiencing a prolonged and significant downturn

Since mid-1999, the manufactured housing industry has experienced a prolonged and significant downturn. This

downturn has resulted in part from the fact that, beginning in 1999, consumer lenders in the sector began to tighten
underwriting standards and curtail credit availability in response to higher than anticipated rates of loan defaults and
significant losses upon the repossession and resale of the manufactured homes securing defaulted loans. From 2004 to
2007, the industry’s downturn was exacerbated by the aggressive financing methods available to customers of
developers and marketers of site-built homes, which had the effect of diverting potential manufactured housing buyers
to more expensive site-built homes. Since 2008, the global credit crisis and general deterioration of economic
conditions have extended the depressed market conditions in which our industry operates. These factors have resulted
in reduced wholesale shipments and excess manufacturing and retail locations. However, industry shipment numbers
have been increasing over the past seven years.

The availability of consumer financing for the purchase of manufactured homes continues to be constrained. If

current industry conditions continue or get materially worse, we may be required to take steps in an attempt to
mitigate the effect of unfavorable industry conditions, such as the closure of facilities or consolidation of existing
operations. These steps could impair our ability to conduct our business in a manner consistent with past practice and
could make it more difficult for us to expand our operations if and when industry conditions improve. Furthermore,
some of these steps could lead to fixed asset, goodwill or other impairment charges.

We may not be able to successfully integrate past acquisitions, including the recent acquisition of Lexington
Homes, or any future acquisition to attain the anticipated benefits. Past acquisitions may adversely impact the
Company’s liquidity

On April 3, 2017, the Company purchased Lexington Homes, which operates one manufacturing facility in
Lexington, Mississippi. This transaction provides additional home production capabilities and increased distribution
into new markets in Southeast.

We may consider other strategic acquisitions if such opportunities arise. Prior acquisitions and any other

acquisitions that we may consider in the future, involve a number of risks, including the diversion of our
management’s attention from our existing business for those transactions that we complete, or possible adverse effects
on our operating results during the integration process and on our liquidity. In addition, we may not be able to
successfully or profitably integrate, operate, maintain and manage the operations or employees of past acquisitions,
Lexington Homes or potential future acquisitions. We also may not be able to maintain uniform standards, controls,
procedures and policies, which may lead to financial losses.

Our involvement in vertically integrated lines of business, including manufactured housing consumer finance,
commercial finance and insurance, exposes the Company to certain risks

CountryPlace offers conforming mortgages, non-conforming mortgages, and chattel loans to purchasers of

factory-built homes sold by Company-owned retail sales centers and independent retailers, builders, communities and
developers. CountryPlace is an approved seller/servicer with Fannie Mae and Freddie Mac, is approved by HUD to
originate FHA-insured mortgages under its Direct Endorsement program, and is approved to issue Ginnie Mae
mortgage-backed securities. Most loans originated through CountryPlace are sold to investors. CountryPlace also
provides various loan servicing functions for non-affiliated entities under contract. CountryPlace has expanded its
chattel lending programs, partially with the support of independent third party financiers. Chattel loans originated will
either be sold outright, grouped and sold as a pool of loans or held for investment.

If CountryPlace’s customers are unable to repay their loans, CountryPlace may be adversely affected.
CountryPlace makes loans to borrowers that it believes are creditworthy based on its underwriting guidelines.
However, the ability of these customers to repay their loans may be affected by a number of factors, including, but not
limited to: national, regional and local economic conditions; changes or weakness in specific industry segments;
natural hazard risks affecting the region in which the borrower resides; and employment, financial or unexpected life
circumstances.

If customers do not repay their loans, CountryPlace may repossess or foreclose on the secured property in order to

liquidate its loan collateral and minimize losses. The homes and land securing the loans are subject to fluctuating
market values, and proceeds realized from liquidating repossessed or foreclosed property are highly susceptible to
adverse movements in collateral values. Home price depreciation and elevated levels of unemployment may result in
additional defaults and exacerbate actual loss severities upon collateral liquidation beyond those normally experienced
by CountryPlace.

Some of the loans CountryPlace has originated or may originate in the future may not have a liquid market, or the

market may contract rapidly and the loans may become illiquid. Although CountryPlace offers loan products and
prices its loans at levels that it believes are marketable at the time of credit application approval, market conditions for
its loans may deteriorate rapidly and significantly. CountryPlace’s ability to respond to changing market conditions is
bound by credit approval and funding commitments it makes in advance of loan completion. In this environment, it is
difficult to predict the types of loan products and characteristics that may be susceptible to future market curtailments
and tailor our loan offerings accordingly. As a result, no assurances can be given that the market value of our loans
will not decline in the future, or that a market will continue to exist for loan products.

CountryPlace sells loans through GSE-related programs 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 loans, the validity of the liens
securing the loans, the loans' compliance with the criteria for inclusion in the sale transactions, including compliance
with underwriting standards or loan criteria established by buyers 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. 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 or indemnification. CountryPlace
manages the risk of repurchase through underwriting and quality assurance practices and by servicing the mortgage
loans to investor standards. CountryPlace maintains a reserve for these contingent repurchase and indemnification
obligations.

Standard Casualty and Standard Insurance Agency specialize in the manufactured housing industry, primarily
serving the Texas, Arizona, New Mexico and Georgia markets. In Texas, the policies are written through one affiliated
managing general agent, which produces all premiums, except surety, through local agents, most of which are
manufactured home retailers. All insurance policies outside the state of Texas are written on a direct basis through
local agents. Property and casualty insurance companies are subject to certain risk-based capital requirements as
specified by the National Association of Insurance Commissioners. Under those requirements, the amount of capital
and surplus maintained by a property and casualty insurance company is determined based on its various risk factors.

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. Standard Casualty remains obligated for amounts ceded in the event that the reinsurers
do not meet their obligations. Substantially all of Standard Casualty’s assumed reinsurance is with one entity. Further,
Standard Casualty’s policies in force may be subject to numerous risks including geographic concentration, adverse
selection, home deterioration, unusual weather events, and regulation. Although claim amounts are recoverable by
Standard Casualty through reinsurance for catastrophic losses up to policy maximums, significant losses may be
realized and our results of operations and financial condition could be adversely affected.

Tightened credit standards, curtailed lending activity by home-only lenders and increased government lending
regulations have contributed to a constrained consumer financing market

Consumers who buy our manufactured homes have historically secured retail financing from third-party lenders.

Home-only financing is at times more difficult to obtain than financing for site-built homes. The availability, terms
and costs of retail financing depend on the lending practices of financial institutions, governmental policies and
economic and other conditions, all of which are beyond our control.

Since 1999, home-only lenders have tightened the credit underwriting standards for loans to purchase

manufactured homes, which has reduced lending volumes and negatively impacted our revenue. Most of the national
lenders who have historically provided home-only loans have exited the manufactured housing sector of the home
loan industry. Retail sales of manufactured housing could be adversely affected if remaining retail lenders curtail
industry lending activities or exit the industry altogether.

Changes in laws or other events that adversely affect liquidity in the secondary mortgage market could hurt our

business. The GSEs and the FHA play significant roles in insuring or purchasing home mortgages and creating or
insuring investment securities that are either sold to investors or held in their portfolios. These organizations provide
significant liquidity to the secondary market. Any new federal laws or regulations that restrict or curtail their
activities, or any other events or conditions that alter the roles of these organizations in the housing finance market
could affect the ability of our customers to obtain mortgage loans or could increase mortgage interest rates, fees, and
credit standards, which could reduce demand for our homes and/or the loans that we originate and adversely affect our
results of operations.

In 2010, the Dodd-Frank Act was passed into law. The Dodd-Frank Act is a sweeping piece of legislation, and the

financial services industry continues to assess its implications and implement necessary changes in procedures and
business practices. The Dodd-Frank Act established the CFPB to regulate consumer financial products and services.
Although many rules have been implemented, the full impact will not be known for years as revisions and the
development of additional rules continue, and Congress and the new President consider amending part of the Act.
Enforcement actions are in the early stages and the effects of possible litigation related to the regulations remains
unknown.

In 2014, certain CFPB mortgage finance rules required under the Dodd-Frank Act became effective. The rules
apply to consumer credit transactions secured by a dwelling, which include real property mortgages and chattel loans
(financed without land) secured by manufactured homes. The rules defined standards for origination of "Qualified
Mortgages," established specific requirements for lenders to prove borrowers' ability to repay loans and outlined the
conditions under which Qualified Mortgages are subject to safe harbor limitations on liability to borrowers. The rules
also established interest rates and other cost parameters for determining which Qualified Mortgages fall under safe
harbor protection. While many manufactured homes are currently financed with agency-conforming mortgages in
which the ability to repay is verified, and interest rates and other costs are within the safe harbor limits established
under the CFPB mortgage finance rules, certain loans to finance the purchase of manufactured homes, especially
chattel loans and non-conforming land-home loans, may fall outside the safe harbor limits. Among other issues,
Qualified Mortgages with interest rates and other costs outside the limits are deemed "rebuttable" by borrowers and
expose the lender and its assignees (including investors in loans, pools of loans, and instruments secured by loans or
loan pools) to possible litigation and penalties.

Overall, the rules have caused some lenders to curtail underwriting such loans, and some investors are reluctant to

own or participate in owning such loans because of the uncertainty of potential litigation and other costs. If so, some
prospective buyers of manufactured homes may be unable to secure the financing necessary to complete purchases. In
addition, compliance with the law and ongoing rule implementation has caused lenders to incur additional costs to
implement new processes, procedures, controls and infrastructure required to comply with the regulations.
Compliance may constrain lenders' ability to profitably price certain loans. Failure to comply with these regulations,
changes in these or other regulations, or the imposition of additional regulations, could affect our earnings, limit our
access to capital and have a material adverse effect on our business and results of operations.

The CFPB rules amending the TILA and RESPA expand the types of mortgage loans that are subject to the

protections of the HOEPA, revise and expand the tests for coverage under HOEPA, and impose additional restrictions
on mortgages that are covered by HOEPA. As a result, certain manufactured home loans are now subject to HOEPA
limits on interest rates and fees. Loans with rates or fees in excess of the limits are deemed High Cost Mortgages and
provide additional protections for borrowers, including with respect to determining the value of the home. Most loans
for the purchase of manufactured homes have been written at rates and fees that would not appear to be considered
High Cost Mortgages under the new rule. Although some lenders may continue to offer loans that are now deemed
High Cost Mortgages, the rate and fee limits appear to have deterred some lenders from offering loans to certain
borrowers and may continue to make them reluctant to enter into loans subject to the provisions of HOEPA. As a
result, some prospective buyers of manufactured homes may be unable to secure financing necessary to complete
manufactured home purchases.

In addition, the CFPB has issued a final rule amending Regulation C of the HMDA, which becomes effective on

January 1, 2018 that requires certain financial institutions, including non-depository institutions, to collect, record,
report and disclose information about their mortgage lending activity. Violations of Regulation C, including
incomplete, inaccurate, or omitted data are subject to administrative sanctions, including civil money penalties.

The availability of wholesale financing for industry retailers is limited due to a reduced number of floor plan
lenders and reduced lending limits

Manufactured housing retailers generally finance their inventory purchases with wholesale floor plan financing

provided by lending institutions. The availability of wholesale financing is significantly affected by the number of
floor plan lenders and their lending limits. Since 1999, a substantial number of wholesale lenders have exited the
industry or curtailed their floor plan operations. As a result, the Company’s independent retailers have relied primarily
on 21st Mortgage Corporation and smaller national and regional lending institutions that have specialized in providing
wholesale floor plan financing to manufactured housing retailers. Floor plan financing providers could further reduce
their levels of floor plan lending. Reduced availability of floor plan lending negatively affects the inventory levels of
our independent retailers, the number of retail sales center locations and related wholesale demand, and adversely
affects the availability of and access to capital on an ongoing basis.

Our participation in certain financing programs for the purchase of our products by industry distributors and
consumers may expose us to additional risk of credit loss, which could adversely impact the Company’s liquidity
and results of operations

We are exposed to risks associated with the creditworthiness of certain independent retailers, builders, developers,

community owners, inventory financing partners and home buyers, many of whom may be adversely affected by the
volatile conditions in the economy and financial markets. These conditions could result in financial instability or other
adverse effects. The consequences of such adverse effects could include delinquencies by customers who purchase our
product under special financing initiatives, and deterioration of collateral values. In addition, we may incur losses if
our collateral cannot be recovered or liquidated at prices sufficient to recover recorded commercial loan notes
receivable balances. The realization of any of these factors may adversely affect our cash flow, profitability and
financial condition.

Our results of operations could be adversely affected by significant warranty and construction defect claims on
factory-built housing

In the ordinary course of our business, we are subject to home warranty and construction defect claims. We record

a reserve for estimated future warranty costs relating to homes sold, based upon our assessment of historical
experience factors. Construction defect claims may arise during a significant period of time after product completion.
Although we maintain general liability insurance and reserves for such claims, based on our assessments, which to
date have been adequate, there can be no assurance that warranty and construction defect claims will remain at current
levels or that such reserves will continue to be adequate. A large number of warranty and construction defect claims
exceeding our current levels could have a material adverse effect on our results of operations.

We have contingent repurchase obligations related to wholesale financing provided to industry retailers

In accordance with customary business practice in the manufactured housing industry, we have entered into
repurchase agreements with various financial institutions and other credit sources who provide floor plan financing to
industry retailers, which provide that we will be obligated, under certain circumstances, to repurchase homes sold to
retailers in the event of a default by a retailer in its obligation to such credit sources. Under these agreements, we have
agreed to repurchase homes at declining prices over the term of the agreement (which in most cases is 18 to 36
months). Our obligation under these repurchase agreements ceases upon the purchase of the home by the retail
customer. The maximum amount of our contingent obligations under such repurchase agreements was approximately
$46.3 million as of April 1, 2017, without reduction for the resale value of the homes. We may be required to honor
contingent repurchase obligations in the future and may incur additional expense as a consequence of these repurchase
agreements.

Our operating results could be affected by market forces and declining housing demand

As a participant in the homebuilding industry, we are subject to market forces beyond our control. These market

forces include employment levels, employment growth, interest rates, consumer confidence, land availability and
development costs, apartment and rental housing vacancy levels, inflation, deflation and the health of the general
economy. Unfavorable changes in any of the above factors or other issues could have an adverse effect on our revenue
and earnings.

We have incurred net losses in certain prior periods and there can be no assurance that we will generate income in
the future

Since becoming a stand-alone public company, we have generated net income each complete fiscal year, except

for fiscal year 2010, in which we incurred net losses attributable in substantial part to the downturn affecting the
manufactured housing industry, which is discussed in detail above. The likelihood that we will generate net income in
the future must be considered in light of the difficulties facing the manufactured housing industry as a whole,
economic conditions, the competitive environment in which we operate and the other risks and uncertainties discussed
in this section of the Annual Report. There can be no assurance that we will generate net income in the future.

A write-off of all or part of our goodwill could adversely affect our operating results and net worth

As of April 1, 2017, 11% of our total assets consisted of goodwill, all of which is attributable to our factory-built

housing operations. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") 350, Intangibles—Goodwill and Other ("ASC 350"), we test goodwill annually for impairment.
If goodwill has become impaired, we charge the impairment as an expense in the period in which the impairment
occurred. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—
Critical Accounting Policies" and Note 1 to the Consolidated Financial Statements. Our goodwill could be impaired if
developments affecting our manufacturing operations or the markets in which we produce manufactured homes lead
us to conclude that the cash flows we expect to derive from our manufacturing operations will be substantially
reduced. A write off of all or part of our goodwill could adversely affect our results of operations and financial
condition.

The cyclical and seasonal nature of the manufactured housing industry causes our revenues and operating results
to fluctuate, and we expect this cyclicality and seasonality to continue in the future

The manufactured housing industry is highly cyclical and seasonal and is influenced by many national and
regional economic and demographic factors, including the availability of consumer financing for home buyers, the
availability of wholesale financing for retailers, seasonality of demand, consumer confidence, interest rates,
demographic and employment trends, income levels, housing demand, general economic conditions, including
inflation and recessions, and the availability of suitable home sites.

As a result of the foregoing economic, demographic and other factors, our revenues and operating results

fluctuate, and we expect them to continue to fluctuate in the future. Moreover, we have experienced and could again
experience operating losses during cyclical downturns in the manufactured housing market.

Our liquidity and ability to raise capital may be limited

We may need to obtain debt or additional equity financing in the future. The type, timing and terms of the
financing selected by us will depend on, among other things, our cash needs, the availability of other financing
sources and prevailing conditions in the financial markets. There can be no assurance that any of these sources will be
available to us at any time or that they will be available on satisfactory terms.

The manufactured housing industry is highly competitive, and increased competition may result in lower revenue

The manufactured housing industry is highly competitive. Competition at both the manufacturing and retail levels

is based upon several factors, including price, product features, reputation for service and quality, merchandising,
terms of retailer promotional programs and the terms of retail customer financing. Numerous companies produce
manufactured homes in our markets. In addition, our homes compete with repossessed homes that are offered for sale
in our markets. Certain of our manufacturing competitors also have their own retail distribution systems and consumer
finance and insurance operations. In addition, there are many independent manufactured housing retail locations in
most areas where we have retail operations. We believe that where wholesale floor plan financing is available, it is
relatively easy for new retailers to enter into our markets as competitors. In addition, our products compete with other
forms of low- to moderate-cost housing, including new and existing site-built homes, apartments, townhouses and
condominiums. If we are unable to compete effectively in this environment, our factory-built housing revenue could
be reduced.

If we are unable to establish or maintain relationships with independent distributors who sell our homes, our
revenue could decline

During fiscal year 2017, approximately 81% of our wholesale sales of manufactured homes were to independent

distributors. As is common in the industry, independent distributors may also sell homes produced by competing
manufacturers. We may not be able to establish relationships with new independent distributors or maintain good
relationships with independent distributors that sell our homes. Even if we do establish and maintain relationships
with independent distributors, these distributors are not obligated to sell our homes exclusively and may choose to sell
our competitors' homes instead. The independent distributors with whom we have relationships can cancel these
relationships on short notice. In addition, these distributors may not remain financially solvent, as they are subject to
industry, economic, demographic and seasonal trends similar to those faced by us. If we do not establish and maintain
relationships with solvent independent distributors in one or more of our markets, revenue in those markets could
decline.

Our business and operations are concentrated in certain geographic regions, which could be impacted by market
declines

Our operations are concentrated in certain states, most notably Texas, California, Florida, Arizona and Oregon.
Due to the concentrated nature of our operations, there could be instances where these regions are negatively impacted
by economic, natural or population changes that could, in turn, negatively impact the results of the business, more
than other companies that are more geographically dispersed.

The Company operates 20 homebuilding facilities located in the Northwest, Southwest, South, Southeast,
Midwest and Mid-Atlantic regions. We have a significant presence in Texas with factories in the cities of Austin, Ft.
Worth, Seguin and Waco. Further, of our 43 Company-owned sales centers, 32 are located in Texas.

Loan contracts secured by collateral that is geographically concentrated could experience higher rates of
delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically
dispersed. CountryPlace has loan contracts secured by factory-built homes located in 30 states, including Texas,
Florida, New Mexico and Arizona.

Standard Casualty and Standard Insurance Agency specialize in the manufactured housing industry, primarily

serving the Texas, Arizona, New Mexico and Georgia markets.

A decline in the economic conditions in the United States and especially the economies of Texas, California,

Florida, Arizona and/or Oregon could have a material adverse effect on our results of operations.

Our results of operations can be adversely affected by labor shortages and the pricing and availability of raw
materials

The homebuilding industry has from time to time experienced labor shortages and other labor related issues. A
number of factors may adversely affect the labor force available to us and our subcontractors in one or more of our
markets, including high employment levels, construction market conditions and government regulation, which include
laws and regulations related to workers’ health and safety, wage and hour practices and immigration. An overall labor
shortage or a lack of skilled or unskilled labor could cause significant increases in costs or delays in construction of
homes, which could have a material adverse effect upon our revenue and results of operations.

Our results of operations can be affected by the pricing and availability of raw materials. Although we attempt to

increase the sales prices of our homes in response to higher materials costs, such increases may lag behind the
escalation of materials costs. Sudden increases in price and lack of availability of raw materials can be caused by
natural disaster, regulation or other market forces, as has occurred in recent years. Although we have not experienced
any production halts, severe or prolonged shortages of some of our most important building materials, which include
wood and wood products, gypsum wallboard, steel, insulation, and other petroleum-based products, have occurred.
There can be no assurance that sufficient supplies of these and other raw materials will continue to be available to us.

If the manufactured housing industry is not able to secure favorable local zoning ordinances, our revenue could
decline and our business could be adversely affected

Manufactured housing communities and individual home placements are subject to local zoning ordinances and
other local regulations relating to utility service and construction of roadways. In the past, property owners often have
resisted the adoption of zoning ordinances permitting the location of manufactured homes in residential areas, which
we believe has restricted the growth of the industry. Manufactured homes may not achieve widespread acceptance and
localities may not adopt zoning ordinances permitting the development of manufactured home communities. If the
manufactured housing industry is unable to secure favorable local zoning ordinances, our revenue could decline and
our business, results of operations and financial condition could be adversely affected.

The loss of any of our executive officers could reduce our ability to execute our business strategy and could have a
material adverse effect on our business and results of operations

We are dependent to a significant extent upon the efforts of our executive officers. The loss of the services of one
or more of our executive officers could impair our ability to execute our business strategy and have a material adverse
effect upon our business, financial condition and results of operations. We currently have no key person life or other
insurance for our executive officers.

Certain provisions of our organizational documents could delay or make more difficult a change in control of our
Company

Certain provisions of our restated certificate of incorporation and restated bylaws could delay or make more
difficult transactions involving a change of control of our Company, and may have the effect of entrenching our
current management or possibly depressing the market price of our common stock. For example, our restated
certificate of incorporation and restated bylaws authorize blank series preferred stock, establish a staggered board of
directors and impose certain procedural and other requirements for stockholder proposals. Furthermore, the fact that
income taxes could be imposed as a result of ownership changes occurring in conjunction with a distribution may
have the effect of delaying or making more difficult certain transactions involving a change of control of our
Company.

Volatility of stock price

The price of our common stock may fluctuate widely, depending upon a number of factors, many of which are

beyond our control. These factors include: the perceived prospects of our business and the manufactured housing
industry as a whole; differences between our actual financial and operating results and those expected by investors
and analysts; changes in analysts' recommendations or projections; changes affecting the availability of financing in
the wholesale and consumer lending markets; actions or announcements by competitors; changes in the regulatory
environment in which we operate; significant sales of shares by a principal stockholder; actions taken by stockholders
that may be contrary to Board of Director recommendations; and changes in general economic or market conditions.
In addition, stock markets generally experience significant price and volume volatility from time to time which may
adversely affect the market price of our common stock for reasons unrelated to our performance.

Deterioration in economic conditions and turmoil in financial markets could reduce our earnings and financial
condition

Deterioration in regional or global economic conditions and turmoil in financial markets could have a negative

impact on our business. Among other things, unfavorable changes in employment levels, job growth, consumer
confidence and income, inflation, deflation, foreign currency exchange rates and interest rates may further reduce
demand for our products, which could negatively affect our business, results of operations and financial condition.
Unprecedented contraction in the credit markets and the financial services industry have occurred in recent years,
characterized by the bankruptcy, failure or consolidation of various financial institutions and extraordinary
intervention from the federal government. These factors could have an adverse effect on the availability of financing
to our customers, causing our revenues to decline.

The cost of operations could be adversely impacted by increased costs of healthcare benefits provided to employees

In 2010, the Affordable Care Act, was passed into law. As enacted, the Health Reform Law reforms, among other

things, certain aspects of health insurance. The Affordable Care Act could increase our healthcare costs, adversely
impacting the Company’s earnings. On March 6, 2017, the American Health Care Act of 2017 (House of
Representatives Bill 1628) passed the vote of the House of Representatives, which would repeal and replace the
Affordable Care Act. At this time, it is uncertain how the changes would impact our results of operations.

A prolonged delay by Congress and the President to approve budgets or continuing appropriation resolutions to
facilitate the operations of the federal government could delay the completion of home sales and/or cause
cancellations, and thereby negatively impact our deliveries and revenues

Congress and the President may not timely approve budgets or appropriation legislation to facilitate the operations

of the federal government. As a result, many federal agencies have historically and may again cease or curtail some
activities. The affected activities include Internal Revenue Service ("IRS") verification of loan applicants’ tax return
information and approvals by the FHA and other government agencies to fund or insure mortgage loans under
programs that these agencies operate. As a number of our home buyers use these programs to obtain financing to
purchase our homes, and many lenders, including CountryPlace, require ongoing coordination with these and other
governmental entities to originate home loans, a prolonged delay in the performance of their activities could prevent
prospective qualified buyers of our homes from obtaining the loans they need to complete such purchases, which
could lead to delays or cancellations of home sales. These and other affected governmental bodies could cause
interruptions in various aspects of our business and investments. Depending on the length of disruption, such factors
could have a material adverse impact on our consolidated financial statements.

Information technology failures or data security breaches could harm our business

We use information technology and other computer resources to carry out important operational activities and to

maintain our business records. Our computer systems, including our back-up systems, are subject to damage or
interruption from power outages, computer and telecommunications failures, computer viruses, security breaches
(through cyber-attacks from computer hackers and sophisticated organizations), catastrophic events such as fires,
tornadoes and hurricanes and human error. Given the unpredictability of the timing, nature and scope of information
technology disruptions, if our computer systems and our backup systems are damaged, breached, or cease to function
properly, we could potentially be subject to production downtimes, operational delays, the compromising of
confidential or otherwise protected information (including information about our home buyers and business partners),
destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks
or financial losses from remedial actions, any of which could have a material adverse effect on our cash flows,
competitive position, financial condition or results of operations.

We are subject to extensive regulation affecting the production and sale of manufactured housing, which could
adversely affect our profitability.

We are subject to a variety of federal, state and local laws and regulations affecting the production and sale of
manufactured housing. Please refer to the section above under the heading "Government Regulation" for a description
of many of these laws and regulations. Our failure to comply with such laws and regulations could expose us to a
wide variety of sanctions, including closing one or more manufacturing facilities. Regulatory matters affecting our
operations are under regular review by governmental bodies and we cannot predict what effect, if any, new laws and
regulations would have on us or the manufactured housing industry. Failure to comply with applicable laws or
regulations or the passage in the future of new and more stringent laws, may adversely affect our financial condition
or results of operations.

Forward-Looking Statements

This Annual Report includes "forward-looking statements," within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the Private Securities Litigation Reform Act
of 1995. In general, all statements included or incorporated in this Annual Report that are not historical in nature are
forward-looking. These may include statements about our plans, strategies and prospects under the headings
"Business," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations." 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; our financial performance and operating results; and the expected effect of certain risks and
uncertainties on our business, financial condition and results of operations, economic conditions and consumer
confidence, our operational and legal risks, how we may be affected by governmental regulations and legal
proceedings, the expected effect of certain risks and uncertainties on our business, the availability of favorable
consumer and wholesale manufactured home financing, market interest rates and our investments, and the ultimate
outcome of our commitments and contingencies.

All forward-looking statements are subject to risks and uncertainties, many of which are beyond our control. As a
result, our actual results or performance may differ materially from anticipated results or performance. Also, forward-
looking statements are based upon management's estimates of fair values and of future costs, using currently available
information. Therefore, actual results may differ materially from those expressed or implied in those statements.
Factors that could cause such differences to occur include, but are not limited to, those discussed under Item 1A,
"Risk Factors," and elsewhere in this Annual Report. We expressly disclaim any obligation to update any forward-
looking statements contained in this Annual Report, whether as a result of new information, future events or
otherwise. For all of these reasons, you should not place any reliance on any such forward-looking statements
included in this Annual Report.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The following table sets forth certain information with respect to our core properties:

Location
Active manufacturing facilities:

Millersburg, Oregon
Woodburn, Oregon
Nampa, Idaho
Riverside, California
Goodyear, Arizona
Phoenix, Arizona
Austin, Texas
Fort Worth, Texas
Seguin, Texas
Waco, Texas
Montevideo, Minnesota (2 plants) (1)
Nappanee, Indiana
Lafayette, Tennessee
Lexington, Mississippi
Martinsville, Virginia
Rocky Mount, Virginia
Douglas, Georgia
Ocala, Florida
Plant City, Florida

Component and supply facilities:

Martinsville, Virginia
Nappanee, Indiana

Inactive manufacturing facilities:

Austin, Texas
Lexington, Mississippi
Martinsville, Virginia
Plant City, Florida

Administrative and other locations:

Phoenix, Arizona
Addison, Texas
New Braunfels, Texas
Nappanee, Indiana

Date of
Commencement
of Operations

Owned /
Leased

Square
Feet

1995
1976
1957
1960
1993
1978
1981
1993
2006
1971
1982
1971
1996
2004
1969
1995
1988
1984
1981

1972
1971

Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Leased
Owned

Owned
Leased

Owned
Leased
Owned
Owned

Leased
Leased
Owned
Leased

169,000
221,000
171,000
107,000
250,000
79,000
104,000
121,000
129,000
132,000
305,000
341,000
149,000
119,800
132,000
137,000
142,000
91,000
87,000

148,000
77,000

77,000
109,300
44,000
94,000

11,000
24,000
9,000
18,000

(1) This facility was purchased by the Company during fiscal year 2017.

We own the land on which the manufacturing facilities are located, except for the Goodyear, Arizona plant,
which is currently leased through June 30, 2021 with options to extend; the Ocala, Florida plant, which is currently
leased through March 29, 2018 with options to extend; and the Lexington, Mississippi plants (active and inactive),
which are currently leased through October 31, 2025 and October 3, 2017, respectively, with options to extend. We
also own substantially all of the machinery and equipment used at these factories. We believe that these facilities are
adequately maintained and suitable for the purposes for which they are used. In addition to our production facilities,
we own an office building and land in New Braunfels, Texas, which houses Standard Casualty's operations, as well
as ten properties upon which six of our active retail centers are located. The remaining active sales centers and a
claims office are leased under operating leases with lease terms generally ranging from monthly to five years. Our
Company-owned retail centers generally range in sizes up to nine acres. We lease office space in Addison, Texas for
CountryPlace operations and Palm Harbor administrative support services, pursuant to a lease that expires in 2023.
Our Phoenix, Arizona corporate headquarters lease expires in January 2018. The Company has the right to
terminate the lease prior to the expiration. The Company also leases an administrative office and a supply facility in
Nappanee, Indiana, expiring in July 2017 with options to extend.

ITEM 3. LEGAL PROCEEDINGS

We are party to certain legal proceedings that arise in the ordinary course and are incidental to our business.
Certain of the claims pending against us in these proceedings allege, among other things, breach of contract, breach
of express and implied warranties, construction defects, deceptive trade practices, unfair insurance practices,
product liability and personal injury. Although litigation is inherently uncertain, based on past experience and the
information currently available, management does not believe that the currently pending and threatened litigation or
claims will have a material adverse effect on the Company’s consolidated financial position, liquidity or results of
operations. However, future events or circumstances, currently unknown to management, will determine whether
the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated
financial position, liquidity or results of operations in any future reporting periods.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

SUPPLEMENTAL ITEM: EXECUTIVE OFFICERS OF THE REGISTRANT (See Item 10 of Part III of
this Report)

The following is a listing of our executive officers as of June 13, 2017, as such term is defined under the rules

and regulations of the Securities and Exchange Commission. Officers are generally elected by the Board of
Directors at its meeting immediately following our annual stockholders’ meeting, with each officer serving until a
successor has been elected and qualified. There is no family relationship between these officers.

Name
Joseph H. Stegmayer

Age
66

Daniel L. Urness

Charles E. Lott

Steven K. Like

Positions with Cavco or Business Experience
Chairman of the Board, President and Chief Executive Officer since March 2001;
Director and Officer of certain of Cavco's major subsidiaries, including Palm
Harbor Homes, Inc. and Fleetwood Homes, Inc; President of Centex Manufactured
Housing Group, LLC from September 2000 to June 2003; President - Retail
Operations and Chief Financial Officer of Champion Enterprises, Inc. from
January 1998 to September 2000; President, Vice Chairman and Chairman of the
Executive Committee of Clayton Homes, Inc. from 1993 to January 1998

Executive Vice President, Chief Financial Officer and Treasurer since January
2006; Director and Officer of certain of Cavco's major subsidiaries, including Palm
Harbor Homes, Inc. and Fleetwood Homes, Inc; Interim Chief Financial Officer of
the Company from August 2005 to January 2006; Corporate Controller from May
2005 to August 2005; Financial Consultant from June 2002 to May 2005;
Controller from May 1999 to June 2002; Manager and staff with Deloitte &
Touche, LLP from September 1993 to May 1999

President of Fleetwood Homes, Inc. since August 2009; President and Vice
President - Housing Group of Fleetwood Enterprises, Inc. from April 2005 to
August 2009; Mr. Lott has worked for Fleetwood Enterprises and subsequently
Fleetwood Homes for all but six years of his over 40-year career in the
manufactured housing industry

Senior Vice President since February 2009; Director of Standard Casualty
Company and affiliated agencies and Officer of certain of Cavco's subsidiaries;
Executive Vice President and General Counsel- Patriot Homes from 1995 to
February 2009; Partner at Warrick & Boyn, LLP from 1981-1995

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company's common stock is traded on the Nasdaq Global Select Market ("Nasdaq") under the symbol
CVCO. The following table sets forth, for each of the periods indicated, the reported high and low sale prices per
share on the Nasdaq for the Company's common stock.

Year ended April 1, 2017
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

Year ended April 2, 2016
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

Sales Price

High

Low

121.70 $
105.75
110.67
102.53

95.25 $

106.55
78.28
78.75

93.65
88.65
90.63
85.56

70.28
66.71
66.22
64.54

As of June 2, 2017, the Company had 702 stockholders of record and approximately 9,100 beneficial holders of

its common stock, based upon information in securities position listings by registered clearing agencies upon
request of the Company's transfer agent.

In the past two fiscal years, we have not paid any dividends on our common stock. The payment of dividends to

our stockholders is subject to the discretion of our board of directors and various factors may prevent us from
paying dividends. Such factors include our cash requirements and liquidity and the requirements of state corporate
and other laws.

Equity Compensation Plan Table

Information concerning equity compensation plans is included in Part III, Item 12, "Security Ownership of

Certain Beneficial Owners and Management and Related Stockholder Matters" in this Annual Report.

Issuer Purchases of Equity Securities

In 2008, we announced a stock repurchase program. A total of $10.0 million may be used to repurchase our
outstanding common stock. The repurchases may be made in the open market or in privately negotiated transactions
in compliance with applicable state and federal securities laws and other legal requirements. The level of repurchase
activity is subject to market conditions and other investment opportunities. The repurchase program does not
obligate us to acquire any particular amount of common stock and may be suspended or discontinued at any time.
The repurchase program will be funded using our available cash. No repurchases have been made under this
program to date.

Performance Graph

The following graph compares the yearly change in the cumulative total stockholder return on Cavco common
stock during the five fiscal years ended April 1, 2017 with that of the Nasdaq Composite Index and the Nasdaq US
Small Cap Home Construction Index. The comparison assumes $100 (with reinvestment of all dividends) was
invested on March 31, 2012 in Cavco common stock and in each of the foregoing indices.

CAVCO INDUSTRIES, INC.

Cavco Industries, Inc.
Nasdaq Composite Index
Nasdaq US Small Cap Home
Construction Index

3/30/2013

3/29/2014

3/28/2015

4/2/2016

102 $
106 $

181 $

169 $
134 $

166 $

161 $
158 $

169 $

4/1/2017
250
191

200 $
159 $

133 $

166

3/31/2012
$
$

100 $
100 $

100 $

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data regarding Cavco for the fiscal years indicated.

The data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the
information presented in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report.

April 1,
2017

April 2,
2016

Year Ended
March 28,
2015

March 29,
2014

March 30,
2013

(Dollars in thousands, except per share data)

773,797 $
615,760
158,037

712,352 $
567,907
144,445

566,659 $
440,523
126,136

533,339 $
413,856
119,483

452,300
351,945
100,355

101,231
56,806
(4,443)
2,918
55,281
(17,326)
37,955

98,103
46,342
(4,363)
2,049
44,028
(15,487)
28,541

87,659
38,477
(4,587)
3,437
37,327
(13,510)
23,817

87,938
31,545
(4,845)
1,105
27,805
(9,099)
18,706

79,313
21,042
(5,973)
1,579
16,648
(6,351)
10,297

Income Statement Data:

Net revenue
Cost of sales
Gross profit
Selling, general and administrative

expenses

Income from operations
Interest expense
Other income, net
Income before income taxes
Income tax expense
Net income
Less: net income attributable to

redeemable noncontrolling interest

—

2,468

5,334

Net income attributable to Cavco

common stockholders

Comprehensive income:
Net income
Unrealized gain on available-for-sale

securities, net of tax
Comprehensive income
Comprehensive income attributable to
redeemable noncontrolling interest

Comprehensive income attributable to

Cavco common stockholders

Net income per share attributable to
Cavco common stockholders:
Basic
Diluted

Weighted average shares outstanding:

Basic
Diluted

37,955 $

28,541 $

23,817 $

16,238 $

4,963

37,955 $

28,541 $

23,817 $

18,706 $

10,297

97
38,052

785
29,326

68
23,885

82
18,788

238
10,535

—

2,392

5,453

38,052 $

29,326 $

23,885 $

16,396 $

5,082

$
$

4.23 $
4.17 $

3.21 $
3.15 $

2.69 $
2.64 $

1.97 $
1.94 $

0.71
0.71

8,976,064
9,105,743

8,889,731
9,046,347

8,854,359
9,015,779

8,262,688
8,379,024

6,956,706
7,027,204

Balance Sheet Data:

Cash and cash equivalents
Restricted cash, current
Accounts receivable, net
Short-term investments
Current portion of consumer loans

receivable, net

Current portion of commercial loans

receivable, net

Inventories
Assets held for sale
Prepaid expenses and other current assets

Deferred income taxes, current
Total current assets
Restricted cash
Investments
Consumer loans receivable, net
Commercial loans receivable, net
Property, plant and equipment, net
Goodwill and other intangibles, net
Deferred income taxes
Total assets

Total current liabilities
Securitized financings and other
Deferred income taxes
Redeemable noncontrolling interest
Total stockholders’ equity
Total liabilities, redeemable
noncontrolling interest and
stockholders’ equity

April 1,
2017

April 2,
2016

March 28,
2015

March 29,
2014

March 30,
2013

(Dollars in thousands)

132,542 $
11,573
31,221
11,289

97,766 $
10,218
29,113
10,140

96,597 $
9,997
26,994
7,106

72,949 $
7,213
20,766
8,289

47,823
6,773
18,710
6,929

31,115

21,918

24,073

19,893

20,188

7,932
93,855
—

28,033
9,204
356,764
724
30,256
64,686
17,901
56,964
80,021
—
607,316 $

140,216
51,574
21,118
—
394,408

3,557
94,813
—

22,196
8,998
298,719
1,082
28,948
67,640
21,985
55,072
80,389
—
553,835 $

125,089
54,909
20,611
—
353,226

2,330
75,334
—

14,460
8,573
265,464
1,081
24,813
74,085
15,751
44,712
76,676
—
502,582 $

101,471
60,370
20,587
—
320,154

2,941
69,729
1,130

12,623
12,313
227,846
1,188
17,165
78,391
18,367
48,227
78,055
—
469,239 $

98,993
59,865
19,948
—
290,433

3,983
68,805
4,180

10,267
6,724
194,382
1,179
10,769
90,802
18,967
46,223
79,435
2,742
444,499

87,005
72,118
16,492
91,994
176,890

607,316 $

553,835 $

502,582 $

469,239 $

444,499

The selected financial data set forth above includes the accounts of Cavco and its consolidated subsidiaries,

CRG Holdings, LLC, and Fleetwood (Fleetwood includes Palm Harbor, Fairmont Homes, Chariot Eagle,
CountryPlace, Standard Casualty, and their subsidiaries). Until July 22, 2013, the Company and its investment
partners, Third Avenue Value Fund and an affiliate, jointly-owned Fleetwood Homes, Inc. Cavco and Third Avenue
each owned 50 percent of Fleetwood, which has been operated by the Company since Fleetwood’s inception in
2009. Third Avenue’s financial interest in Fleetwood was reported as a "redeemable noncontrolling interest" in the
Consolidated Financial Statements. During the fiscal year ended March 29, 2014, Cavco completed the purchase
from Third Avenue of all noncontrolling interests in Fleetwood and its subsidiaries. The transaction closed on July
22, 2013, resulting in Cavco owning 100 percent of the Fleetwood businesses and entitling Cavco to all of the
associated earnings from that date forward.

The selected financial data set forth above may not be indicative of our future performance.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Introduction

The following should be read in conjunction with the Company’s Consolidated Financial Statements and the

related Notes that appear in Part IV of this Report. References to "Note" or "Notes" refer to the Notes to the
Company’s Consolidated Financial Statements.

Overview

Headquartered in Phoenix, Arizona, the Company designs and produces factory-built homes primarily

distributed through a network of independent and Company-owned retailers. We are the second largest producer of
manufactured homes in the United States, based on reported wholesale shipments, marketed under a variety of
brand names, including Cavco Homes, Fleetwood Homes, Palm Harbor Homes, Fairmont Homes, Friendship
Homes, Chariot Eagle and Lexington Homes. The Company is also a leading builder 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 mortgage subsidiary, CountryPlace, is an approved Fannie Mae and Freddie Mac seller/
servicer, a Ginnie Mae mortgage-backed securities issuer which offers conforming mortgages, non-conforming
mortgages and chattel loans to purchasers of factory-built and site-built homes. Our insurance subsidiary, Standard
Casualty, provides property and casualty insurance primarily to owners of manufactured homes.

Company Growth

From its inception in 1965, Cavco has traditionally served affordable housing markets in the southwestern
United States principally through manufactured home production. During the period from 1997 to 2000, Cavco was
purchased by and became a wholly-owned subsidiary of Centex Corporation, which operated the Company until
2003, when Cavco became a stand-alone publicly-held Company traded on the Nasdaq Global Select Market under
the ticker symbol CVCO.

Beginning in 2007, the overall housing industry experienced a multi-year decline, which included the

In 2009, the Company acquired certain manufactured housing assets and liabilities of Fleetwood Enterprises,

Inc ("Fleetwood"). The assets purchased included seven operating production facilities as well as idle factories.
During fiscal year 2011, the Company acquired certain manufactured housing assets and liabilities of Palm Harbor
Homes, Inc., a Florida corporation. The assets purchased included five operating production facilities as well as idle
factories, 49 operating retail locations, a manufactured housing finance company and a homeowners insurance
company. These acquisitions expanded the Company's presence across the Unites States.

On March 30, 2015, the Company purchased the business and operating assets of Chariot Eagle, a Florida-based

manufacturer of park model RVs and manufactured homes. This transaction has grown the Company's offering of
park model RV product lines and further strengthened our market position in the Southeastern United States.

On May 1, 2015, Cavco acquired certain assets and liabilities of Fairmont Homes. Fairmont Homes is a builder

of manufactured and modular homes and park model RVs, with manufacturing plants in Indiana and Minnesota
selling under the Fairmont Homes and Friendship Homes brands. This transaction provides additional home
production capabilities and increased distribution into new markets in the Midwest, the western Great Plains states
and several provinces in Canada.

On April 3, 2017, the Company purchased Lexington Homes, which operates one manufacturing facility in
Lexington, Mississippi. This transaction was accounted for as a business combination and provides additional home
production capabilities and increased distribution into new markets in Southeast.

The Company operates 20 homebuilding facilities located in Millersburg and Woodburn, Oregon; Nampa,

Idaho; Riverside, California; Phoenix and Goodyear, Arizona; Austin, Fort Worth, Seguin and Waco, Texas;
Montevideo, Minnesota (2); Nappanee, Indiana; Lafayette, Tennessee; Lexington, Mississippi; Martinsville and
Rocky Mount, Virginia; Douglas, Georgia; Plant City and Ocala, Florida. The majority of the homes produced are
sold to and distributed by independently owned retailers located primarily throughout the United States and Canada.
In addition, our homes are sold through 43 Company-owned U.S. retail locations.

We continually review our product offerings throughout the combined organization and strive to improve
product designs, production methods and marketing strategies. The supportive market response to the past and
recent acquisitions has been encouraging and we believe that these expansions provide positive long-term strategic
benefits for the Company. We plan to focus on developing synergies among all operations, which continue to have
organic growth potential.

Industry and Company Outlook

According to data reported by the MHI, during calendar year 2016, our industry shipped approximately 81,000

HUD code manufactured homes. This followed approximately 71,000 homes shipped in 2015, 64,000 in 2014,
60,000 in 2013 and 55,000 shipped in calendar year 2012, among the lowest levels since industry shipment statistics
began to be recorded in 1959. Annual home shipments from 2009 to 2016 were less than the annual home shipments
for each of the 40 years from 1969 to 2008. While industry HUD code manufactured home shipments improved
modestly during recent years, the manufactured housing industry is operating at relatively low production and
shipment levels.

Although ongoing economic challenges continue to hinder annual industry and Company home sales, we

believe that employment rates and underemployment among potential home buyers who favor affordable housing as
well as low consumer confidence levels are improving from low levels reported in recent years. "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 were particularly affected by a period of
persistently low employment rates and underemployment. Following such challenges, the process of repairing
damaged credit among such consumers and efforts to save for a home loan down-payment often require substantial
time. Improving consumer confidence in the U.S. economy is evident among manufactured home buyers interested
in our products for seasonal or retirement living that have been concerned about financial stability, and appear to be
less hesitant to commit to a new home purchase. We believe sales of our products may continue to increase as
employment and consumer confidence levels continue to recover.

The two largest manufactured housing consumer demographics, young adults and those who are 55+ years old,

are both growing. The U.S. adult population is estimated to expand by approximately 11.8 million between 2016
and 2021. Young adults born from 1976 to 1995, sometimes referred to as Gen Y, represent a large segment of the
population. Late-stage Gen Y is approximately 2 million people larger than the next age category born from 1966 to
1975, Gen X, and is considered to be in the peak home-buying years. Gen Y represents prime first-time home
buyers who may be attracted by the affordability, diversity of style choices and location flexibility of factory-built
homes. The age 55 and older category is reported to be the fastest growing segment of the U.S. population. This
group is similarly interested in the value proposition; however, they are also motivated by the energy efficiency and
low maintenance requirements of systems-built homes, and by the lifestyle offered by planned communities that are
specifically designed for homeowners that fall into this age group.

Consumer financing for the retail purchase of manufactured homes needs to become generally more available
before marked emergence from current low home shipment levels can occur. Restrictive underwriting guidelines,
irregular appraisal processes, higher interest rates compared to site-built homes, regulatory burdens, a limited
number of institutions lending to manufactured home buyers and limited secondary market availability for
manufactured home loans are significant constraints to industry growth. We are working directly with other industry
participants to develop manufactured home consumer financing models to attract industry financiers interested in
furthering or expanding lending opportunities in the industry. We have invested in community-based lending
initiatives that provide home-only financing to new residents of certain manufactured home communities.
CountryPlace developed chattel lending programs to grow sales of homes through traditional distribution point as
well. We believe that growing our participation in chattel lending may provide additional sales growth opportunities
for our factory-built housing operation.

We are also working through industry trade associations to encourage favorable legislative and GSE action to

While sales activity of existing homes has improved, the current lending environment that favors site-built
housing and more affluent home buyers has not provided improved capabilities for affordable-home buyers to
facilitate a new home purchase. In addition, the contingency contract process, wherein existing manufactured home
owners must sell their existing manufactured home in order to facilitate the purchase of a new factory-built home
continues to be somewhat impeded.

Based on the relatively low cost associated with manufactured home ownership, our products have traditionally
competed with rental housing's monthly payment affordability. Rental housing activity is reported to have continued
to increase in recent years. As a result, tenant housing vacancy rates appear to have declined, causing a
corresponding rise in associated rental rates. These rental market factors may cause some renters to become
interested buyers of affordable-housing alternatives, including manufactured homes.

Further, with respect to the general rise in demand for rental housing, we have realized a larger proportion of
orders from developers and community owners for new manufactured homes intended for use as rental housing. The
Company is responsive to the unique product and related requirements of these home buyers and values the
opportunity to provide homes that are well suited for these purposes.

The backlog of sales orders at April 1, 2017 varied among our factories, but in total was $88.8 million, or
approximately seven weeks of current production levels, compared to $47.9 million at April 2, 2016. Retailers may
cancel orders prior to production without penalty. Accordingly, until the production of a particular home has
commenced, we do not consider our order backlog to be firm orders.

The Company participates in certain commercial loan programs with 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 our 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 6 to the Consolidated Financial
Statements). The Company’s involvement in commercial loans has increased the availability of manufactured home
financing to distributors and users of our products. We believe that our participation in wholesale financing is
helpful to retailers, communities and developers and allows our homes additional opportunities for exposure to
potential home buyers. These initiatives support the Company’s ongoing efforts to expand our distribution base in
all of our markets with existing and new customers. However, the initiatives expose the Company to risks
associated with the creditworthiness of certain customers and business partners, including independent retailers,
developers, communities and inventory financing partners.

With manufacturing facilities strategically positioned across the United States, we utilize local market research
to design homes to meet the demands of our customers. We have the ability to customize floor plans and designs to
fulfill specific needs and interests. By offering a full range of homes from entry-level models to large custom homes
with the ability to engineer designs in-house, we can accommodate virtually any customer request. In addition to
homes built to the federal HUD code, we construct modular homes that conform to state and local codes, park
models and cabins and light commercial buildings at many of our manufacturing facilities.

We employ a concerted effort to identify niche market opportunities where our diverse product lines and custom
building capabilities provide us with 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, specially designed ventilation systems and
sustainability. Cavco also builds homes designed to use alternative energy sources, such as solar and wind. Building
green may significantly reduce greenhouse gas emissions without sacrificing features, style or comfort. From
bamboo flooring and tankless water heaters to solar-powered homes, our products are diverse and tailored to a wide
range of consumer interests. Innovation in housing design is a forte of the Company and we continue to introduce
new models at competitive price points with expressive interiors and exteriors that complement home styles in the
areas in which they are located.

We maintain a conservative cost structure in an effort to build added value into our homes. We have placed a

consistent focus on developing synergies among all operations. In addition, the Company has worked diligently to
maintain a solid financial position. Our balance sheet strength and position in cash and cash equivalents should help
us avoid liquidity problems and enable us to act effectively as market opportunities present themselves.

In 2008, we announced a stock repurchase program under which a total of $10.0 million may be used to
repurchase our outstanding common stock. The repurchases may be made in the open market or in privately
negotiated transactions in compliance with applicable state and federal securities laws and other legal requirements.
The level of repurchase activity is subject to market conditions and other investment opportunities. The plan does
not obligate us to acquire any particular amount of common stock and may be suspended or discontinued at any
time. The repurchase program will be funded using our available cash. No repurchases have been made under this
program to date.

Regulatory Developments

In 2010, the Dodd-Frank Act was passed into law. The Dodd-Frank Act is a sweeping piece of legislation and
the financial services industry continues to assess its implications and implement necessary changes in procedures
and business practices. The Dodd-Frank Act established the CFPB to regulate consumer financial products and
services. Although many rules have been implemented, the full impact will not be known for years as revisions and
the development of additional rules continue, and Congress and the new President consider amending part of the
Act. Enforcement actions are in the early stages and the effects of possible litigation related to the regulations
remains unknown.

In 2014, certain CFPB mortgage finance rules required under the Dodd-Frank Act became effective. The rules

While many manufactured homes are currently financed with agency-conforming mortgages in which the
ability to repay is verified, and interest rates and other costs are within the safe harbor limits established under the
CFPB mortgage finance rules, certain loans to finance the purchase of manufactured homes, especially chattel loans
and non-conforming land-home loans, may fall outside the safe harbor limits. The rules have caused some lenders to
curtail underwriting such loans, and some investors are reluctant to own or participate in owning such loans because
of the uncertainty of potential litigation and other costs. As a result, some prospective buyers of manufactured
homes may be unable to secure the financing necessary to complete purchases. In addition, compliance with the law
and ongoing rule implementation has caused lenders to incur additional costs to implement new processes,
procedures, controls and infrastructure required to comply with the regulations. Compliance may constrain lenders'
ability to profitably price certain loans. Failure to comply with these regulations, changes in these or other
regulations, or the imposition of additional regulations, could affect our earnings, limit our access to capital and
have a material adverse effect on our business and results of operations.

The CFPB rules amending the TILA and RESPA expand the types of mortgage loans that are subject to the

protections of the HOEPA, revise and expand the tests for coverage under HOEPA, and impose additional
restrictions on mortgages that are covered by HOEPA. As a result, certain manufactured home loans are now subject
to HOEPA limits on interest rates and fees. Loans with rates or fees in excess of the limits are deemed High Cost
Mortgages and provide additional protections for borrowers, including with respect to determining the value of the
home. Most loans for the purchase of manufactured homes have been written at rates and fees that would not appear
to be considered High Cost Mortgages under the new rule. Although some lenders may continue to offer loans that
are now deemed High Cost Mortgages, the rate and fee limits appear to have deterred some lenders from offering
loans to certain borrowers and may continue to make them reluctant to enter into loans subject to the provisions of
HOEPA. As a result, some prospective buyers of manufactured homes may be unable to secure financing necessary
to complete manufactured home purchases.

The Dodd-Frank Act amended provisions of TILA to require rules for appraisals on principal residences

securing HPMLs. Certain loans secured by manufactured homes, primarily chattel loans, could be considered
HPMLs. Among other things, the rule requires creditors to provide copies of appraisal reports to borrowers prior to
loan closing. To implement these amendments, the CFPB adopted the HPML Appraisal Rule effective December 30,
2014 and loans secured by new manufactured homes were exempt from the rule until July 18, 2015. While effects
of these new requirements are not fully known, some prospective home buyers may be deterred from completing a
manufactured home purchase as a result of appraised values.

The Dodd-Frank Act also required integrating disclosures provided by lenders to borrowers under TILA and

RESPA. The final rule became effective October 3, 2015. The TRID mandated extensive changes to the mortgage
loan closing process and necessitated significant changes to mortgage origination systems. Since its implementation,
technical ambiguities in the rule have resulted in lender and investor uncertainty regarding acceptable cures and
tolerances for disclosure and estimate errors. It is not yet fully known how the GSEs and HUD will view TRID
compliance, how they will apply their own interpretations of TRID to their repurchase and claims review processes,
or how the market for private-label securitizations may be impacted.

Regulation C of the Home Mortgage Disclosure Act ("HMDA") enacted in 1975 requires certain financial

New FHA Title I program guidelines became effective on June 1, 2010 and provide Ginnie Mae the ability to

securitize manufactured home FHA Title I loans. These guidelines were intended to allow lenders to obtain new
capital, which can then be used to fund new loans for our customers. Chattel loans have languished for several years
and these changes were meant to broaden chattel financing availability for prospective homeowners. However, we
are aware of only a small number of loans currently being securitized under the Ginnie Mae program.

The SAFE Act established requirements for the licensing and registration of all individuals that are MLOs.
MLOs must be registered or licensed by the states. Traditionally, manufactured housing retailers have assisted home
buyers with securing financing for the purchase of homes. This assistance may have included assisting with loan
applications and presenting terms of loans. Under the SAFE Act, these activities are prohibited unless performed by
a registered or licensed MLO. Although the definition of an MLO contains exemptions for administrative and other
specific functions and industries, manufactured housing retailers are no longer able to negotiate rates and terms for
loans unless they are licensed as MLOs. Compliance may have required manufactured housing retailers to become
licensed lenders and employ MLOs, or alter business practices related to assisting home buyers in securing
financing. This may have resulted in increased costs for retailers who elect to employ MLOs, penalties assessed
against or litigation costs incurred by retailers found to be in violation, reduced home sales from home buyers’
inability to secure financing without retailer assistance, or increased costs to home buyers or reduced transaction
profitability for retailers as a result of the additional cost of mandatory MLO involvement.

The Housing and Economic Recovery Act of 2008 requires the GSEs to facilitate a secondary market for

mortgages on housing for very low, low and moderate-income families in under-served markets, including
manufactured housing. On January 30, 2017, the Federal Housing Finance Agency issued a final rule specifying the
scope of GSE activities that are eligible to receive credit for compliance with the "Duty to Serve" rule after January
2018. On May 8, 2017, both GSEs released their Underserved Markets Plan, which included steps to ensure chattel
loans can be purchased in bulk prior to proceeding with a chattel loan pilot. Both GSEs have expressed interest in
pursuing such pilot programs for manufactured housing, however, it is uncertain whether either GSE will conduct a
pilot program or launch a chattel loan program.

Our sale of insurance products is subject to various state insurance laws and regulations which govern allowable
charges and other insurance practices. Standard Casualty’s insurance operations are regulated by the state insurance
boards where it underwrites its policies. Underwriting, premiums, investments and capital reserves (including
dividend payments to stockholders) are subject to the rules and regulations of these state agencies.

In 2010, the Affordable Care Act was passed into law. As enacted, the Affordable Care Act reforms, among
other things, certain aspects of health insurance. The Affordable Care Act could continue to increase our healthcare
costs, adversely impacting the Company's earnings. On March 6, 2017, the American Health Care Act of 2017
(House of Representatives Bill 1628) passed the vote of the House of Representatives, which would repeal and
replace the Affordable Care Act. At this time, it is uncertain how the changes would impact our results of operations.

Governmental authorities have the power to enforce compliance with their regulations, and violations may

Results of Operations

Fiscal Year 2017 Compared to Fiscal Year 2016

Net Revenue. The following table summarizes net revenue for fiscal years 2017 and 2016.

Net revenue:

Factory-built housing
Financial services

Year Ended

April 2,
April 1,
2017
2016
(Dollars in thousands)

$ Change

% Change

720,971 $
52,826
773,797 $

655,148 $
57,204
712,352 $

65,823
(4,378)
61,445

10.0 %
(7.7)%
8.6 %

Total homes sold

13,820

12,339

1,481

12.0 %

Net factory-built housing revenue per
home sold

52,169 $

53,096 $

(927)

(1.7)%

Factory-built housing segment revenue increased, driven primarily from higher home sales volume. We had

improvement across all of our housing product lines, which was supported from growing market demand. In
addition, the manufactured housing industry and the Company were aided by the production of a limited number of
disaster relief units, which further supplemented industry and Company shipment growth. The current fiscal year
also contains one additional month of Fairmont Homes operations versus the prior year, as Fairmont Homes was
purchased by the Company on May 1, 2015.

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 retailers, 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 homebuilding facility to the home-site.
Retail home prices include these items and retail markup, as well as items that are largely subject to home buyer
discretion, including, but not limited to, installation, utilities, site improvements, landscaping and additional
services. Changes to the proportion of home sales among these distribution channels between reporting periods
impacts the overall net revenue per home sold. For the twelve months ending April 1, 2017, the Company sold
11,142 homes Wholesale and 2,678 Retail versus 9,953 homes Wholesale and 2,386 homes Retail in the comparable
prior year period. Further, fluctuations in net factory-built housing revenue per home sold are the result of changes
in product mix, which results from home buyer tastes and preferences as they select home types/models, as well as
optional home upgrades when purchasing the home. These selections vary regularly based on consumer interests,
local housing preferences and economic circumstances. Our product prices are also periodically adjusted for the
cost and availability of raw materials included in, and labor used to produce, each home. For these reasons, we have
experienced, and expect to continue to experience, volatility in overall net factory-built housing revenue per home
sold.

Financial services segment revenue decreased primarily from changes made to the recognition of certain ceded

insurance commissions that took effect this fiscal year and lower interest income earned on securitized loan
portfolios that continue to amortize, offset by increased higher home loan sales volume and premium revenue from
a greater number of insurance policies in force.

Gross Profit. The following table summarizes gross profit for fiscal years 2017 and 2016.

Gross profit:

Factory-built housing
Financial services

Year Ended

April 2,
April 1,
2016
2017
(Dollars in thousands)

$ Change

% Change

130,221
27,816
158,037

116,896
27,549
144,445

13,325
267
13,592

11.4%
1.0%
9.4%

Gross profit as % of Net revenue:

20.4%

20.3%

N/A

0.1%

The increase in factory-built housing gross profit was the result of higher home sales volume.

Gross profit increased for financial services mainly as a result of fewer weather-related insurance claims overall

and higher home loan sales volume, offset by lower net interest income earned on securitized loan portfolios that
continue to amortize.

Selling, General and Administrative Expenses. The following table summarizes Selling, General and

Administrative Expenses for fiscal years 2017 and 2016.

Selling, general and administrative
expenses:

Factory-built housing
Financial services

Year Ended

April 2,
April 1,
2017
2016
(Dollars in thousands)

$ Change

% Change

86,017
15,214
101,231

83,335
14,768
98,103

2,682
446
3,128

3.2 %
3.0 %
3.2 %

Selling, general and administrative
expenses as % of Net revenue:

13.1%

13.8%

N/A

(0.7)%

Factory-built housing selling, general and administrative expenses increased from higher salary and incentive

compensation expense from improved earnings on increased home sales.

Selling, general and administrative expenses for financial services increased primarily from higher salary and

incentive compensation costs related to improved earnings.

As a percentage of net revenue, selling, general and administrative expenses declined from increased utilization

on higher net revenue.

Interest Expense. The following table summarizes Interest Expense for fiscal years 2017 and 2016.

Year Ended

April 2,
April 1,
2017
2016
(Dollars in thousands)

$ Change

% Change

Interest expense

4,443 $

4,363 $

1.8%

Interest expense consists primarily of debt service on the CountyPlace securitized financings of manufactured
home loans and interest related to the capital lease treatment for a lease of manufacturing facilities and land entered
into as part of the Fairmont acquisition during the first quarter of fiscal year 2016. On September 20, 2016, the
Company purchased the assets under the capital lease, terminating the lease arrangement. While essentially flat year
over year, for the year ended April 1, 2017, there were modest increases related to changes to the purchase discount
market-based valuation adjustment on securitized financings, partially offset by the continued principal reductions
of those financings and lower capital lease interest from the termination of the lease.

Other Income, net. The following table summarizes Other Income, net for fiscal years 2017 and 2016.

Year Ended

April 2,
April 1,
2017
2016
(Dollars in thousands)

$ Change

% Change

Other income, net

2,918 $

2,049 $

869

42.4%

The majority of Other income, net, is attributable to interest income earned on commercial loans receivable in
the factory-built housing segment and also represents gains and losses on corporate investments and property, plant
and equipment. Other income, net increased for the fiscal year ended April 1, 2017 compared to the prior year
mainly from realized gains on corporate investments and the sale of certain retail location assets.

Income Before Income Taxes. The following table summarizes Income Before Income Taxes for fiscal years

2017 and 2016.

Income before income taxes:
Factory-built housing
Financial services

Year Ended

April 2,
April 1,
2017
2016
(Dollars in thousands)

$ Change

% Change

46,840 $
8,441
55,281 $

35,440 $
8,588
44,028 $

11,400
(147)
11,253

32.2 %
(1.7)%
25.6 %

Fiscal Year 2016 Compared to Fiscal Year 2015

Net Revenue. The following table summarizes net revenue for fiscal years 2016 and 2015.

Net revenue:

Factory-built housing
Financial services

Year Ended

March 28,
April 2,
2015
2016
(Dollars in thousands)

$ Change

% Change

655,148 $
57,204
712,352 $

513,707 $
52,952
566,659 $

141,441
4,252
145,693

27.5%
8.0%
25.7%

Total homes sold

12,339

9,999

2,340

23.4%

Net revenue per home sold

53,096 $

51,376 $

1,720

3.3%

Factory-built housing segment revenue increased, primarily from businesses acquired during the first quarter of

fiscal year 2016, while the remainder of the increase was from sales growth at the Company's pre-existing factory-
built housing operations.

Financial services segment revenue increased, resulting from 11.8% more insurance policies in force compared

to the prior year as well as an increase of 4.3% in the number of home loan serviced for others, year over year.
Financial services segment revenue is partially offset by lower interest income earned on securitized loan portfolios
that continue to amortize.

Gross Profit. The following table summarizes gross profit for fiscal years 2016 and 2015.

Gross profit:

Factory-built housing
Financial services

Year Ended

March 28,
April 2,
2016
2015
(Dollars in thousands)

$ Change

% Change

116,896
27,549
144,445

94,697
31,439
126,136

22,199
(3,890)
18,309

23.4 %
(12.4)%
14.5 %

Gross profit as % of Net revenue:

20.3%

22.3%

N/A

(2.0)%

The increase in factory-built housing gross profit was primarily from higher home sales volume pertaining to
businesses acquired during the first quarter of fiscal year 2016, while the remainder of the increase was from sales
growth at the Company's pre-existing factory-built housing operations.

Gross profit decreased for financial services mainly from higher insurance claim losses and lower interest
income earned on securitized loan portfolios that continue to amortize, partially offset by gross profit earned on
increased insurance policies in force and higher loan servicing volume. Higher insurance claims losses included
record setting storms in Texas during fiscal 2016. Losses on these catastrophic events were somewhat mitigated by
reinsurance contracts in place.

Selling, General and Administrative Expenses. The following table summarizes Selling, General and

Administrative Expenses for fiscal years 2016 and 2015.

Selling, general and administrative
expenses:

Factory-built housing
Financial services

Year Ended

March 28,
April 2,
2016
2015
(Dollars in thousands)

$ Change

% Change

83,335
14,768
98,103

73,169
14,490
87,659

10,166
278
10,444

13.9 %
1.9 %
11.9 %

Selling, general and administrative
expenses as % of Net revenue:

13.8%

15.5%

N/A

(1.7)%

Factory-built housing and general corporate expenses increased from the addition of the Fairmont Homes and

Chariot Eagle factories acquired during the first quarter of the fiscal year 2016 and increased incentive
compensation from increased home sales overall.

Selling, general and administrative expenses for financial services remained relatively consistent from ongoing

operating stability.

As a percentage of net revenue, selling, general and administrative expenses decreased from increased utilization

on higher net revenue from recently acquired businesses and pre-existing operations.

Interest Expense. The following table summarizes Interest Expense for fiscal years 2016 and 2015.

Year Ended

March 28,
April 2,
2016
2015
(Dollars in thousands)

$ Change

% Change

Interest expense

4,363 $

4,587 $

(224)

(4.9)%

Interest expense, consisted primarily of debt service on securitization financings connected to the CountryPlace
securitized manufactured home loan portfolios. Interest expense also included interest related to the capital lease of
certain manufacturing facilities and land from the Fairmont acquisition. The decrease is mainly from continued
principal reductions of the securitization financings, partially offset by capital lease related interest.

Other Income, net. The following table summarizes Other Income, net for fiscal years 2016 and 2015.

Year Ended

March 28,
April 2,
2016
2015
(Dollars in thousands)

$ Change

% Change

Other income, net

2,049 $

3,437 $

(1,388)

(40.4)%

The majority of Other income, net is attributable to interest income earned on commercial loans receivable in

the factory built housing segment. Other income also includes periodic gains, losses or impairment on property,
plant and equipment, including assets held for sale or sold. Other income, net decreased mainly from the sale of idle
real estate properties. During the fiscal year ended March 28, 2015, the Company sold inactive manufacturing
facilities in Albemarle, North Carolina and Woodland, California and two idle retail locations for a combined net
gain of $1.4 million.

Income Before Income Taxes. The following table summarizes Income Before Income Taxes for fiscal years

2016 and 2015.

Income before income taxes:
Factory-built housing
Financial services

Year Ended

March 28,
April 2,
2016
2015
(Dollars in thousands)

$ Change

% Change

35,440 $
8,588
44,028 $

25,133 $
12,194
37,327 $

10,307
(3,606)
6,701

41.0 %
(29.6)%
18.0 %

Liquidity and Capital Resources

We believe that cash and cash equivalents at April 1, 2017, together with cash flow from operations, will be
sufficient to fund our operations and provide for growth for the next 12 months and into the foreseeable future. We
maintain cash in various deposit accounts, the balances of which are in excess of federally insured limits. We expect
to continue to evaluate potential acquisitions of, or strategic investments in, businesses that are complementary to
our business. Such transactions may require the use of cash and have other impacts on the Company's liquidity and
capital resources in the event of such a transaction. The recent acquisition of Lexington Homes did not have a
significant impact on our liquidity or capital resources. Because of the Company’s sufficient cash position, the
Company has not sought external sources of liquidity, such as a credit facility; however, depending on our operating
results and strategic opportunities, we 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 us to reevaluate our long-term operating plans to make more efficient use of our
existing capital resources. The exact nature of any changes to our plans that would be considered depends on
various factors, such as conditions in the factory-built housing industry and general economic conditions outside of
our control.

Projected cash to be provided by or used in operations in the coming year is largely dependent on sales volume.
Operating activities provided $44.8 million of cash during the year ended April 1, 2017, compared to $43.5 million
during the year ended April 2, 2016. Cash provided by operating activities during the year ended April 1, 2017 was
primarily the result of cash generated by operating income before non-cash charges, collections of principal
payments on consumer loans receivable, higher accounts payable and accrued liabilities, including factory
warranties, wages and unearned insurance premiums. These increases were partially offset by increases in prepaid
and other current assets from the timing of quarterly income tax payments and higher accounts payable primarily as
a result of greater home sales activity. Cash provided by operating activities during the year ended April 2, 2016 was
primarily the result of cash generated by operating income before non-cash charges, collections of principal
payments on consumer loans receivable, higher accounts payable and accrued liabilities, including factory
warranties, wages and insurance loss reserves. These increases were partially offset by increases in commercial
loans receivable from further expansion of our distribution-based lending programs.

Consumer loan originations increased $17.4 million to $116.7 million during the year ended April 1, 2017 from

$99.3 million during the year ended April 2, 2016. This increase is primarily a result of increased home lending
activity. Proceeds from the sale of consumer loans provided $104.4 million in cash, compared to $101.1 million in
the previous year, a net increase of $3.3 million. The primary reason for the increase relates to the timing of loan
origination and related sales, partially offset by an increase in consumer loans held for investment of $5.0 million.

With respect to consumer lending for the purchase of manufactured housing, states may classify manufactured

homes for both legal and tax purposes as personal property rather than real estate. As a result, financing for the
purchase of manufactured homes is characterized by shorter loan maturities and higher interest rates. Unfavorable
changes in these factors and the current adverse trend in the availability and terms of financing in the industry may
have material negative effects on our results of operations and financial condition. See Item IA, "Risk Factors."

Cavco has entered into programs to provide some of the capital used by inventory lenders to finance wholesale
home purchases by retailers. 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 and
invested in community-based lending initiatives that provide home-only financing to new residents of certain
manufactured home communities (see Note 6 to the Consolidated Financial Statements).

Investing activities required the use of $7.1 million of cash during the year ended April 1, 2017, compared to

$38.2 million used during the year ended April 2, 2016. In the current period, cash was used for the purchase of
property, plant and equipment and publicly-traded securities by Standard Casualty for its investment portfolio, as
well as minority investments in distribution operations, offset by Standard Casualty's investment sales. Cash used by
investing activities in the prior period included $28.1 million for the purchase of certain assets and liabilities of
Fairmont Homes and Chariot Eagle as well as the purchase of publicly-traded securities by Standard Casualty for its
investment portfolio and investments in community-based lending institutions that provide home-only loans to
residents of certain manufactured home communities, offset by Standard Casualty's investment sales.

Financing activities used $3.0 million in cash during the year ended April 1, 2017, primarily from payments on

securitized financings, offset by proceeds from other secured financings and tax benefits from stock option exercises
now able to be realized. In the prior year, financing activities used $4.1 million in cash during the year ended,
primarily from payments on securitized financings, offset by loan sales accounted for as other secured financings
and tax benefits from stock option exercises now able to be realized.

CountryPlace’s securitized debt is subject to provisions that require certain levels of overcollateralization.
Overcollateralization is equal to CountryPlace's equity in the bonds. Failure to satisfy these provisions could cause
cash, which would normally be distributed to CountryPlace, to be used for repayment of the principal of the related
Class A bonds until the required overcollateralization level is reached. During periods when the overcollateralization
is below the specified level, cash collections from the securitized loans in excess of servicing fees payable to
CountryPlace and amounts owed to the Class A bondholders, trustee and surety, are applied to reduce the Class A
debt until such time the overcollateralization level reaches the specified level. Therefore, failure to meet the
overcollateralization requirement could adversely affect the timing of cash flows received by CountryPlace.
However, principal payments of the securitized debt, including accelerated amounts, is payable only from cash
collections from the securitized loans and no additional sources of repayment are required or permitted. As of April
1, 2017, the 2005-1 and 2007-1 securitized portfolios were within the required overcollateralization level.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations at April 1, 2017, consisting of future payments
under securitized financings and non-cancelable operating lease agreements. For additional information related to
these obligations, see Notes 11 and 14, respectively, to the Consolidated Financial Statements. This table excludes
long-term obligations for which there is no definite commitment period.

Total

Less than
1 Year

Payments Due by Period
1-3
Years
(in thousands)

3-5
Years

Debt obligations:

Securitized financing 2005-1 (1)
Securitized financing 2007-1 (1)
Commitments for future payments
under noncancelable operating leases

Total contractual obligations

26,410 $
29,118

4,110 $
4,235

22,300 $
24,883

— $
—

11,129
66,657 $

3,470
11,815 $

4,586
51,769 $

2,106
2,106 $

After 5
Years

—
—

967
967

(1) Interest is calculated by applying contractual interest rates to month-end balances. The timing of these estimated
payments fluctuates based upon various factors, including estimated loan portfolio prepayment and default
rates.

The following table summarizes our contingent commitments at April 1, 2017, consisting of contingent
repurchase obligations, letters of credit and remaining construction contingent commitments. For additional
information related to these contingent obligations, see Note 14 to the Consolidated Financial Statements.

Total

Contingent Payments Due by Period
1-3
Less than
Years
1 Year
(in thousands)

3-5
Years

After 5
Years

Repurchase obligations (1)
Letters of credit (2)
Construction contingent commitment (3)
Total contractual obligations

46,301 $
7,000
11,074
64,375 $

32,082 $
7,000
11,074
50,156 $

14,219 $
—
—
14,219 $

— $
—
—
— $

—
—
—
—

(1) Although the repurchase obligations outstanding at April 1, 2017 have a finite life, these commitments are

continually replaced as we continue to sell manufactured homes to retailers under repurchase and other recourse
agreements with lending institutions which have provided wholesale floor plan financing to retailers.
(2) While the current letters of credit have finite lives, they are subject to renewal based on their underlying

requirements.

(3) The total loan contract amount, less cumulative advances, represents an off-balance sheet contingent

commitment of CountryPlace to fund future advances.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated

Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles
("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and
liabilities. Management bases its estimates and judgments on historical experience and on various other factors that
are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

Management believes the following accounting policies are critical to our operating results or may affect

significant judgments and estimates used in the preparation of its Consolidated Financial Statements.

Factory-Built Housing Revenue Recognition. Revenue from homes sold to independent retailers is generally

recognized when the home is shipped, at which time title passes to the independent retailer and collectability is
reasonably assured. Homes sold to independent retailers are generally either paid for prior to shipment or floor plan
financed by the independent retailer through standard industry arrangements, which can include repurchase
agreements. Manufacturing sales financed under repurchase agreements are reduced by a provision for estimated
repurchase obligations (see Note 14). Revenue from homes sold under commercial loan programs involving funds
provided by the Company is either deferred until such time that payment for the related commercial loan receivable
is received by the Company or recognized when the home is shipped, depending on the nature of the program and
borrower (see Note 6 for discussion of commercial loans receivable). Retail sales by Company-owned retail
locations are generally recognized when the customer has entered into a legally binding sales contract, the home is
delivered and permanently located at the customer's site, accepted by the customer, title has transferred and funding
is reasonably assured.

Some of the Company’s independent retailers operate multiple sales outlets. No independent retailer accounted

for 10% or more of our factory-built housing revenue during any fiscal year within the three-year period ended
April 1, 2017.

Financial Services Revenue Recognition. Premium amounts collected on policies issued and assumed by
Standard Casualty are amortized on a straight-line basis into net revenue over the life of the policy. Premiums
earned are net of reinsurance ceded. Policy acquisition costs are also amortized as cost of sales over the life of the
policy.

On April 23, 2011, the date of the Palm Harbor acquisition (the "Palm Harbor Acquisition Date"), management
evaluated consumer loans receivable held for investment by CountryPlace to determine whether there was evidence
of deterioration of credit quality and if it was probable that CountryPlace would be unable to collect all amounts due
according to the loans’ contractual terms. The Company also considered expected prepayments and estimated the
amount and timing of undiscounted expected principal, interest and other cash flows. The Company determined the
excess of the loan pool’s scheduled contractual principal and contractual interest payments over all cash flows
expected as of the Palm Harbor Acquisition Date as an amount that includes interest that cannot be accreted into
interest income (the non-accretable difference). The cash flow expected to be collected in excess of the carrying
value of the acquired loans includes interest that is accreted into interest income over the remaining life of the loans
(referred to as accretable yield). Interest income on consumer loans receivable is recognized as net revenue (see
Note 5).

For loans originated by CountryPlace and held for sale, loan origination fees and gains or losses on sales are
recognized as net revenue upon title transfer of the loans. CountryPlace provides third-party servicing of mortgages
and earns servicing fees each month based on the aggregate outstanding balances. Servicing fees are recognized as
net revenue when earned.

Warranties. We provide the retail home buyer a one-year limited warranty covering defects in material or
workmanship in home structure, plumbing and electrical systems. Nonstructural components of a cosmetic nature
are warranted for 120 days, except in specific cases where state laws require longer warranty terms. We record a
liability for estimated future warranty costs relating to homes sold, based upon our assessment of historical
experience factors. Factors we use in the estimation of the warranty liability include the estimated amount of homes
still under warranty including homes in retailer inventories, homes purchased by consumers still within the one-year
warranty period, the timing in which work orders are completed and the historical average costs incurred to service
a home. We have a reserve for estimated warranties of $15.5 million and $13.4 million at April 1, 2017 and April 2,
2016, respectively. Construction defect claims may arise during a significant period of time after product
completion. Although we maintain general liability insurance and reserves for such claims, based on our
assessments as described above, which to date have been adequate, there can be no assurance that warranty and
construction defect claims will remain at current levels or that such reserves will continue to be adequate. A large
number of warranty and construction defect claims exceeding our current levels could have a material adverse effect
on our results of operations.

Reserve for Repurchase Commitments. Manufactured housing companies customarily enter into repurchase and
other recourse agreements with lending institutions that have provided wholesale floor plan financing to retailers. A
significant portion of our sales are made to retailers pursuant to repurchase agreements with lending institutions.
These agreements generally provide that we will repurchase our new products from the lending institutions in the
event such product is repossessed upon a retailer’s default. Our obligation under these repurchase agreements ceases
upon the purchase of the home by the retail customer. The risk of loss under repurchase agreements is lessened by
certain factors, including the following:

•

sales of our manufactured homes are spread over a relatively large number of independent retailers;

the price that we are obligated to pay under such repurchase agreements declines based on predetermined
amounts over the period of the agreement (generally 18 to 36 months); and

• we have historically been able to resell homes repurchased from lenders.

The Company applies FASB ASC 460, Guarantees ("ASC 460") and FASB ASC 450-20, Loss Contingencies
("ASC 450-20"), to account for its liability for repurchase commitments. Under the provisions of ASC 460, issuance
of a guarantee results in two different types of obligations: (1) a non-contingent obligation to stand ready to perform
under the repurchase commitment (accounted for pursuant to ASC 460) and (2) a contingent obligation to make
future payments under the conditions of the repurchase commitment (accounted for pursuant to ASC 450-20).
Management reviews retailers' inventories to estimate the amount of inventory subject to repurchase obligation,
which is used to calculate (1) the fair value of the non-contingent obligation for repurchase commitments and (2)
the contingent liability based on historical information available at the time. During the period in which a home is
sold (inception of a repurchase commitment), the Company records the greater of these two calculations as a
liability for repurchase commitments and as a reduction to revenue.

(1) The Company estimates the fair value of the non-contingent portion of its manufacturer's inventory

repurchase commitment under the provisions of ASC 460 when a home is shipped to retailers whose floor
plan financing includes a repurchase commitment. The fair value of the inventory repurchase agreement is
determined by calculating the net present value of the difference in (a) the Company's interest cost to carry
the inventory over the maximum repurchase liability period at the prevailing floor plan note interest rate
and (b) the retailer's interest cost to carry the inventory over the maximum repurchase liability period at the
interest rate of a similar type loan without a manufacturer's repurchase agreement in force. Following the
inception of the commitment, the recorded reserve is reduced over the repurchase period in conjunction
with applicable curtailment arrangements and is eliminated once the retailer sells the home.

(2) The Company estimates the contingent obligation to make future payments under its manufacturer's

inventory repurchase commitment for the same pool of commitments as used in the fair value calculation
above and records the greater of the two calculations. This contingent obligation is estimated using
historical loss factors, including the frequency of repurchases and the losses experienced by the Company
for repurchased inventory.

Additionally, subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood

that it will be called on to perform under the inventory repurchase commitments. If it becomes probable that a
retailer will default and an ASC 450-20 loss reserve should be recorded, then such contingent liability is recorded
equal to the estimated loss on repurchase. Based on identified changes in retailers' financial conditions, the
Company evaluates the probability of default for retailers who are identified at an elevated risk of default and
applies a probability of default, based on historical default rates. Commensurate with this default probability
evaluation, the Company reviews repurchase notifications received from floor plan sources and reviews retailer
inventory for expected repurchase notifications based on various communications from the lenders and retailers.
The Company's repurchase commitments for the retailers in the category of elevated risk of default are excluded
from the pool of commitments used in both of the calculations at (1) and (2) above. Changes in the reserve are
recorded as an adjustment to revenue.

The maximum amount for which the Company was contingently liable under such agreements approximated
$46.3 million and $46.6 million at April 1, 2017 and April 2, 2016, respectively, without reduction for the resale
value of the homes. The Company had a reserve for repurchase commitments of $1.7 million at both April 1, 2017
and April 2, 2016. The Company made payments totaling $79,000 under repurchase commitments during fiscal year
2017 and $393,000 in 2016.

Retailer Volume Rebates. The Company’s manufacturing operations sponsor volume rebate programs under
which certain sales to retailers, builders and developers can qualify for cash rebates generally based on the level of
sales attained during a twelve-month period. Volume rebates are accrued at the time of sale and are recorded as a
reduction of net revenue.

Impairment of Long-Lived Assets. The Company periodically evaluates the carrying value of long-lived assets to
be held and used and when events and circumstances warrant such a review. The carrying value of long-lived assets
is considered impaired when the anticipated undiscounted cash flow from such assets is less than its carrying value.
In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the
long-lived assets. Fair value is determined primarily using the anticipated cash flows discounted at a rate
commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar
manner, except that the fair values are based primarily on independent appraisals and preliminary or definitive
contractual arrangements less costs to dispose. The Company recorded no impairment charges on long-lived assets
during fiscal years 2017, 2016 or 2015.

Income Taxes and Deferred Tax Assets and Liabilities. Deferred tax assets and liabilities are determined based
on temporary differences between the financial statement amounts and the tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected to reverse. The Company periodically
evaluates the deferred tax assets based on the requirements established in FASB ASC 740, Income Taxes, which
requires the recording of a valuation allowance when it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The determination of the need for or amount of any valuation allowance
involves significant management judgment and is based upon the evaluation of both positive and negative evidence,
including estimates of anticipated taxable profits in various jurisdictions with which the deferred tax assets are
associated. At April 1, 2017, the Company evaluated its historical profits earned and forecasted taxable profits and
determined that, except for certain state net operating loss deferred tax assets, all other deferred tax assets would be
utilized in future periods. A valuation allowance of $18,000 was recorded during fiscal year 2017 against the related
deferred tax asset. Ultimate realization of the deferred tax assets depends on our ability to continue to earn profits as
we have historically and to meet these forecasts in future periods. Changes in events or expectations could result in
significant adjustments, which could include the recording of additional valuation allowance and material changes
to the provision for income taxes.

Goodwill and Other Intangibles. We test goodwill and indefinite-lived intangibles annually for impairment. Our

analysis depends upon a number of judgments, estimates and assumptions. Accordingly, such testing is subject to
uncertainties, which could cause the fair value to fluctuate from period to period.

As of April 1, 2017, all of our goodwill is attributable to our factory-built housing reporting unit. We performed

our annual goodwill impairment analysis as of April 1, 2017 in accordance with Accounting Standards Update
("ASU") No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The analysis
determined that the fair value of the reporting unit was greater than the carrying value and thus no further
procedures were considered necessary.

In the event that we are not able to achieve expected cash flow levels, or other factors indicate that goodwill is
impaired, we may need to write off all or part of our goodwill, which would adversely affect our operating results
and net worth. See Item 1A, "Risk Factors."

Accretable Yield on Consumer Loans Receivable and Securitized Financings. The Company acquired consumer

loans receivable and securitized financings during the first quarter of fiscal 2012 as a part of the Palm Harbor
transaction. Acquired consumer loans receivable held for investment and securitized financings were acquired at fair
value, which resulted in a discount, and subsequently are accounted for a manner similar to FASB ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30") to accrete the discount.

The Company considers expected prepayments and default rates and estimates the amount and timing of

undiscounted expected principal, interest and other cash flows for consumer loans receivable held for investment to
determine the expected cash flows on securitized financings and the contractual payments. The amount of
contractual principal and contractual interest payments due on the securitized financings in excess of all cash flows
expected as of the Palm Harbor Acquisition Date cannot be accreted into interest expense (the non-accretable
difference). The remaining amount is accreted into interest expense over the remaining life of the obligation
(referred to as accretable yield). For additional information, see Note 5 to the Consolidated Financial Statements.

Other Matters

Related Party Transactions. In July 2015, the Company’s CEO made a payment of $1.1 million to the
Company, representing the repayment of performance bonuses related to fiscal 2012, 2014 and 2015 that were
determined to be in excess of the 2005 Stock Incentive Plan limits and made to the CEO during those periods.

Impact of Inflation. We believe that the general inflation rate over the past several years has not had a significant

impact on our revenue or profitability, but we can give no assurance that this trend will continue in the future.
However, sudden increases in specific costs, such as the increases in material costs, as well as price competition,
can affect our ability to increase our selling prices and adversely impact our results of operations. Therefore, we can
give no assurance that inflation or the impact of rising material costs will not have a significant impact on our
revenue or results of operations in the future.

Impact of Accounting Standards. In September 2013, the United States Treasury and the Internal Revenue
Service issued final regulations regarding the deduction and capitalization of expenditures related to tangible
property. The final regulations under Internal Revenue Code Sections 162, 167 and 263(a) apply to amounts paid to
acquire, produce, or improve tangible property as well as dispositions of such property and are generally effective
for tax years beginning on or after January 1, 2014. These regulations have not had a material impact on our
consolidated results of operations, cash flows or financial position.

In May 2014, the FASB issued ASU No. 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 arising from
contracts with customers and supersedes most current revenue recognition guidance, including industry-specific
guidance. The standard requires entities to recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to
provide users of financial statements with comprehensive information about the nature, amount, timing and
uncertainty of revenue and cash flows arising from a company’s contracts with customers. In August 2015, the
FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,
which deferred the effective date of the new revenue standard. Accordingly, the updated standard will be effective
for us beginning the first quarter of the Company's fiscal year 2019, with early application permitted in fiscal year
2018. The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the
periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current
period presented in the financial statements. The Company is currently evaluating the effect ASU 2014-09 will have
on the Company’s Consolidated Financial Statements and disclosures.

In May 2015, the FASB issued ASU 2015-09, Financial Services-Insurance-Disclosures about Short-Duration
Contracts ("ASU 2015-09"), which would require additional disclosures in annual and interim reporting periods by
insurance entities related to liabilities for claims and claim adjustment expenses, and changes in assumptions or
methodologies for calculating such liabilities. The Company does not believe that these disclosures are material to
the consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of

Deferred Taxes ("ASU 2015-17"). ASU 2015-17 will be effective beginning with the Company's fiscal year 2018
annual report and interim periods thereafter, with early adoption permitted. In this update, entities are required to
present all deferred tax liabilities and assets as noncurrent on the balance sheet instead of separating deferred taxes
into current and noncurrent amounts. The standard can be applied either prospectively to all deferred tax liabilities
and assets or retrospectively to all periods presented. As this standard impacts presentation only, the adoption of
ASU 2015-17 is not expected to have an impact on the Company's financial condition, results of operations or cash
flows.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and

Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 will be effective
beginning with the first quarter of the Company's fiscal year 2019. The amendments require certain equity
investments to be measured at fair value with changes in the fair value recognized through net income. The
Company is currently evaluating the effect ASU 2016-01 will have on the Company's Consolidated Financial
Statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 will be

effective beginning with the first quarter of the Company's fiscal year 2020, with early adoption permitted. The
amendments require the recognition of lease assets and lease liabilities on the balance sheet for most leases, but
recognize expenses in the income statement in a manner similar to current accounting treatment. In addition,
disclosures of key information about leasing arrangements are required. Upon adoption, leases will be recognized
and measured at the beginning of the earliest period presented using a modified retrospective approach. The
Company is currently evaluating the effect ASU 2016-02 will have on the Company's Consolidated Financial
Statements and disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation- Stock Compensation (Topic 718) ("ASU
2016-09"). ASU 2016-09 will be effective beginning with the first quarter of the Company's fiscal year 2018, with
early adoption permitted. The amendment simplifies several aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification of awards as either equity or liabilities, and
classification on the statement of cash flows. Upon adoption, the Company will record any excess tax benefits or
deficiencies from its equity awards in its Consolidated Statements of Comprehensive Income in the reporting
periods in which exercise or settlement occurs. As a result, subsequent to adoption the Company's income tax
expense and effective tax rate will be impacted by fluctuations in stock price between the grant dates and exercise or
settlement dates of equity awards.

In June 2016, the FASB issued 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, which sets forth a new forward-looking impairment model based on
expected losses rather than incurred losses. The guidance also requires increased disclosures. ASU 2016-01 will be
effective beginning with the first quarter of the Company's fiscal year 2021. The Company is currently evaluating
the effect ASU 2016-13 will have on the Company's Consolidated Financial Statements and disclosures.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a
consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"), which provides guidance on the presentation
of restricted cash or restricted cash equivalents in the statement of cash flows. ASU 2016-18 will be effective
beginning with the first quarter of the Company's fiscal year 2019. The adoption of ASU 2016-18 is not expected to
have a material impact on the consolidated financial statements and will only change the presentation of the
Consolidated Statement of Cash Flows.

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 date. Unless otherwise discussed, 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market prices and interest rates. We may from
time to time be exposed to interest rate risk inherent in our financial instruments, but are not currently subject to
foreign currency or commodity price risk. We manage our exposure to these market risks through our regular
operating and financing activities.

Our operations are interest rate sensitive. As overall manufactured housing demand can be adversely affected
by increases in interest rates, a significant increase in wholesale or mortgage interest rates may negatively affect the
ability of retailers and home buyers to secure financing. Higher interest rates could unfavorably impact our
revenues, gross margins and net earnings. Our business is also sensitive to the effects of inflation, particularly with
respect to raw material and transportation costs. We may not be able to offset inflation through increased selling
prices.

CountryPlace is exposed to market risk related to the accessibility and terms of long-term financing of its loans.

In the past, CountryPlace accessed the asset-backed securities market to provide term financing of its chattel and
non-conforming mortgage originations. At present, independent asset-backed and mortgage-backed securitization
markets are not readily available to CountryPlace and other manufactured housing lenders. Accordingly,
CountryPlace has not continued to securitize its loan originations as a means to obtain long-term funding.

We are also exposed to market risks related to our fixed rate consumer and commercial loan notes receivables, as
well as our securitized financings balances. For fixed rate instruments, changes in interest rates do not change future
earnings and cash flows. However, changes in interest rates could affect the fair value of these instruments. Assuming
the level of these instruments as of April 1, 2017, is held constant, a 1% unfavorable change in average interest rates
would adversely impact the fair value of these instruments, as follows (in thousands):

Consumer loans receivable
Commercial loans receivable
Securitized financings

Change in Fair
Value

$
$
$

5,026
164
302

In originating loans for sale, CountryPlace issues interest rate lock commitments ("IRLCs") to prospective
borrowers and third-party originators. These IRLCs represent an agreement to extend credit to a loan applicant, or
an agreement to purchase a loan from a third-party originator, whereby the interest rate on the loan is set prior to
loan closing or sale. These IRLCs bind CountryPlace 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, CountryPlace 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. As of April 1, 2017, CountryPlace had outstanding IRLCs with
a notional amount of $17.4 million and are recorded at fair value in accordance with FASB ASC 815, Derivatives
and Hedging. The estimated fair values of IRLCs are based on quoted market values and are recorded in other
assets in the consolidated balance sheets. The fair value of IRLCs is based on the value of the underlying mortgage
loan adjusted for: (i) estimated cost to complete and originate the loan and (ii) the estimated percentage or IRLCs
that will result in closed mortgage loans. The initial and subsequent changes in the value of IRLCs are a component
of current income. Assuming CountryPlace’s level of IRLCs is held constant, a 1% increase in average interest rates
would decrease the fair value of CountryPlace’s obligations by approximately $0.4 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the Consolidated Financial Statements, the Reports thereon, the Notes thereto, and the
supplementary data commencing on page F-1 of this report, which Consolidated Financial Statements, Reports,
Notes and data are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including

our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period
covered in this report, our disclosure controls and procedures were effective.

Management’s Report on Internal Controls Over Financial Reporting

The management of Cavco Industries, Inc. (the "Company") is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted
accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material
effect on the financial statements.

Because of its inherent limitations, the Company’s controls and procedures may not prevent or detect
misstatements. A control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the controls system are met. Because of the inherent limitations in all
controls systems, no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, have been detected.

Management assessed the effectiveness of the Company’s internal control over financial reporting based on the

criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework). Based on management’s evaluation under the criteria in Internal Control
—Integrated Framework, management concluded that the Company’s internal control over financial reporting was
effective as of April 1, 2017.

The effectiveness of the Company’s internal control over financial reporting as of April 1, 2017, has been
audited by RSM US LLP, an independent registered public accounting firm, as stated in their report, which appears
herein.

Changes in Internal Control over Financial Reporting

There have been no changes in our 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 April 1, 2017, which have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Cavco Industries, Inc.

We have audited Cavco Industries, Inc. and subsidiaries' internal control over financial reporting as of April 1,
2017, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission in 2013. Cavco Industries, Inc.’s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Management’s Report on
Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal
control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (c) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, Cavco Industries, Inc. maintained, in all material respects, effective internal control over financial
reporting as of April 1, 2017, based on the criteria established in Internal Control - Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the April 1, 2017 consolidated financial statements of Cavco Industries, Inc. and subsidiaries, and
our report dated June 13, 2017 expressed an unqualified opinion thereon.

/s/ RSM US LLP
Phoenix, Arizona
June 13, 2017

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

For a description of the directors of the Company and other information called for by this Item 10, see "Election

of Directors," and "General - Section 16(a) Beneficial Ownership Reporting Compliance" in the Company’s Proxy
Statement for the 2017 Annual Meeting of Stockholders, which is incorporated herein by reference. Also see the
information relating to executive officers of the Company that follows Item 4 of Part I of this Report, which is
incorporated in this Item 10 by reference.

The Company has adopted a Code of Ethics that applies to all directors, officers and employees of the

Company. A copy of the Company’s Code of Ethics is located on the Company’s website at www.cavco.com or will
be mailed, at no charge, upon request submitted to James P. Glew, Secretary, Cavco Industries, Inc., 1001 North
Central Avenue, Suite 800, Phoenix, Arizona, 85004. If the Company makes any amendment to, or grants any
waivers of, a provision of the Code of Ethics that applies to its principal executive officer, principal financial
officer, principal accounting officer or controller where such amendment or waiver is required to be disclosed under
applicable SEC rules, the Company intends to disclose such amendment or waiver and the reasons therefore on its
Internet website at www.cavco.com.

ITEM 11. EXECUTIVE COMPENSATION

For a description of the Company’s executive compensation, see "Election of Directors," and "Compensation
Discussion and Analysis" (other than the "Compensation Committee Report") in the Company's Proxy Statement
for the 2017 Annual Meeting of Stockholders, which is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

For a description of the security ownership of management and certain beneficial owners, see "Stock

Ownership" in the Company’s Proxy Statement for the 2017 Annual Meeting of Stockholders, which is
incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of April 1, 2017, with respect to our compensation plans and
individual compensation arrangements under which our equity securities were authorized for issuance to directors,
officers, employees, consultants and certain other persons and entities in exchange for the provision to us of goods
or services.

Plan Category
Equity compensation plans approved by
stockholders
Equity compensation plans not approved by
stockholders
Total

Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants, and
Rights (a)

Weighted-
Average Exercise
Price of
Outstanding
Options,
Warrants, and
Rights

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))

68.01

—
68.01

346,202

—
346,202

464,930 $

—
464,930 $

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

For a description of certain relationships and related transactions of the Company, see "Compensation

Discussion and Analysis-Compensation Committee Interlocks and Insider Participation" of the Company’s Proxy
Statement for the 2017 Annual Meeting of Stockholders, which is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

For a description of principal accounting fees and services, see "Audit Fees" and "Ratification of Appointment
of Independent Auditor" in the Company's Proxy Statement for the 2017 Annual Meeting of Stockholders, which is
incorporated herein by reference.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements and Financial Statement Schedules

PART IV

Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this report.

All schedules have been omitted because they are not applicable or the required information is included in the

Consolidated Financial Statements or Notes thereto.

Exhibits

The documents listed below are being filed or have previously been filed on behalf of the Company and are
incorporated herein by reference from the documents indicated and made a part hereof. Exhibits not identified as
previously filed are filed herewith.

Restated Certificate of Incorporation of Cavco

Exhibit

Filed/Furnished Herewith or
Incorporated by Reference

Exhibit 3.1 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2004

Certificate of Amendment to Restated Certificate of
Incorporation of Cavco

Exhibit 3.1 to the Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2006

Exhibit
Number

3.1

3.2

3.3

Amended and Restated Bylaws of Cavco

10.1*

Stock Incentive Plan of Cavco

10.1.1*

Amendment to the Cavco Industries, Inc. Stock Incentive Plan

10.1.2*

Form of Stock Option Agreement for Stock Incentive Plan

10.2*

Cavco 2005 Stock Incentive Plan

Exhibit 3.2 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2004

Exhibit 10.6 to the Registration Statement on Form 10/A
(File No. 000-08822) filed by Cavco on April 23, 2003,
as amended by Form 10/A dated May 21, 2003, Form 10/
A dated May 30, 2003, Form 10/A dated June 17, 2003,
and Form 10/A dated June 20, 2003

Exhibit 10.1 to the Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2010

Exhibit 10.18 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2008

Exhibit A to the Corporation's Definitive Proxy
Statement for its 2005 Annual Meeting of Stockholders
filed by the Company with the Securities and Exchange
Commission on May 23, 2005, and incorporated by
reference herein (this Exhibit is filed as an Exhibit to the
Company's Registration Statement on Form S-8 (No.
333-132925), filed with the Securities and Exchange
Commission on April 3, 2006)

10.2.1*

10.2.2*

10.2.3*

First Amendment to Cavco Industries, Inc. 2005 Stock
Incentive Plan

Exhibit 10.2 to the Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2010

Second Amendment to Cavco Industries, Inc. 2005 Stock
Incentive Plan

Exhibit 10.1 to the Quarterly Report on Form 10-Q for
the fiscal quarter ended September 26, 2015

Representative Form of Restricted Stock Award Agreement for
the applicable Cavco stock incentive plan

Exhibit 10.1 to the Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2007

10.2.4*

Form of Stock Option Agreement for Stock Incentive Plan

10.2.5*

Form of Stock Option Agreement for Stock Incentive Plan

Exhibit 10.18 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2008

Exhibit 10.1 to the Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2012

10.3*

Amended and Restated Employment Agreement, dated June
30, 2011, between Joseph H. Stegmayer and Cavco

Exhibit 10.1 to the Periodic Report on Form 8-K filed on
July 5, 2011

10.4*

Executive Officer Incentive Plans for Fiscal Year 2015

Periodic Report on Form 8-K filed on May 8, 2014

10.4.2*

Executive Officer Incentive Plans for Fiscal Year 2016

Periodic Report on Form 8-K filed on June 9, 2015

10.4.3*

Executive Officer Incentive Plans for Fiscal Year 2017

Periodic Report on Form 8-K filed on June 30, 2016

10.5

Distribution Agreement, dated May 30, 2003, among Centex,
Cavco Industries, LLC, and Cavco

Exhibit 10.9 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2004

Exhibit
Number

Exhibit

Filed/Furnished Herewith or
Incorporated by Reference

10.6

10.7

10.8

10.8.1

10.8.2

10.8.3

10.8.4

10.9

Tax Sharing Agreement, dated June 30, 2003, among Centex,
Centex’s Affiliates, and Cavco

Exhibit 10.10 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2004

Asset Purchase Agreement dated July 2009 by and among FH
Holding, Inc., Fleetwood Enterprises, Inc. and certain of its
subsidiaries

Shareholders’ Agreement by and among FH Holding, Inc. (now
known as Fleetwood Homes, Inc.) and its Shareholders dated
August 17, 2009

Exhibit 10.1 to the Periodic Report on Form 8-K filed on
July 23, 2009

Exhibit 10.10 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2012

First Amendment to Shareholders’ Agreement dated November
30, 2010

Exhibit 10.10.1 to the Annual Report on Form 10-K for
the fiscal year ended March 31, 2012

Second Amendment to Shareholders’ Agreement dated June
17, 2011

Exhibit 10.10.2 to the Annual Report on Form 10-K for
the fiscal year ended March 31, 2012

Third Amendment to Shareholders’ Agreement dated February
16, 2012

Exhibit 10.10.3 to the Annual Report on Form 10-K for
the fiscal year ended March 31, 2012

Fourth Amendment to Shareholders’ Agreement dated June 5,
2012

Exhibit 10.10.4 to the Annual Report on Form 10-K for
the fiscal year ended March 31, 2012

Debtor-In-Possession Revolving Credit Agreement dated
November 29, 2010

Exhibit 10.1 to the Periodic Report on Form 8-K filed on
November 29, 2010

Exhibit 10.2 to the Periodic Report on Form 8-K filed on
November 29, 2010

Exhibit 10.3 to the Periodic Report on Form 8-K filed on
November 29, 2010

Exhibit 2.1 to the Periodic Report on Form 8-K filed
on June 14, 2013

10.10

Security Agreement dated November 29, 2010

10.11

Asset Purchase Agreement dated November 29, 2010

10.12

23.1

23.2

31.1

31.2

Stock Purchase Agreement, dated June 14, 2013, by and among
Third Avenue Trust, a Delaware Trust, the Whitman High
Conviction Fund and Cavco Industries, Inc., a Delaware
corporation

List of Subsidiaries of Cavco

Consent of RSM US LLP, Independent Registered Public
Accounting Firm

Filed herewith

Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm

Filed herewith

Certificate of Joseph H. Stegmayer, Chief Executive Officer,
pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended

Certificate of Daniel L. Urness, Chief Financial Officer,
pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended

Filed herewith

32.1**

Certifications of Chief Executive Officer and Chief Financial
Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished herewith

Management contract or compensatory plan or arrangement

These certifications are not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liability of that section. These certifications are not to be deemed incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless Cavco
specifically incorporates them by reference.

Copies of any of the exhibits referred to above will be furnished at no cost to security holders who make a
written request to James P. Glew, Secretary, Cavco Industries, Inc., 1001 North Central Avenue, Suite 800, Phoenix,
Arizona, 85004 or via the Company website (www.cavco.com).

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has

duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Date:

June 13, 2017

CAVCO INDUSTRIES, INC.

/s/ Joseph H. Stegmayer
Joseph H. Stegmayer – Chairman,

President and Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

/s/ Joseph H. Stegmayer

/s/ Daniel L. Urness

Chairman, President and
Chief Executive Officer
(Principal Executive Officer)

Executive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting
Officer)

/s/ William C. Boor

/s/ Steven G. Bunger

/s/ David A. Greenblatt

/s/ Jack Hanna

Director

Date

June 13, 2017

CAVCO INDUSTRIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of April 1, 2017 and April 2, 2016

Consolidated Statements of Comprehensive Income for the Years Ended April 1, 2017, April
2, 2016 and March 28, 2015

Consolidated Statements of Stockholders’ Equity for the Years Ended April 1, 2017, April 2,
2016 and March 28, 2015

Consolidated Statements of Cash Flows for the Years Ended April 1, 2017, April 2, 2016 and
March 28, 2015

Notes to Consolidated Financial Statements

F-2

F-4

F-5

F-6

F-7

F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Cavco Industries, Inc.

We have audited the accompanying consolidated balance sheets of Cavco Industries, Inc. and subsidiaries (the
Company) as of April 1, 2017 and April 2, 2016, and the related consolidated statements of comprehensive income,
stockholders’ equity and cash flows for the fiscal years then ended. These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Cavco Industries, Inc. and subsidiaries as of April 1, 2017 and April 2, 2016, and the
consolidated results of their operations and their cash flows for the years then ended in conformity with U.S.
generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Cavco Industries Inc.’s internal control over financial reporting as of April 1, 2017, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013 and our report dated June 13, 2017 expressed an unqualified
opinion on the effectiveness of Cavco Industries, Inc.'s internal controls over financial reporting.

/s/ RSM US LLP
Phoenix, Arizona
June 13, 2017

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Cavco Industries, Inc.

We have audited the accompanying consolidated statements of comprehensive income and cash flows for the year
ended March 28, 2015. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
results of their operations and their cash flows for the year ended March 28, 2015, in conformity with U.S.
generally accepted accounting principles.

/s/ Ernst & Young LLP
Phoenix, Arizona
June 10, 2015

F-3

CAVCO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)

ASSETS
Current assets:

Cash and cash equivalents
Restricted cash, current
Accounts receivable, net
Short-term investments
Current portion of consumer loans receivable, net
Current portion of commercial loans receivable, net
Inventories
Prepaid expenses and other current assets
Deferred income taxes, current

Total current assets
Restricted cash
Investments
Consumer loans receivable, net
Commercial loans receivable, net
Property, plant and equipment, net
Goodwill and other intangibles, net
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable
Accrued liabilities
Current portion of securitized financings and other

Total current liabilities
Securitized financings and other
Deferred income taxes
Stockholders’ equity:

Preferred stock, $.01 par value; 1,000,000 shares authorized; No shares
issued or outstanding
Common stock, $.01 par value; 40,000,000 shares authorized; Outstanding
8,994,968 and 8,927,989 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income

Total stockholders’ equity
Total liabilities and stockholders’ equity

April 1,
2017

April 2,
2016

132,542 $
11,573
31,221
11,289
31,115
7,932
93,855
28,033
9,204
356,764
724
30,256
64,686
17,901
56,964
80,021
607,316 $

24,010 $
109,789
6,417
140,216
51,574
21,118

97,766
10,218
29,113
10,140
21,918
3,557
94,813
22,196
8,998
298,719
1,082
28,948
67,640
21,985
55,072
80,389
553,835

18,513
100,314
6,262
125,089
54,909
20,611

—

90
244,791
148,141
1,386
394,408
607,316 $

89
241,662
110,186
1,289
353,226
553,835

See accompanying Notes to Consolidated Financial Statements

F-4

CAVCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per share amounts)

Net revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Other income, net
Income before income taxes
Income tax expense
Net income

Comprehensive income:

Net income
Unrealized gain on available-for-sale securities, net of tax
Comprehensive income

Net income per share:

Basic
Diluted

Weighted average shares outstanding:

Basic
Diluted

$
$

April 1,
2017

Year Ended
April 2,
2016

March 28,
2015

773,797 $
615,760
158,037
101,231
56,806
(4,443)
2,918
55,281
(17,326)
37,955

712,352 $
567,907
144,445
98,103
46,342
(4,363)
2,049
44,028
(15,487)
28,541

566,659
440,523
126,136
87,659
38,477
(4,587)
3,437
37,327
(13,510)
23,817

37,955 $
97
38,052

28,541 $
785
29,326

23,817
68
23,885

4.23 $
4.17 $

3.21 $
3.15 $

2.69
2.64

8,976,064
9,105,743

8,889,731
9,046,347

8,854,359
9,015,779

See accompanying Notes to Consolidated Financial Statements

F-5

CAVCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands)

Balance, March 29, 2014

Net income

Unrealized gain on available-for-sale securities

Stock option exercises and associated tax
benefits

Stock-based compensation

Balance, March 28, 2015

Net income

Unrealized gain on available-for-sale securities

Stock option exercises and associated tax
benefits

Stock-based compensation

Balance, April 2, 2016

Net income

Unrealized gain on available-for-sale securities

Stock option exercises and associated tax
benefits

Stock-based compensation

Balance, April 1, 2017

Common Stock

Amount

8,844,824

—

14,375

—

8,859,199

—

68,790

8,927,989

—

66,979

—

8,994,968

Stockholders’ Equity

Additional
paid-in capital

Retained
earnings

Accumulated
other
comprehensive
income

Total

232,081

57,828

436

290,433

—

4,178

1,657

237,916

—

1,984

1,762

241,662

—

1,004

2,125

23,817

—

81,645

28,541

—

110,186

37,955

—

504

—

785

1,289

—

23,817

4,179

1,657

320,154

28,541

785

1,984

1,762

353,226

37,955

1,005

2,125

244,791

148,141

1,386

394,408

—

See accompanying Notes to Consolidated Financial Statements

F-6

CAVCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

OPERATING ACTIVITIES

Net income
Adjustments to reconcile net income to net cash provided by operating activities:

37,955

28,541

23,817

April 1,
2017

Year Ended

April 2,
2016

March 28,
2015

Depreciation and amortization
Provision for credit losses
Deferred income taxes
Stock-based compensation expense
Non-cash interest income, net
Incremental tax benefits from option exercises
Gain on sale of property, plant and equipment and assets held for sale

Gain on investments and sale of loans
Changes in operating assets and liabilities:

Restricted cash
Accounts receivable
Consumer loans receivable originated
Principal payments on consumer loans receivable
Proceeds from sales of consumer loans
Inventories
Prepaid expenses and other current assets
Commercial loans receivable
Accounts payable and accrued liabilities

Net cash provided by operating activities

INVESTING ACTIVITIES

Purchases of property, plant and equipment
Purchase of certain assets and liabilities of Fairmont Homes and Chariot Eagle

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

Purchases of investments
Proceeds from sale of investments

Net cash used in investing activities

FINANCING ACTIVITIES

Proceeds from exercise of stock options
Incremental tax benefits from exercise of stock options
Proceeds from secured financings and other
Payments on securitized financings and other
Net cash (used in) provided by financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes
Cash paid during the year for interest

3,687
792
278
2,125
(1,161)
(2,398)

(62)
(7,179)

(1,682)
(2,145)
(116,662)
11,629
104,446
958
(2,779)
(373)
17,365
44,794

(5,295)

—

145
(10,930)
9,018
(7,062)

(1,393)
2,398
4,270
(8,231)
(2,956)
34,776
97,766
132,542

18,106
3,402

$
$

3,922
408
(940)
1,762
(1,681)
(1,279)

(15)
(5,836)

100
3,332
(99,314)
11,717
101,130
(3,980)
(2,325)
(7,515)
15,516
43,543

(3,519)

(28,121)

93
(17,114)
10,434
(38,227)

705
1,279
1,383
(7,514)
(4,147)
1,169
96,597
97,766

15,443
3,862

$
$

3,757
(149)
4,341
1,657
(1,098)
(3,679)

(1,558)
(6,263)

(3,092)
(6,205)
(107,957)
14,143
100,380
(5,605)
(233)
3,293
10,149
25,698

(2,210)

—

6,035
(16,707)
10,783
(2,099)

500
3,679
3,573
(7,703)
49
23,648
72,949
96,597

7,373
4,103

$
$

See accompanying Notes to Consolidated Financial Statements

F-7

CAVCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Principles of Consolidation. These Consolidated Financial Statements include the accounts of Cavco Industries,

Inc. and its consolidated subsidiaries (collectively, the "Company" or "Cavco"). All significant intercompany
transactions and balances have been eliminated in consolidation. Certain prior period amounts have been
reclassified to conform to current period classification. The Company has evaluated subsequent events after the
balance sheet date of April 1, 2017, through the date of the filing of this report with the Securities and Exchange
Commission ("SEC").

On March 30, 2015, the Company purchased certain manufactured housing assets and liabilities of Chariot

Eagle, LLC, which produces park model RVs and manufactured homes distributed in the southeastern United
States. On May 1, 2015, the Company also purchased certain manufactured housing assets and liabilities of
Fairmont Homes, a premier builder of manufactured and modular homes and park model RVs serving the Midwest,
western Great Plains states, the Northeast and several provinces in Canada. These operations include manufactured
housing production facilities in Ocala, Florida; Nappanee, Indiana; and two factories in Montevideo, Minnesota,
and provided for further operating capacity, increased home production capabilities and distribution in the
Southeastern United States.

Subsequent to the end of fiscal year 2017, the Company purchased Lexington Homes, Inc. in April 2017. As
such, the results of operations from these operations are not included in our fiscal year 2017 Consolidated Financial
Statements. This operation includes a manufactured housing production facility in Lexington, Mississippi and
provides for further operating capacity, increased home production capabilities and further distribution into certain
markets.

Nature of Operations. Headquartered in Phoenix, Arizona, the Company designs and produces manufactured
homes which are sold to a network of independent retailers located throughout the continental United States as well
as through Company-owned retail sales locations which offer the Company’s homes to retail customers. Our
financial services group is comprised of a mortgage subsidiary, CountryPlace, an approved Federal National
Mortgage Association ("FNMA" or "Fannie Mae") and Federal Home Loan Mortgage Corporation ("FHLMC" and
"Freddie Mac") seller/servicer, a Government National Mortgage Association ("GNMA" or "Ginnie Mae")
mortgage-backed securities issuer which offers conforming mortgages and chattel loans to purchasers of factory-
built and site-built homes. Also included is our insurance subsidiary, Standard Casualty, which provides property
and casualty insurance to owners of manufactured homes.

Fiscal Year. The Company utilizes a 52-53 week fiscal year ending on the Saturday nearest to March 31 of each
year. Each fiscal quarter consists of 13 weeks, with an occasional fourth quarter extending to 14 weeks, if necessary,
for the fiscal year to end on the Saturday nearest to March 31. The Company’s current fiscal year consisted of 52
weeks and ended on April 1, 2017. The previous fiscal year, ending April 2, 2016, consisted of 53 weeks.

Accounting Estimates. 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
accompanying notes. Actual results could differ from the estimates and assumptions used in preparation of the
consolidated financial statements.

F-8

Fair Value of Financial Instruments. The Company’s financial instruments consist of cash and cash equivalents,
restricted cash, accounts receivable, investments, consumer loans receivable, commercial loans receivable, accounts
payable, certain accrued liabilities and securitized financings. The carrying amount of cash and cash equivalents
approximates fair value because their maturity is less than three months. The carrying amounts of restricted cash,
accounts receivable, accounts payable and certain accrued liabilities approximate fair value due to the short-term
maturity of the amounts. The carrying amount of investments classified as available for sale is at fair value as the
investments are marked to market (see Note 3). The carrying amount of the Company’s commercial loans
receivable fair value is estimated based on the market value of comparable loans. The fair value of consumer loans
receivable and securitized financings are both estimated to be greater than carrying value (see Note 17).

Factory-Built Housing Revenue Recognition. Revenue from homes sold to independent retailers is generally

Some of the Company’s independent retailers operate multiple sales outlets. No independent retailer accounted

for 10% or more of our factory-built housing revenue during any fiscal year within the three-year period ended
April 1, 2017.

At the Palm Harbor Acquisition Date, management evaluated consumer loans receivable held for investment by

CountryPlace to determine whether there was evidence of deterioration of credit quality and if it was probable that
CountryPlace would be unable to collect all amounts due according to the loans’ contractual terms. The Company
also considered expected prepayments and estimated the amount and timing of undiscounted expected principal,
interest and other cash flows. The Company determined the excess of the loan pool’s scheduled contractual
principal and contractual interest payments over the undiscounted cash flows expected as of the Palm Harbor
Acquisition Date as an amount that is not accreted into interest income (the non-accretable difference). The cash
flow expected to be collected in excess of the carrying value of the acquired loans is accreted into interest income
over the remaining life of the loans (referred to as accretable yield). Interest income on consumer loans receivable is
recognized as net revenue (see Note 5).

Cash and Cash Equivalents. Highly liquid investments with insignificant interest rate risk and original
maturities of three months or less, when purchased, are classified as cash equivalents. The Company’s cash
equivalents are comprised of U.S. Treasury money market funds and money market funds.

F-9

Restricted Cash. Restricted cash primarily represents cash related to CountryPlace customer payments to be
remitted to third parties, cash held in trust for workers' compensation insurance and deposits received from retail
customers required to be held in trust accounts. The Company cannot access restricted cash for general operating
purposes (see Note 2).

Accounts Receivable. The Company extends competitive credit terms on a customer-by-customer basis in the
normal course of business and its accounts receivable are subject to normal industry risk. The Company provides
for reserves against accounts receivable for estimated losses that may result from customers' inability to pay. As of
April 1, 2017, allowance for doubtful accounts was $7,000, attributable to factory-built housing operations,
compared to $75,000 at April 2, 2016.

Investments. Management determines the appropriate classification of its investment securities at the time of

purchase. The Company’s investments include marketable debt and equity securities, which are classified as
available-for-sale, and non-marketable equity investments. All investments classified as available-for-sale are
recorded at fair value with any unrealized gains and losses reported in accumulated other comprehensive income,
net of income tax, if applicable. Realized gains and losses from the sale of securities are determined using the
specific identification method (see Note 3).

Management regularly makes an assessment to determine whether a decline in value of an individual security is

other-than-temporary. The Company considers the following factors when making its assessment: (i) the
Company’s ability and intent to hold the investment to maturity, or a period of time sufficient to allow for a
recovery in market value; (ii) whether it is probable that the Company will be able to collect the amounts
contractually due; and (iii) whether any decision has been made to dispose of the investment prior to the balance
sheet date. Investments on which there is an unrealized loss that is deemed to be other-than-temporary are written
down to fair value with the loss recorded in earnings.

Consumer Loans Receivable. Consumer loans receivable consists of manufactured housing loans originated by
CountryPlace (securitized, held for investment, or held for sale) and construction advances on mortgages. The fair
value of consumer loans receivable held on the Palm Harbor Acquisition Date was calculated as of that date, as
determined by the present value of expected future cash flows, with no allowance for loan loss recorded.

Loans held for investment consist of loan contracts collateralized by the borrowers’ homes and, in some
instances, related land. Construction loans in progress are stated at the aggregate amount of cumulative funded
advances. Loans held for sale consist of loan contracts collateralized by single-family residential mortgages. Loans
held for sale are stated at the lower of cost or market on an aggregate basis. Loans held for sale are loans that, at the
time of origination, are originated with the intent to resell in the mortgage market to investors, such as Fannie Mae
and Freddie Mac, with which the Company has pre-existing purchase agreements, or to sell as part of a Ginnie Mae
insured pool of loans.

Prior to being acquired by the Company, CountryPlace completed two securitizations of factory-built housing
loan receivableson July 12, 2005 and March 22, 2007. These two securitizations were accounted for as financings,
which use the portfolio method of accounting in accordance with FASB ASC 310, Receivables – Nonrefundable
Fees and Other. The securitizations included provisions for removal of accounts, retention of certain credit loss risk
by CountryPlace and other factors that preclude sale accounting of the securitizations under FASB ASC 860,
Transfers and Servicing. Both securitizations were accounted for as securitized borrowings; therefore, the related
consumer loans receivable and securitized financings were included in CountryPlace’s financial statements. Since
the Palm Harbor Acquisition Date, the acquired consumer loans receivable and securitized financings are accounted
for in a manner similar to FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality
("ASC 310-30").

F-10

Allowance for Loan Losses. The primary portion of the allowance for loan losses reflects the Company’s
judgment of the probable loss exposure on our commercial loans receivable as of the end of the reporting period.
The allowance for loan loss is developed at a portfolio level. A range of probable losses is calculated and the
Company makes a determination of the best estimate within the range of loan losses. The Company has historically
been able to resell repossessed homes, thereby mitigating loss experience. If a default occurs and collateral is lost,
the Company is exposed to loss of the full value of the home loan. If the Company determines that it is probable
that a borrower will default, a specific reserve is determined and recorded within the estimated allowance for loan
loss. The Company recorded an allowance for loan loss of $210,000 and $128,000 at April 1, 2017 and April 2,
2016, respectively (see Note 6).

Another portion of the allowance for loan losses relates to consumer loans receivable originated by
CountryPlace after the Palm Harbor Acquisition Date. This allowance for loan losses reflects CountryPlace’s
judgment of the probable loss exposure on its loans originated since the Palm Harbor Acquisition Date in the held
for investment portfolio as of the end of the reporting period.

CountryPlace accounts for the loans that were in existence at the Palm Harbor Acquisition Date in a manner
similar to ASC 310-30. Management evaluated such loans as of the Palm Harbor Acquisition Date to determine
whether there was evidence of deterioration of credit quality and if it was probable that CountryPlace would be
unable to collect all amounts due according to the loans’ contractual terms.

Over the life of the loans, CountryPlace continues to estimate cash flows expected to be collected.

CountryPlace evaluates at the balance sheet date whether the present value of its expected cash flows, determined
using the effective interest rate, has decreased and, if so, recognizes an allowance for loan loss subsequent to the
Palm Harbor Acquisition Date. The present value of any subsequent increase in the loan pool’s actual cash flows
expected to be collected is used first to reverse any existing allowance for loan loss. Any remaining increase in cash
flows expected to be collected adjusts the amount of accretable yield recognized on a prospective basis over the
loan pool’s remaining life (see Note 5).

CountryPlace has modified payment amounts and/or interest rates for borrowers that, in management’s

judgment, exhibited the willingness and ability to continue to pay and meet certain other conditions. CountryPlace
considers a modified loan a troubled debt restructuring when three conditions are met: (i) the borrower is
experiencing financial difficulty, (ii) concessions are made by CountryPlace that it would not otherwise consider for
a borrower with similar risk characteristics, and (iii) the loan was originated after the Palm Harbor Acquisition
Date. CountryPlace no longer considers modified loans to be troubled debt restructurings once the modified loan is
seasoned for six months, is not delinquent under the modified terms and is at a market rate of interest at the
modification date.

Commercial Loans Receivable. The Company’s commercial loans receivable balance consists of amounts

loaned by the Company under commercial loan programs for the benefit of our independent retailers and
community operators’ home purchasing needs. Under the terms of certain programs, the Company has entered into
direct commercial loan arrangements with independent retailers and community operators wherein the Company
provides funds to purchase home inventory or homes for placement in communities. In addition, the Company
provides a significant amount of the funds that independent financiers lend to distributors to finance retail
inventories of homes. Interest income on commercial loans receivable is recognized as Other income in the
Consolidated Statements of Comprehensive Income on an accrual basis.

Inventories. Raw material inventories are valued at the lower of cost (first-in, first-out method) or market.

Finished goods and work-in-process inventories are valued at the lower of cost or market, using the specific
identification method.

Assets Held for Sale. As of April 1, 2017, the Company has no assets classified as held for sale.

F-11

Property, Plant and Equipment. Property, plant and equipment are carried at cost. Depreciation is calculated
using the straight-line method over the estimated useful life of each asset. Estimated useful lives for significant
classes of assets are as follows: buildings and improvements, 10 to 39 years; and machinery and equipment, 3 to 25
years. Repairs and maintenance charges are expensed as incurred. The Company sold miscellaneous property, plant
and equipment in the normal course of business.

Asset Impairment. The Company periodically evaluates the carrying value of long-lived assets to be held and
used and held for sale for impairment when events and circumstances warrant such a review. The carrying value of
a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is less than
its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the
fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a
rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar
manner, except that the fair values are primarily based on independent appraisals and preliminary or definitive
contractual arrangements less costs to dispose. The Company recognized no impairment losses in fiscal years 2017,
2016 or 2015.

Goodwill and Other Intangibles. The Company accounts for goodwill and other intangible assets in accordance
with the provisions of FASB ASC 350, Intangibles—Goodwill and Other ("ASC 350"). As such, the Company tests
goodwill annually for impairment. The Company has identified two reporting units, factory-built housing and
financial services. As of April 1, 2017, all of the Company's goodwill is attributable to its factory-built housing
reporting unit. Certain intangibles are considered indefinite-lived and others are finite-lived and are amortized over
their useful lives. Indefinite-lived intangible assets are assessed annually for impairment first by making a
qualitative assessment, and if necessary, performing a quantitative assessment and recording an impairment charge
if the fair value of the asset is less than its carrying amount.

The Company performed its annual goodwill impairment analysis as of April 1, 2017 in accordance with

Accounting Standards Update ("ASU") No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing
Goodwill for Impairment. The analysis determined that the fair value of the reporting unit was greater than the
carrying value. As a result, no impairment was determined to be necessary for fiscal years 2017 or 2016.

Warranties. The Company provides retail home buyers, builders or developers with a one-year warranty for
manufacturing defects from the date of sale to the retail customer. Nonstructural components of a cosmetic nature
are warranted for 120 days, except in specific cases where state laws require longer warranty terms. Estimated
warranty costs are accrued as cost of sales at the time of sale. The warranty provision and reserves are based on
estimates of the amounts necessary to settle existing and future claims on homes sold as of the balance sheet date.
Factors used to calculate the warranty obligation are the estimated amount of homes still under warranty including
homes in retailer inventories, homes purchased by consumers still within the one-year warranty period, the timing
in which work orders are completed and the historical average costs incurred to service a home.

F-12

Reserve for Repurchase Commitment. The Company is contingently liable under terms of repurchase

agreements with financial institutions providing inventory financing for retailers of its products. These
arrangements, which are customary in the industry, provide for the repurchase of products sold to retailers in the
event of default by the retailer. Our obligation under these repurchase agreements ceases upon the purchase of the
home by the retail customer. The risk of loss under these agreements is spread over numerous retailers. The price
the Company is obligated to pay generally declines over the period of the agreement (generally 18 to 36 months)
and is further reduced by the resale value of repurchased homes. The Company applies FASB ASC 460, Guarantees
("ASC 460") and FASB 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 a
repurchase commitment), the Company records the greater of the estimated fair value of the non-contingent
obligation or a contingent liability for each repurchase arrangement under the provisions of ASC 450-20, based on
historical information available, as a reduction to revenue. Additionally, subsequent to the inception of the
repurchase commitment, the Company evaluates the likelihood that it will be called on to perform under the
inventory repurchase commitments. If it becomes probable that a retailer will default and an ASC 450-20 loss
reserve should be recorded, then such contingent liability is recorded equal to the estimated loss on repurchase.
Following the inception of the commitment, the recorded reserve is reduced over the repurchase period in
conjunction with applicable curtailment arrangements and is eliminated once the retailer sells the home. Changes in
the reserve are recorded as an adjustment to revenue.

Reserve for Property-Liability Insurance Claims and Claims Expense. Standard Casualty establishes reserves

for claims and claims expense ("loss") on reported and unreported claims of insured losses. Standard Casualty’s
reserving process takes into account known facts and interpretations of circumstances and factors, including
Standard’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and
pending levels of unpaid claims, loss management programs, product mix, contractual terms, changes in law and
regulation, judicial decisions and economic conditions. In the normal course of business, Standard Casualty may
also supplement its claims processes by utilizing third party adjusters, appraisers, engineers, inspectors and other
professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The
effects of inflation are implicitly considered in the reserving process. The applicable reserve balance was $5.2
million as of April 1, 2017, of which $2.6 million related to incurred but not reported ("IBNR") losses.

Insurance. The Company is self-insured for a significant portion of its general and products liability, auto
liability, health, property and workers’ compensation liability coverage. Insurance is maintained for catastrophic
exposures and those risks required to be insured by law. Estimated self-insurance costs are accrued for incurred
claims and estimated IBNR claims. A reserve for products liability is actuarially determined and reflected in
accrued liabilities in the accompanying Consolidated Balance Sheets. The determination of claims and expenses
and the appropriateness of the related liabilities are regularly reviewed and updated.

Advertising. Advertising costs are expensed as incurred and were $1.0 million in fiscal year 2017, $0.7 million

in fiscal year 2016 and $1.5 million in fiscal year 2015.

Freight. Substantially all freight costs are recovered from the Company’s retailers. Freight charges of $24.3
million were recognized in net revenue and cost of sales in fiscal year 2017, $22.3 million was recognized in fiscal
year 2016 and $17.6 million was recognized for in fiscal year 2015.

Income Taxes. The Company accounts for income taxes pursuant to FASB ASC 740, Income Taxes ("ASC
740"), and provides for income taxes utilizing the asset and liability approach. Under this approach, deferred taxes
represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid. The provision for income taxes generally represents income taxes paid or payable for the current
year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial
and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when
changes are enacted.

F-13

The calculation of tax liabilities involves considering uncertainties in the application of complex tax

regulations. The Company recognizes liabilities for anticipated tax audit issues based on the Company’s estimate of
whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be
unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the
liabilities are no longer determined to be necessary. If the estimate of tax liabilities proves to be less than the
ultimate assessment, a further charge to expense would result. The Company uses a two-step approach to evaluate
uncertain tax positions. This approach involves recognizing any tax positions that are more likely than not to occur
and then measuring those positions to determine the amounts to be recognized in the Consolidated Financial
Statements.

Other Income, net. Other income, net totaled $2.9 million, $2.0 million and $3.4 million for fiscal years 2017,

2016 and 2015, respectively. Other income primarily consists interest related to commercial loan receivable
balances and interest income earned on cash balances, gains and losses on the sale of corporate investments and
gains and losses or impairment on property, plant and equipment, including assets held for sale or sold.

Accumulated Other Comprehensive Income. Accumulated other comprehensive income is comprised of
unrealized gains and losses on available-for-sale investments (see Note 3). Unrealized gains and losses are
presented net of tax. Unrealized gain on available-for-sale investments during fiscal year 2017 was $121,000 before
tax, with an associated tax amount of $24,000, resulting in a net unrealized gain of $97,000. Unrealized gain on
available-for-sale investments during fiscal year 2016 was $1.3 million, offset by tax effect of $539,000, for a net
unrealized gain of $785,000. Unrealized gain on available-for-sale investments during fiscal year 2015 was
$106,000 before tax, with an associated tax amount of $38,000, resulting in a net unrealized gain of $68,000.

Net Income Per Share Attributable to Cavco Common Stockholders. Basic earnings per common share

attributable to Cavco common stockholders is computed based on the weighted-average number of common shares
outstanding during the reporting period. Diluted earnings per common share attributable to Cavco common
stockholders is computed based on the combination of dilutive common share equivalents, comprised of shares
issuable under the Company’s stock-based compensation plans and the weighted-average number of common
shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-
the-money options to purchase shares, which is calculated based on the average share price for each period using
the treasury stock method (see Note 16).

Recent Accounting Pronouncements. In September 2013, the United States Treasury and the Internal Revenue

Service issued final regulations regarding the deduction and capitalization of expenditures related to tangible
property. The final regulations under Internal Revenue Code Sections 162, 167 and 263(a) apply to amounts paid to
acquire, produce, or improve tangible property as well as dispositions of such property and are generally effective
for tax years beginning on or after January 1, 2014. These regulations have not had a material impact on our
consolidated results of operations, cash flows or financial position.

In May 2014, the FASB issued ASU No. 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 arising from
contracts with customers and supersedes most current revenue recognition guidance, including industry-specific
guidance. The standard requires entities to recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to
provide users of financial statements with comprehensive information about the nature, amount, timing, and
uncertainty of revenue and cash flows arising from a company’s contracts with customers. In August 2015, the
FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,
which deferred the effective date of the new revenue standard. Accordingly, the updated standard is effective for us
beginning with the first quarter of the Company's fiscal year 2019, with early application permitted in fiscal year
2018. The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the
periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current
period presented in the financial statements. The Company is currently evaluating the effect ASU 2014-09 will have
on the Company’s Consolidated Financial Statements and disclosures.

F-14

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 will be

In June 2016, the FASB issued 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, which requires a new forward-looking impairment model based on
expected losses rather than incurred losses. The guidance also requires increased disclosures. ASU 2016-01 will be
effective beginning with the first quarter of the Company's fiscal year 2021. The Company is currently evaluating
the effect ASU 2016-13 will have on the Company's Consolidated Financial Statements and disclosures.

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. Unless otherwise discussed, 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.

F-15

2. Restricted Cash

Restricted cash consists of the following (in thousands):

Cash related to CountryPlace customer payments to be remitted to third parties $
Cash related to CountryPlace customers payments on securitized loans to be

April 1,
2017

April 2,
2016

9,998 $

8,419

remitted to bondholders

Cash related to workers’ compensation insurance held in trust
Other restricted cash

1,391
354
554
12,297 $

1,747
728
406
11,300

Corresponding amounts are recorded in accounts payable and accrued liabilities for customer payments,

deposits and other restricted cash.

3. Investments

Investments consist of the following (in thousands):

Available-for-sale investment securities
Non-marketable equity investments

April 1,
2017

April 2,
2016

24,162 $
17,383
41,545 $

24,247
14,841
39,088

Non-marketable equity investments includes $15.0 million as of April 1, 2017 and April 2, 2016, of
contributions to equity-method investments in community-based initiatives that buy and sell our homes and
provide home-only financing to residents of certain manufactured home communities. Other non-marketable
investments include investments in other distribution operations.

The following tables summarize the Company’s available-for-sale investment securities, gross unrealized

gains and losses and fair value, aggregated by investment category (in thousands):

U.S. Treasury and government debt

securities

Residential mortgage-backed securities
State and political subdivision debt

securities

Corporate debt securities
Marketable equity securities
Certificates of deposit

April 1, 2017

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

Amortized
Cost

650 $

5,646

7,195
1,698
5,752
1,000
21,941 $

— $
3

145
4
2,430
—
2,582 $

(1) $

(90)

(117)
(23)
(130)
—
(361) $

649
5,559

7,223
1,679
8,052
1,000
24,162

F-16

U.S. Treasury and government debt

securities

Residential mortgage-backed securities
State and political subdivision debt

securities

Corporate debt securities
Marketable equity securities
Certificates of deposit

April 2, 2016

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

Amortized
Cost

1,002 $
5,866

7,231
1,166
5,882
1,000
22,147 $

— $
13

239
4
2,374
—
2,630 $

(3) $

(60)

(49)
(6)
(412)
—
(530) $

999
5,819

7,421
1,164
7,844
1,000
24,247

The following tables show the gross unrealized losses and fair value, aggregated by investment category and

length of time that individual securities have been in a continuous unrealized loss position (in thousands):

U.S. Treasury and government

debt securities

Residential mortgage-backed

securities

State and political subdivision

debt securities
Corporate debt securities
Marketable equity securities

U.S. Treasury and government

debt securities

Residential mortgage-backed

securities

State and political subdivision

debt securities
Corporate debt securities
Marketable equity securities

Less than 12 Months

April 1, 2017
12 Months or Longer

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

349 $

(1) $

— $

349 $

3,449

(38)

1,962

(52)

5,411

1,948
1,424
1,393
8,563 $

(36)
(23)
(90)
(188) $

2,084
—
157
4,203 $

(81)
—
(40)
(173) $

4,032
1,424
1,550
12,766 $

(1)

(90)

(117)
(23)
(130)
(361)

Less than 12 Months

April 2, 2016
12 Months or Longer

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

— $

699 $

(3) $

699 $

3,436

(27)

898

(33)

4,334

1,865
763
1,780
7,844 $

(29)
(6)
(324)
(386) $

1,257
—
152
3,006 $

(20)
—
(88)
(144) $

3,122
763
1,932
10,850 $

(3)

(60)

(49)
(6)
(412)
(530)

Based on the Company’s ability and intent to hold the investments for a reasonable period of time sufficient

for a forecasted recovery of fair value, the Company does not consider any investments to be other-than-
temporarily impaired at April 1, 2017.

F-17

As of April 1, 2017, the Company’s investments in marketable equity securities consist of investments in

common stock of industrial and other companies.

As of April 2, 2016, the Company’s investments in marketable equity securities consisted of investments in

common stock of industrial and other companies ($7.7 million of the total fair value and $409,000 of the total
unrealized losses) and bank trust, insurance, and public utility companies ($100,000 of the total fair value and
$3,000 of the total unrealized losses).

The amortized cost and fair value of the Company’s investments in 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 call or prepayment penalties.

Due in less than one year
Due after one year through five years
Due after five years through ten years
Due after ten years

April 1, 2017

Amortized
Cost

Fair
Value

2,251 $
3,724
3,408
5,806
15,189 $

2,238
3,678
3,311
5,883
15,110

Realized gains and losses from the sale of securities are determined using the specific identification method.
Gross gains realized on the sales of investment securities for fiscal years 2017 and 2016 were approximately $1.1
million and $431,000, respectively. Gross losses realized were approximately $413,000 and $385,000 for fiscal
years 2017 and 2016, respectively.

4. Inventories

Inventories consist of the following (in thousands):

Raw materials
Work in process
Finished goods and other

April 1,
2017

April 2,
2016

31,506 $
11,768
50,581
93,855 $

28,764
10,755
55,294
94,813

F-18

5. Consumer Loans Receivable

The Company acquired consumer loans receivable during the first quarter of fiscal year 2012 as part of the
Palm Harbor transaction. Acquired consumer loans receivable held for investment were acquired at fair value and
subsequently are accounted for in accordance with ASC 310-30. Consumer loans receivable held for sale are carried
at the lower of cost or market and construction advances are carried at the amount advanced less a valuation
allowance. The following table summarizes consumer loans receivable (in thousands):

Loans held for investment (acquired on Palm Harbor Acquisition Date)
Loans held for investment (originated after Palm Harbor Acquisition Date)
Loans held for sale
Construction advances
Consumer loans receivable
Deferred financing fees and other, net
Consumer loans receivable, net

April 1,
2017

April 2,
2016

60,513 $
11,108
18,570
6,957
97,148
(1,347)
95,801 $

68,951
6,120
8,765
6,566
90,402
(844)
89,558

As of the date of the Palm Harbor acquisition, management evaluated consumer loans receivable held for
investment by CountryPlace to determine whether there was evidence of deterioration of credit quality and if it was
probable that CountryPlace would be unable to collect all amounts due according to the loans' contractual terms.
The Company also considered expected prepayments and estimated the amount and timing of undiscounted
expected principal, interest and other cash flows. The Company determined the excess of the loan pool’s scheduled
contractual principal and contractual interest payments over all cash flows expected as of the date of the Palm
Harbor transaction as an amount that includes interest that cannot be accreted into interest income (the non-
accretable difference). The cash flow expected to be collected in excess of the carrying value of the acquired loans
includes interest that is accreted into interest income over the remaining life of the loans (referred to as accretable
yield). Interest income on consumer loans receivable is recognized as net revenue.

Consumer loans receivable held for investment – contractual amount
Purchase discount:
Accretable
Non-accretable difference

Less consumer loans receivable reclassified as other assets
Total acquired consumer loans receivable held for investment, net

April 1,
2017

April 2,
2016

(in thousands)

142,391 $

166,793

(56,686)
(25,032)
(160)
60,513 $

(69,053)
(28,536)
(253)
68,951

Over the life of the acquired loans, the Company continues to estimate cash flows expected to be collected by

CountryPlace. As of the balance sheet date, the Company evaluates whether the present value of expected cash
flows, determined using the effective interest rate, has decreased from the value at acquisition and, if so, recognizes
an allowance for loan loss. The present value of any subsequent increase in the loan pool’s actual cash flows
expected to be collected is used first to reverse any existing allowance for loan loss. Any remaining increase in cash
flows expected to be collected adjusts the amount of accretable yield recognized on a prospective basis over the
loan pool’s remaining life. The weighted averages of assumptions used in the calculation of expected cash flows to
be collected are as follows:

F-19

Prepayment rate
Default rate

April 1,
2017

April 2,
2016

13.8%
1.1%

13.0%
1.0%

Assuming there was a 1% unfavorable variation from the expected level, for each key assumption, the expected
cash flows for the life of the portfolio, as of April 1, 2017, would decrease by approximately $1.8 million and $4.8
million for the expected prepayment rate and expected default rate, respectively.

The changes in accretable yield on acquired consumer loans receivable held for investment were as follows (in

thousands):

Balance at the beginning of the period
Additions
Accretion
Reclassifications from (to) nonaccretable discount
Balance at the end of the period

The consumer loans held for investment have the following characteristics:

Weighted average contractual interest rate
Weighted average effective interest rate
Weighted average months to maturity

Year Ended

April 1,
2017

April 2,
2016

69,053 $
—
(9,621)
(2,746)
56,686 $

73,202
—
(10,720)
6,571
69,053

April 1,
2017

April 2,
2016

8.87%
9.35%
165

9.05%
9.39%
170

The Company's consumer loans receivable balance consists of fixed-rate, fixed-term and fully-amortizing
single-family home loans. These loans are either secured by a manufactured home, excluding the land upon which
the home is located (chattel personal property loans), or by a combination of the home and the land upon which the
home is located (real property mortgage loans). The real property mortgage loans are primarily for manufactured
homes. Combined land and home loans are further disaggregated by the type of loan documentation: those
conforming to the requirements of Government-Sponsored Enterprises ("GSEs"), and those that are non-
conforming. In most instances, CountryPlace’s loans are secured by a first-lien position and are provided for the
consumer purchase of a home. Unsecuritized consumer loans held for investment include chattel personal property
loans originated under the Company's chattel lending programs. Accordingly, CountryPlace classifies its loans
receivable as follows: chattel loans, conforming mortgages, non-conforming mortgages and other loans.

In measuring credit quality within each segment and class, CountryPlace uses commercially available credit
scores (such as FICO®). At the time of each loan’s origination, CountryPlace obtains credit scores from each of the
three primary credit bureaus, if available. To evaluate credit quality of individual loans, CountryPlace uses the mid-
point of the available credit scores or, if only two scores are available, the Company uses the lower of the two.
CountryPlace does not update credit bureau scores after the time of origination.

F-20

The following table disaggregates CountryPlace’s gross consumer loans receivable for each class by portfolio

segment and credit quality indicator as of the time of origination (in thousands):

Consumer Loans Held for Investment

April 1, 2017

Securitized
2005

Securitized
2007

Unsecuritized

Construction
Advances

Consumer
Loans Held
For Sale

Total

Asset Class

Credit Quality Indicator (FICO® score)

705 $

411 $

393 $

Conforming mortgages

0-619
620-719
720+
Subtotal

Non-conforming mortgages

Chattel loans
0-619
620-719
720+
Other
Subtotal

0-619
620-719
720+
Other
Subtotal
Other loans
Subtotal

11,681
12,748
51
25,185

—
—
—
—

86
1,242
1,527
—
2,855

8,072
7,800
—
16,283

—
—
—
—

435
4,947
2,909
—
8,291

5,406
5,081
433
11,313

161
1,792
247
2,200

1,327
3,372
484
299
5,482

— $
—
—
—
—

261
4,231
2,465
6,957

—
—
—
—
—

— $

697
3,097
—
3,794

99
10,553
4,124
14,776

—
—
—
—
—

1,509
25,856
28,726
484
56,575

521
16,576
6,836
23,933

1,848
9,561
4,920
299
16,628

12
97,148

—
28,040 $

—
24,574 $

12
19,007 $

—
6,957 $

—
18,570 $

F-21

Consumer Loans Held for Investment

April 2, 2016

Securitized
2005

Securitized
2007

Unsecuritized

Construction
Advances

Consumer
Loans Held
For Sale

Total

Asset Class

Credit Quality Indicator (FICO® score)

776 $

543 $

336 $

Conforming mortgages

0-619
620-719
720+
Subtotal

Non-conforming mortgages

Chattel loans
0-619
620-719
720+
Other
Subtotal

0-619
620-719
720+
Other
Subtotal
Other loans
Subtotal

13,139
14,751
55
28,721

—
—
—
—

88
1,365
1,684
—
3,137

9,100
9,409
—
19,052

—
—
—
—

585
5,290
3,382
—
9,257

3,683
2,324
447
6,790

164
1,428
320
1,912

1,392
3,664
826
307
6,189

— $
—
—
—
—

— $
96
215
—
311

95
3,355
3,116
6,566

—
—
—
—
—

171
5,847
2,436
8,454

—
—
—
—
—

1,655
26,018
26,699
502
54,874

430
10,630
5,872
16,932

2,065
10,319
5,892
307
18,583

13
90,402

—
31,858 $

—
28,309 $

13
14,904 $

—
6,566 $

—
8,765 $

Loan contracts secured by collateral that is geographically concentrated could experience higher rates of
delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically
dispersed. Forty-three percent of the outstanding principal balance of consumer loans receivable portfolio is
concentrated in Texas and 12% is concentrated in Florida. No other state had concentrations in excess of 10% of the
principal balance of the consumer loan receivable as of April 1, 2017.

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. At repossession, the fair value of the collateral is computed
based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is charged
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 $1.2 million and $707,000 as of April 1, 2017 and April 2,
2016, respectively, and are included in prepaid and other assets in the consolidated balance sheets. Foreclosure or
similar proceedings in progress totaled approximately $694,000 and $340,000 as of April 1, 2017 and April 2, 2016,
respectively.

6. Commercial Loans Receivable and Allowance for Loan Loss

The Company’s commercial loans receivable balance consists of two classes: (i) direct financing arrangements

for the home product needs of our independent retailers, communities and developers; and (ii) amounts loaned by
the Company under participation financing programs.

F-22

Under the terms of the direct programs, the Company provides funds for the independent retailers, communities

and developers’ financed home purchases. The notes are secured by the home as collateral and, in some instances,
other security depending on the circumstances. The other terms of direct arrangements vary depending on the needs
of the borrower and the opportunity for the Company.

Under the terms of the participation programs, the Company provides loans to independent floor plan lenders,
representing a significant portion of the funds that such financiers then lend to retailers to finance their inventory
purchases. The participation commercial loan receivables are unsecured general obligations of the independent floor
plan lenders.

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

Direct loans receivable
Participation loans receivable
Allowance for loan loss

The commercial loans receivable balance has the following characteristics:

Weighted average contractual interest rate
Weighted average months to maturity

April 1,
2017

April 2,
2016

24,959 $
1,084
(210)
25,833 $

24,392
1,278
(128)
25,542

April 1,
2017

April 2,
2016

5.6%
6

6.9%
9

The Company evaluates the potential for loss from its participation loan programs based on the independent
lender’s overall financial stability, as well as historical experience, and has determined that an applicable allowance
for loan loss was not needed at either April 1, 2017 or April 2, 2016.

With respect to direct programs with communities and developers, borrower activity is monitored on a regular

basis and contractual arrangements are in place to provide adequate loss mitigation in the event of a default. For
direct programs with independent retailers, the risk of loss is spread over numerous borrowers. Borrower activity is
monitored in conjunction with third-party service providers, where applicable, to estimate the potential for loss on
the related loans receivable, considering potential exposures including repossession costs, remarketing expenses,
impairment of value and the risk of collateral loss. The Company has historically been able to resell repossessed
unused homes, thereby mitigating loss experience. If a default occurs and collateral is lost, the Company is exposed
to loss of the full value of the home loan. If the Company determines that it is probable that a borrower will default,
a specific reserve is determined and recorded within the estimated allowance for loan loss. The Company recorded
an allowance for loan loss of $210,000 and $128,000 at April 1, 2017 and April 2, 2016, respectively.

F-23

The following table represents changes in the estimated allowance for loan losses, including related additions

and deductions to the allowance for loan loss applicable to the direct programs (in thousands):

Balance at beginning of period
Provision for commercial loan credit losses
Loans charged off, net of recoveries
Balance at end of period

Year Ended

April 1,
2017

April 2,
2016

128 $
82
—
210 $

73
55
—
128

The following table disaggregates commercial loans receivable and the estimated allowance for loan loss for

each class of financing receivable by evaluation methodology (in thousands):

Commercial loans receivable:
Collectively evaluated for impairment
Individually evaluated for impairment

Allowance for loan loss:
Collectively evaluated for impairment
Individually evaluated for impairment

Direct Commercial Loans
April 2,
April 1,
2016
2017

Participation Commercial Loans

April 1,
2017

April 2,
2016

13,688 $
11,271
24,959 $

(137) $
(73)
(210) $

12,761 $
11,631
24,392 $

(128) $
—
(128) $

— $

1,084
1,084 $

— $
—
— $

—
1,278
1,278

—
—
—

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 past due 90 days or more. The Company’s policy is to place loans
on nonaccrual status when interest is past due and remains unpaid 90 days or more or when there is a clear
indication that the borrower has the inability or unwillingness to meet payments as they become due. The Company
will resume accrual of interest once these factors have been remedied. At April 1, 2017, there are no commercial
loans that are 90 days or more past due that are still accruing interest. Payments received on nonaccrual loans are
recorded on a cash basis, first to interest and then to principal. At April 1, 2017, the Company was not aware of any
potential problem loans that would have a material effect on the commercial receivables balance. Charge-offs occur
when it becomes probable that outstanding amounts will not be recovered.

The following table disaggregates the Company’s commercial loans receivable by class and credit quality

indicator (in thousands):

Risk profile based on payment activity:
Performing
Watch list
Nonperforming

Direct Commercial Loans
April 2,
April 1,
2016
2017

Participation Commercial Loans

April 1,
2017

April 2,
2016

24,886 $
—
73
24,959 $

24,392 $
—
—
24,392 $

1,084 $
—
—
1,084 $

1,278
—
—
1,278

F-24

The Company has concentrations of commercial loans receivable related to factory-built homes located in the

following states, measured as a percentage of commercial loans receivables principal balance outstanding:

Arizona
Oregon
Texas
California
Indiana

April 1,
2017

April 2,
2016

21.3%
15.7%
11.0%
11.0%
10.7%

13.3%
5.4%
33.2%
5.4%
7.1%

The risks created by these concentrations have been considered in the determination of the adequacy of the
allowance for loan losses. The Company did not have concentrations in excess of 10% of the principal balance of
commercial loans receivable in any other states as of April 1, 2017 or April 2, 2016, respectively.

The Company had concentrations of commercial loans receivable with one independent third-party and its
affiliates that equaled 23% and 32% of the principal balance outstanding, all of which was secured, as of April 1,
2017 and April 2, 2016, respectively.

7. Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation is calculated using the straight-line method over

the estimated useful lives of each asset. Estimated useful lives for significant classes of assets are as follows: (i)
buildings and improvements, 10 to 39 years and (ii) machinery and equipment, 3 to 25 years. Repairs and
maintenance charges are expensed as incurred. Property, plant and equipment consist of the following (in
thousands):

Property, plant and equipment, at cost:

Land
Buildings and improvements
Machinery and equipment

Accumulated depreciation
Property, plant and equipment, net

April 1,
2017

April 2,
2016

22,897 $
34,180
21,618
78,695
(21,731)
56,964 $

22,719
32,230
19,533
74,482
(19,410)
55,072

As of April 2, 2016, the Company had land and buildings and improvements under capital lease of $240,000
and $3.0 million, respectively, which are included in the amounts above. On September 20, 2016, the Company
purchased the assets under the capital lease, terminating the lease arrangement.

8. Goodwill and Other Intangibles

Intangible assets principally consist of goodwill, trademarks and trade names, state insurance licenses, customer

relationships, and other, which includes technology, insurance policies and renewal rights and other. Goodwill,
trademarks and trade names and state insurance licenses are indefinite-lived intangible assets and are evaluated for
impairment annually and whenever events or circumstances indicate that more likely than not impairment has
occurred. During fiscal years 2017, 2016 and 2015, no impairments were recorded. Finite-lived intangibles are
amortized over their estimated useful lives on a straight-line basis and are reviewed for possible impairment
whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. The value of
customer relationships is amortized over 4 to 15 years and other intangibles over 7 to 15 years.

F-25

Goodwill and other intangibles consist of the following (in thousands):

Gross
Carrying
Amount

April 1, 2017

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

April 2, 2016

Accumulated
Amortization

Net
Carrying
Amount

69,753 $

— $

69,753 $

— $

69,753

7,000

1,100

77,853

7,100
1,384

—

7,000

1,100

7,000

1,100

77,853

—

(5,543)
(773)

1,557
611

7,100
1,384

(5,329)
(619)

7,000

1,100

77,853

1,771
765

86,337 $

(6,316) $

80,021 $

86,337 $

(5,948) $

80,389

Indefinite lived:
Goodwill
Trademarks and trade

names

State insurance

licenses

Total indefinite-lived
intangible assets

Finite lived:

Customer relationships
Other
Total goodwill and
other intangible
assets

Amortization expense recognized on intangible assets was $368,000 during fiscal year 2017, $454,000 during

fiscal year 2016 and $1.4 million during fiscal year 2015.

Expected amortization for future fiscal years is as follows (in thousands):

2018
2019
2020
2021
2022

368
324
320
318
245

F-26

9. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

Salaries, wages and benefits
Unearned insurance premiums
Customer deposits
Estimated warranties
Company repurchase options on certain loans sold
Accrued volume rebates
Insurance loss reserves
Accrued insurance
Deferred margin
Reserve for repurchase commitments
Accrued Taxes
Capital Lease Obligation
Other

10. Warranties

April 1,
2017

April 2,
2016

22,029 $
17,488
15,986
15,479
5,858
5,686
5,239
4,113
2,906
1,749
1,682
—
11,574
109,789 $

20,675
15,528
14,039
13,371
3,497
4,647
5,990
3,969
2,823
1,660
1,282
2,387
10,446
100,314

Homes are generally warranted against manufacturing defects for a period of one year commencing at the time

of sale to the retail customer. Estimated costs relating to home warranties are provided at the date of sale. The
Company has recorded a liability for estimated future warranty costs relating to homes sold based upon
management’s assessment of historical experience factors, an estimate of the amount of homes in the distribution
channel and current industry trends. Activity in the liability for estimated warranties was as follows (in thousands):

Balance at beginning of period
Purchase accounting additions
Charged to costs and expenses
Payments and deductions
Balance at end of period

April 1,
2017

April 2,
2016

March 28,
2015

13,371 $
—
24,282
(22,174)
15,479 $

9,953 $
1,111
21,133
(18,826)
13,371 $

9,262
—
13,083
(12,392)
9,953

F-27

11. Debt Obligations

Debt obligations consist of amounts related to loans sold that did not qualify for loan sale accounting treatment.

The following table summarizes debt obligations (in thousands):

Acquired securitized financings (acquired as part of the Palm Harbor

transaction)

Securitized financing 2005-1
Securitized financing 2007-1

Other secured financings
Secured Term Loan
Total securitized financings and other, net

April 1,
2017

April 2,
2016

23,756 $
25,728
4,987
3,520
57,991 $

27,481
28,859
4,831
—
61,171

The Company acquired CountryPlace's securitized financings during the first quarter of fiscal year 2012 as a

part of the Palm Harbor acquisition. Acquired securitized financings were recorded at fair value at the time of
acquisition, which resulted in a discount, and subsequently are accounted for in a manner similar to ASC 310-30 to
accrete the discount.

The Company considers expected prepayments and estimates the amount and timing of undiscounted expected
principal, interest and other cash flows for securitized consumer loans receivable held for investment to determine
the expected cash flows on securitized financings and the contractual payments. The amount of contractual
principal and contractual interest payments due on the securitized financings in excess of all cash flows expected as
of the date of the Palm Harbor acquisition include interest that cannot be accreted into interest expense (the non-
accretable difference). The remaining amount is accreted into interest expense over the remaining life of the
obligation (referred to as accretable yield). The following table summarizes acquired securitized financings (in
thousands):

Securitized financings – contractual amount
Purchase Discount
Accretable
Non-accretable (1)

Total acquired securitized financings, net

April 1,
2017

April 2,
2016

57,120 $

68,673

(7,636)
—
49,484 $

(12,333)
—
56,340

(1) There is no non-accretable difference, as the contractual payments on acquired securitized financing are
determined by the cash collections from the underlying loans.

Over the life of the loans, the Company continues to estimate cash flows expected to be paid on securitized
financings. The Company evaluates at the balance sheet date whether the present value of its securitized financings,
determined using the effective interest rate, has increased or decreased. The present value of any subsequent change
in cash flows expected to be paid adjusts the amount of accretable yield recognized on a prospective basis over the
securitized financing’s remaining life.

F-28

The changes in accretable yield on securitized financings were as follows (in thousands):

Balance at the beginning of the period
Additions
Accretion
Adjustment to cash flows
Balance at the end of the period

Year Ended

April 1,
2017

April 2,
2016

12,333 $
—
(3,724)
(973)
7,636 $

12,128
—
(3,579)
3,784
12,333

On July 12, 2005, prior to the Company's acquisition of Palm Harbor and CountryPlace, CountryPlace

completed its initial securitization (2005-1) for approximately $141.0 million of loans, which was funded by issuing
bonds totaling approximately $118.4 million. The bonds were issued in four different classes: Class A-1 totaling
$36.3 million with a coupon rate of 4.23%; Class A-2 totaling $27.4 million with a coupon rate of 4.42%; Class A-3
totaling $27.3 million with a coupon rate of 4.80%; and Class A-4 totaling $27.4 million with a coupon rate of
5.20%. The bonds mature at varying dates and at issuance had an expected weighted average maturity of 4.66 years.
For accounting purposes, this transaction was structured as a securitized borrowing. As of April 1, 2017, the
Class A-1, Class A-2 and Class A-3 bonds have been retired.

On March 22, 2007, prior to the Company's acquisition of Palm Harbor and CountryPlace, CountryPlace
completed its second securitization (2007-1) for approximately $116.5 million of loans, which was funded by
issuing bonds totaling approximately $101.9 million. The bonds were issued in four classes: Class A-1 totaling
$28.9 million with a coupon rate of 5.484%; Class A-2 totaling $23.4 million with a coupon rate of 5.232%;
Class A-3 totaling $24.5 million with a coupon rate of 5.593%; and Class A-4 totaling $25.1 million with a coupon
rate of 5.846%. The bonds mature at varying dates and at issuance had an expected weighted average maturity of
4.86 years. For accounting purposes, this transaction was also structured as a securitized borrowing. As of April 1,
2017, the Class A-1 and Class A-2 bonds have been retired.

CountryPlace’s securitized debt is subject to provisions that require certain levels of overcollateralization.
Overcollateralization is equal to CountryPlace's equity in the bonds. Failure to satisfy these provisions could cause
cash, which would normally be distributed to CountryPlace, to be used for repayment of the principal of the related
Class A bonds until the required overcollateralization level is reached. During periods when the
overcollateralization is below the specified level, cash collections from the securitized loans in excess of servicing
fees payable to CountryPlace and amounts owed to the Class A bondholders, trustee and surety, are applied to
reduce the Class A debt until such time the overcollateralization level reaches the specified level. Therefore, failure
to meet the overcollateralization requirement could adversely affect the timing of cash flows received by
CountryPlace. However, principal payments of the securitized debt, including accelerated amounts, is payable only
from cash collections from the securitized loans and no additional sources of repayment are required or permitted.
As of April 1, 2017, the 2005-1 and 2007-1 securitized portfolios were within the required overcollateralization
level.

On October 24, 2016, the Company entered into an agreement with an independent third party bank for a $10.0
million secured credit facility with a one year drawn period and a maturity date of October 24, 2027. The proceeds
are used by the Company to originate and hold consumer chattel loans secured by manufactured homes, which are
pledged as collateral to the facility. The maximum advance for loans under this program is 80% of the outstanding
collateral principal balance with the Company providing the remaining funds. The facility has a floating interest
rate during a one year warehouse period in which the Company has the option to convert all or a portion of the loan
to a fixed rate. During the warehouse period, the facility bears interest at an annual rate of the average one month
LIBOR rates plus 3.50%. Upon conversion, converted balances bear interest at an annual rate of 10 year US
Treasury bonds plus 2.75%. Payments are based on a 20 year amortization schedule with a balloon payment due
upon maturity.

F-29

Scheduled maturities for future fiscal years of the Company’s debt obligations consist of the following (in

thousands):

2018
2019
2020
2021
2022

6,409
5,414
39,826
659
612

Actual payments may vary from those above, resulting from prepayments or defaults on the underlying

mortgage portfolio.

12. Reinsurance

Standard Casualty is primarily a specialty writer of manufactured home physical damage insurance. 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. Substantially all
of Standard Casualty’s assumed reinsurance is with one entity.

The effects of reinsurance on premiums written and earned are as follows (in thousands):

Direct premiums
Assumed premiums—nonaffiliate
Ceded premiums—nonaffiliate
Net premiums

Year Ended
April 1, 2017

Year Ended
April 2, 2016

Written

Earned

Written

Earned

16,528 $
25,332
(12,247)
29,613 $

15,919 $
23,908
(12,247)
27,580 $

15,595 $
22,580
(11,088)
27,087 $

14,764
21,191
(11,088)
24,867

Typical insurance policies written or assumed by Standard Casualty have a maximum coverage of $300,000 per
claim, of which Standard Casualty cedes $200,000 of the risk of loss per reinsurance. Therefore, Standard Casualty
maintains risk of loss limited to $100,000 per claim on typical policies. 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.

F-30

13. Income Taxes

The provision for income taxes for fiscal years 2017, 2016 and 2015 were as follows (in thousands):

Current

Federal
State

Total current

Deferred

Federal
State

Total deferred
Total income tax provision

2017

Fiscal Year
2016

2015

15,924 $
1,131
17,055

(13)
284
271
17,326 $

15,070 $
1,350
16,420

(987)
54
(933)
15,487 $

8,277
882
9,159

3,937
414
4,351
13,510

A reconciliation of income taxes computed by applying the expected federal statutory income tax rates of 35%
for fiscal years 2017, 2016 and 2015 to income before income taxes to the total income tax provision reported in the
Consolidated Statements of Comprehensive Income is as follows (in thousands):

Federal income tax at statutory rate
Tax credits
State income taxes, net of federal benefit
Domestic production activities deduction
Other

Total income tax provision

2017

Fiscal Year
2016

2015

19,348 $
(1,826)
1,428
(1,422)
(202)
17,326 $

15,410 $
(941)
1,427
(889)
480
15,487 $

13,065
(374)
1,104
(561)
276
13,510

F-31

Net current deferred tax assets and net long-term deferred tax liabilities were as follows (in thousands):

Net current deferred tax assets (liabilities)

Warranty reserves
Prepaid expenses
Salaries and wages
Inventory
Deferred revenue
Policy acquisition costs
Other

Net long-term deferred tax (liabilities) assets

Goodwill
Loan discount
Property, plant, equipment and depreciation
Stock based compensation
Other intangibles
Deferred margin
Other

April 1,
2017

April 2,
2016

5,784 $
(2,494)
2,375
1,466
1,374
(1,001)
1,700
9,204 $

(24,847) $
6,419
(4,569)
3,054
(2,382)
1,627
(420)
(21,118) $

5,019
(1,472)
2,501
1,510
1,206
(1,201)
1,435
8,998

(24,635)
7,546
(4,621)
2,784
(2,418)
1,562
(829)
(20,611)

The effective income tax rate for the current year was positively impacted by the timing of certain tax credits

and deductions. As Cavco’s taxable income has grown, we have realized additional benefit from tax deductions
established to favor domestic manufacturing operations. We also received benefit from tax credits, including
research and development, fuel, energy efficient home and work opportunity tax credits.

The Company recorded an insignificant amount of unrecognized tax benefits during fiscal years 2017, 2016 and

2015, and there would be an insignificant effect on the effective tax rate if all unrecognized tax benefits were
recognized. The Company classifies interest and penalties related to unrecognized tax benefits in income tax
expense. At April 1, 2017, the Company has state net operating loss carryforwards that total $2.8 million, that began
to expire in 2015. As a result, the Company recorded an $18,000 valuation allowance against the related deferred
tax asset.

The Company periodically evaluates the deferred tax assets based on the requirements established in ASC 740
which requires the recording of a valuation allowance when it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The determination of the need for or amount of any valuation allowance
involves significant management judgment and is based upon the evaluation of both positive and negative evidence,
including management projections of anticipated taxable income. At April 1, 2017, the Company evaluated its
historical profits earned and forecasted taxable income and determined that, except as described above, all of the
deferred tax assets would be utilized in future periods. Ultimate realization of the deferred tax assets depends on our
ability to continue to earn profits as we have historically and to meet these forecasts in future periods.

F-32

Income tax returns are filed in the U.S. federal jurisdiction and in several state jurisdictions. The Company is no

longer subject to examination by the IRS for years before fiscal year 2013. In general, the Company is no longer
subject to state and local income tax examinations by tax authorities for years before fiscal year 2012. The
Company believes that its income tax filing positions and deductions will be sustained on audit and does not
anticipate any adjustments that will result in a material change to the Company’s financial position. The total
amount of unrecognized tax benefit related to any particular tax position is not anticipated to change significantly
within the next 12 months. The provision for income taxes generally represents income taxes paid or payable for the
current year plus the change in deferred taxes during the year.

14. Commitments and Contingencies

Repurchase Contingencies. The Company is contingently liable under terms of repurchase agreements with
financial institutions providing inventory financing for independent retailers of its products. These arrangements,
which are customary in the industry, provide for the repurchase of products sold to retailers in the event of default
by the retailer. The risk of loss under these agreements is spread over numerous retailers. 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 retailer) and the risk of loss is further reduced by the resale value of the repurchased homes. The
Company applies ASC 460 and ASC 450-20 to account for its liability for repurchase commitments. Under the
provisions of ASC 460, issuance of a guarantee results in two different types of obligations: (1) a non-contingent
obligation to stand ready to perform under the repurchase commitment (accounted for pursuant to ASC 460) and
(2) a contingent obligation to make future payments under the conditions of the repurchase commitment (accounted
for pursuant to ASC 450-20). Management reviews the retailers' inventories to estimate the amount of inventory
subject to repurchase obligation, which is used to calculate: (1) the fair value of the non-contingent obligation for
repurchase commitments and (2) the contingent liability based on historical information available at the time.
During the period in which a home is sold (inception of a repurchase commitment), the Company records the
greater of these two calculations as a liability for repurchase commitments and as a reduction to revenue.

(1) The Company estimates the fair value of the non-contingent portion of its manufacturer's inventory

(2) The Company estimates the contingent obligation to make future payments under its manufacturer's

Additionally, subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood

F-33

The maximum amount for which the Company was liable under such agreements approximated $46.3 million

and $46.6 million at April 1, 2017 and April 2, 2016, respectively, without reduction for the resale value of the
homes. The Company had a reserve for repurchase commitments of $1.7 million at April 1, 2017 and April 2, 2016.
Activity in the liability for estimated repurchase contingencies was as follows for fiscal years 2017, 2016 and 2015
(in thousands):

Balance at beginning of period
(Credited) Charged to costs and expenses
Payments and deductions
Balance at end of period

2017

Fiscal Year
2016

2015

1,660 $
168
(79)
1,749 $

2,240 $
(187)
(393)
1,660 $

1,845
522
(127)
2,240

Leases. The Company leases certain equipment and facilities under operating leases with various renewal
options. Rent expense was $5.3 million, $5.1 million and $4.5 million for the fiscal years ended April 1, 2017,
April 2, 2016 and March 28, 2015, respectively. Future minimum lease commitments under all noncancelable
operating leases having a remaining term in excess of one year at April 1, 2017, are as follows (in thousands):

2018
2019
2020
2021
2022 and thereafter

3,470
2,637
1,949
1,442
1,631
11,129

Letters of Credit. To secure certain reinsurance contracts, Standard Casualty maintains an irrevocable letter of
credit of $7.0 million to provide assurance that Standard Casualty will fulfill its reinsurance obligations. This letter
of credit is secured by certain of the Company’s investments.

Construction-Period Mortgages. CountryPlace funds construction-period mortgages through periodic advances
during the period of home construction. At the time of initial funding, CountryPlace commits to fully fund the loan
contract in accordance with a predetermined schedule. Subsequent advances are contingent upon the performance
of contractual obligations by the seller of the home and the borrower. Cumulative advances on construction-period
mortgages are carried in the consolidated balance sheet at the amount advanced less a valuation allowance, which
are included in consumer loans receivable. The total loan contract amount, less cumulative advances, represents an
off-balance sheet contingent commitment of CountryPlace to fund future advances.

F-34

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

Construction loan contract amount
Cumulative advances
Remaining construction contingent commitment

April 1,
2017

April 2,
2016

18,031 $
(6,957)
11,074 $

15,109
(6,566)
8,543

Representations and Warranties of Mortgages Sold. CountryPlace sells loans to 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. 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. CountryPlace maintains a reserve for
these contingent repurchase and indemnification obligations. This reserve of $885,000 and $785,000 as of April 1,
2017 and April 2, 2016, respectively, included in accrued 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 defect rates to estimate the liability for loan repurchases
and indemnifications. During the year ended April 1, 2017, no claim request resulted in an indemnification
agreements being executed.

Interest Rate Lock Commitments. In originating loans for sale, CountryPlace issues interest rate lock

commitments ("IRLCs") to prospective borrowers and third-party originators. These IRLCs represent an agreement
to extend credit to a loan applicant, or an agreement to purchase a loan from a third-party originator, whereby the
interest rate on the loan is set prior to loan closing or sale. These IRLCs bind CountryPlace 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, CountryPlace 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 April 1, 2017 CountryPlace had outstanding IRLCs with a notional amount of $17.4 million and are
recorded at fair value in accordance with FASB 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 values of IRLCs are recorded in other assets in the consolidated balance sheets. The fair value of IRLCs is
based on the value of the underlying mortgage loan adjusted for: (i) estimated cost to complete and originate the
loan and (ii) the estimated percentage of IRLCs that will result in closed mortgage loans. The initial and subsequent
changes in the value of IRLCs are a component of gain (loss) on mortgage loans held for sale. During fiscal years
2017, 2016 and 2015, CountryPlace recognized a gain of $27,000, a loss of $11,000 and a gain of $34,000,
respectively, on the outstanding IRLCs.

F-35

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 April 1, 2017 CountryPlace had $34.5 million in outstanding notional forward sales of
MBSs and forward sales commitments. Commitments to 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 other current assets in the consolidated balance sheets. During the years ended
April 1, 2017 and April 2, 2016, CountryPlace recognized a loss of $55,000, a gain of $23,000 and a loss of
$78,000, respectively, on forward sales and whole loan sale commitments.

Legal Matters. The Company is party to certain legal proceedings that arise in the ordinary course and are
incidental to its business. Certain of the claims pending against the Company in these proceedings allege, among
other things, breach of contract and warranty, product liability and personal injury. Although litigation is inherently
uncertain, based on past experience and the information currently available, management does not believe that the
currently pending and threatened litigation or claims will have a material adverse effect on the Company’s
consolidated financial position, liquidity or results of operations. However, future events or circumstances currently
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.

15. Stock-Based Compensation

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 346,202 shares were still available for grant.
When options are exercised, new shares of the Company’s common stock are issued. Stock options 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 typically vest over a one to
five year period as determined by the plan administrator (the Compensation Committee of the Board of Directors,
which consists of independent directors). 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).

The Company applies the fair value recognition provisions of FASB ASC 718, Compensation—Stock
Compensation ("ASC 718"). Stock option compensation expense, including restricted stock, decreased income
before income taxes by approximately $2.1 million, $1.8 million and $1.7 million for fiscal years 2017, 2016 and
2015, respectively. As of April 1, 2017, total unrecognized compensation cost related to stock options was
approximately $4.0 million and the related weighted-average period over which it is expected to be recognized is
approximately 3.47 years.

F-36

The following table summarizes the option activity within the Company’s stock-based compensation plans for

the fiscal years 2017, 2016 and 2015:

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (years)

Aggregate
Intrinsic
Value
(in thousands)

Number
of Shares

Options outstanding at March 29, 2014

Granted
Exercised
Canceled or expired

Options outstanding at March 28, 2015

Granted
Exercised
Canceled or expired

Options outstanding at April 2, 2016

Granted
Exercised
Canceled or expired

Options outstanding at April 1, 2017

Exercisable at March 28, 2015
Exercisable at April 2, 2016
Exercisable at April 1, 2017

443,900 $
80,730
(14,375)
(3,275)
506,980 $
90,500
(104,500)
(1,000)
491,980 $
116,850
(121,275)
(22,625)
464,930 $

347,750 $
320,975 $
244,025 $

37.98
78.35
34.76
51.13
44.42
75.27
33.46
75.90
51.91
98.93
30.02
80.21
68.01

36.17
41.01
50.77

3.29 $

15,836

3.28 $

35,906

3.83 $

42,194

2.36 $
2.09 $
2.29 $

13,537
24,786
23,626

The weighted-average estimated fair value of employee stock options granted during fiscal years 2017, 2016

and 2015 were $35.55, $27.83 and $30.11, respectively. The total intrinsic value of options exercised during fiscal
years 2017, 2016 and 2015 was $7.8 million, $4.9 million and $593,000, respectively.

The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock options.

The determination of the fair value of stock options on the date of grant using an option-pricing model is affected
by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables.
These variables include actual and projected employee stock option exercise behaviors, the Company’s expected
stock price volatility over the expected term of the awards, risk-free interest rate and expected dividends. The fair
values of options granted were estimated at the date of grant using the following weighted average assumptions:

Volatility
Risk-free interest rate
Dividend yield
Expected option life in years

2017

Fiscal Year
2016

2015

38.3%
1.1%
—%
5.24

39.8%
1.5%
—%
5.03

42.4%
1.5%
—%
4.87

F-37

In fiscal 2017, the Company utilized historic option activity when estimating the expected term of options
granted. The Company estimates the expected volatility of its common stock taking into consideration its historical
stock price movement and its expected future stock price trends based on known or anticipated events. The
Company bases the risk-free interest rate that it uses in the option pricing model on U.S. Treasury zero-coupon
issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying
cash dividends and therefore uses an expected dividend yield of zero in the option-pricing model. The Company is
required to estimate future forfeitures at the time of grant and revise those estimates in subsequent periods if actual
forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures
and records stock-based compensation cost only for those awards that are expected to vest. The Company
recognizes stock-based compensation expense using the straight-line attribution method.

16. Earnings Per Share

Basic earnings per common share is computed based on the weighted-average number of common shares
outstanding during the reporting period. Diluted earnings per common share is computed based on the combination
of dilutive common share equivalents, comprised of shares issuable under the Company’s stock-based
compensation plans and the weighted-average number of common shares outstanding during the reporting period.
Dilutive common share equivalents include the dilutive effect of in-the-money options to purchase shares, which is
calculated based on the average share price for each period using the treasury stock method. The following table
sets forth the computation of basic and diluted earnings per share for fiscal years 2017, 2016 and 2015 (dollars in
thousands, except per share amounts):

Net income attributable to Cavco common stockholders
Weighted average shares outstanding:

Basic
Common stock equivalents—treasury stock method
Diluted

Net income per share attributable to Cavco common

stockholders:
Basic
Diluted

2017

Fiscal Year
2016

2015

37,955 $

28,541 $

23,817

8,976,064
129,679
9,105,743

8,889,731
156,616
9,046,347

8,854,359
161,420
9,015,779

$
$

4.23 $
4.17 $

3.21 $
3.15 $

2.69
2.64

There were 9,766 anti-dilutive common stock equivalents excluded from the computation of diluted earnings

per share for the year ended April 1, 2017, 11,161 for the year ended April 2, 2016 and 2,669 for the year ended
March 28, 2015.

F-38

17. Fair Value Measurements

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

Available-for-sale investment securities (1)
Non-marketable equity investments (2)
Consumer loans receivable (3)
Interest rate lock commitment derivatives (4)
Forward loan sale commitment derivatives (4)
Commercial loans receivable (5)
Securitized financings and other (6)
Mortgage servicing rights (7)

April 1, 2017

April 2, 2016

Book
Value

Estimated
Fair Value

Book
Value

Estimated
Fair Value

24,162 $
17,383
95,801
35
(86)
25,833
(57,991)
1,110

24,162 $
17,383
121,021
35
(86)
25,841
(61,270)
1,110

24,247 $
14,841
89,558
8
(31)
25,542
(61,171)
803

24,247
14,841
126,077
8
(31)
25,688
(60,220)
803

(1) For Level 1 classified securities, the fair value is based on quoted market prices. The fair value of Level 2

securities is based on other inputs, as further described below.

(2) The fair value approximates book value based on the non-marketable nature of the investments.
(3) Includes consumer loans receivable held for investment, held for sale and construction advances. The fair
value of the loans held for investment is based on the discounted value of the remaining principal and
interest cash flows. The fair value of the loans held for sale are estimated based on recent GSE mortgage-
backed bond prices. The fair value of the construction advances approximates book value and the sales
price of these loans is estimated based on construction completed.

(4) The fair values are based on changes in GSE mortgage-backed bond prices, and additionally for IRLCs,

pull through rates.

(5) The fair value is estimated using market interest rates of comparable loans.
(6) The fair value is estimated using recent public transactions of similar asset-backed securities.
(7) The fair value of the mortgage servicing rights is based on the present value of expected net cash flows

related to servicing these loans.

In accordance with FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), fair value is
defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to
maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The
standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active; or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair

value of the assets or liabilities.

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The
market approach uses prices and other relevant information generated by market transactions involving identical or
comparable assets or liabilities.

F-39

When the Company uses observable market prices for identical securities that are traded in less active markets,
it classifies such securities as Level 2. When observable market prices for identical securities are not available, the
Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated
with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted
cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding
market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These
valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable
market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use
observable market inputs and, to a lesser degree, unobservable market inputs.

Financial instruments measured at fair value on a recurring basis are summarized below (in thousands):

Securities issued by the U.S Treasury and

Government (1)

Mortgage-backed securities (1)
Securities issued by states and political

subdivisions (1)

Corporate debt securities (1)
Marketable equity securities (1)
Interest rate lock commitment derivatives (2)
Forward loan sale commitment derivatives (2)
Mortgage servicing rights (3)

April 1, 2017

Total

Level 1

Level 2

Level 3

649 $

5,559

7,223
1,679
8,052
35
(86)
1,110

— $
—

—
—
8,052
—
—
—

649 $

5,559

7,223
1,679
—
—
—
—

—
—

—
—
—
35
(86)
1,110

(1) Unrealized gains or losses on investments are recorded in accumulated other comprehensive income (loss)

at each measurement date.

(2) Gains or losses on derivatives are recognized in current period earnings through cost of sales.
(3) 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 year ended April 1, 2017. The Company’s
policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting
period.

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):

Loans held for investment
Loans held for sale
Loans held—construction advances
Commercial loans receivable
Securitized financings
Non-marketable equity investments

April 1, 2017

Total

Level 1

Level 2

Level 3

94,434 $
19,630
6,957
25,841
(61,270)
17,383

— $
—
—
—
—
—

— $
—
—
—
(61,270)
—

94,434
19,630
6,957
25,841
—
17,383

F-40

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 is lower than the fair value as of April 1, 2017. 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 expected prepayment of the debt and
credit spreads, based on market activity for similar rated bonds from other asset classes with similar durations.

FASB ASC 825, Financial Instruments ("ASC 825"), requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair
value. Fair value estimates are made as of a specific point in time based on the characteristics of the financial
instruments and the relevant market information. Where available, quoted market prices are used. In other cases,
fair values are based on estimates using other valuation techniques. These techniques involve uncertainties and are
significantly affected by the assumptions used and the judgments made regarding risk characteristics of various
financial instruments, discount rates, estimates of future cash flows, future expected loss experience and other
factors. Changes in assumptions could significantly affect these estimates and the resulting fair values. Derived fair
value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be
realized in an immediate sale of the instrument. Also, because of differences in methodologies and assumptions
used to estimate fair values, the Company’s fair values should not be compared to those of other companies.

Under ASC 825, fair value estimates are based on existing financial instruments without attempting to estimate

the value of anticipated future business and the value of assets and liabilities that are not considered financial
instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying market value
of the Company.

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. The Company recorded
no impairment charges on assets held for sale or used in operations during the fiscal years ended April 1, 2017 and
April 2, 2016.

Mortgage Servicing. Mortgage Servicing Rights ("MSRs") are the rights to receive a portion of the interest

coupon and fees collected from the mortgagors for performing specified mortgage servicing activities, which
consist of collecting loan payments, remitting principal and interest payments to investors, managing escrow
accounts, performing loss mitigation activities on behalf of investors and otherwise administering the loan servicing
portfolio. MSRs are initially recorded at fair value. Changes in fair value subsequent to the initial capitalization are
recorded in net revenue 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.

F-41

The Company applies fair value accounting to MSRs, with all changes in fair value recorded to net revenue in

accordance with FASB 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 the Company believes 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.

Number of loans serviced with MSRs
Weighted average servicing fee (basis points)
Capitalized servicing multiple
Capitalized servicing rate (basis points)
Serviced portfolio with MSRs (in thousands)
Mortgage servicing rights (in thousands)

18. Employee Benefit Plans

April 1,
2017

April 2,
2016

4,041
31.42
74.79%
23.50
472,492
1,110

$
$

3,728
30.43
61.65%
18.76
428,324
803

$
$

The Company has a self-funded group medical plan which is administered by third-party administrators. The

medical plan has reinsurance coverage limiting liability for any individual employee loss to a maximum of
$300,000. Incurred claims identified under the third-party administrator's incident reporting system and incurred but
not reported claims are accrued based on estimates that incorporate the Company's past experience, as well as other
considerations such as the nature of each claim or incident, relevant trend factors and advice from consulting
actuaries when necessary. Medical claims expense was $13.8 million, $15.7 million and $6.6 million for fiscal years
2017, 2016 and 2015, respectively.

The Company sponsors an employee savings plan (the "401k Plan") that is intended to provide participating
employees with additional income upon retirement. Employees may contribute their eligible compensation up to
federal limits to the 401k Plan. The Company match is discretionary, and may be up to 50% of the first 5% of
eligible compensation contributed by employees up to a maximum of $1,000. For calendar year 2016, the Company
match was 20% of the first 4% of eligible compensation contributed by employees. Employees are eligible to
participate on the first of the month following 90 days of service and employer matching contributions are vested
progressively over a four-year period. Employer matching contribution expense was $728,000, $567,000 and
$411,000 for fiscal years 2017, 2016 and 2015, respectively.

19. Related Party Transactions

In July 2015, the Company’s CEO made a payment of $1.1 million to the Company, representing the repayment

of performance bonuses related to fiscal 2012, 2014 and 2015 that were determined to be in excess of the 2005
Stock Incentive Plan limits and made to the CEO during those periods.

F-42

20. Business Segment Information

The Company operates principally in two segments: (1) factory-built housing, which includes wholesale and

retail systems-built housing operations and (2) financial services, which includes manufactured housing consumer
finance and insurance. The following table details net revenue and income before income taxes by segment (in
thousands):

Net revenue:

Factory-built housing
Financial services

Net revenue for financial services consists of:

Consumer finance
Insurance

Income before income taxes:
Factory-built housing
Financial services

Depreciation:

Factory-built housing
Financial services

Amortization:

Factory-built housing
Financial services

Income tax expense:

Factory-built housing
Financial services

Capital expenditures:

Factory-built housing
Financial services

Total assets:

Factory-built housing
Financial services

April 1,
2017

Fiscal Year Ended
April 2,
2016

March 28,
2015

720,971 $
52,826
773,797 $

655,148 $
57,204
712,352 $

513,707
52,952
566,659

20,517 $
32,309
52,826 $

46,840 $
8,441
55,281 $

3,221 $
98
3,319 $

167 $
201
368 $

14,349 $
2,977
17,326 $

5,281 $
14
5,295 $

20,240 $
36,964
57,204 $

35,440 $
8,588
44,028 $

3,376 $
92
3,468 $

253 $
201
454 $

12,369 $
3,118
15,487 $

3,443 $
76
3,519 $

19,571
33,381
52,952

25,133
12,194
37,327

2,307
71
2,378

1,178
201
1,379

9,160
4,350
13,510

2,084
126
2,210

April 1,
2017

April 2,
2016

427,022 $
180,294
607,316 $

382,176
171,659
553,835

F-43

21. Quarterly Financial Data (Unaudited)

The following tables set forth certain unaudited quarterly financial information for fiscal years 2017 and 2016.

Fiscal year ended April 1, 2017

Net revenue
Gross profit
Net income
Net income per share:

Basic
Diluted

Fiscal year ended April 2, 2016

Net revenue
Gross profit
Net income
Net income per share:

Basic
Diluted

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

$
$

185,141 $
33,252
5,443

188,348 $
39,107
9,341

202,310 $
43,544
12,283

197,998 $
42,134
10,888

773,797
158,037
37,955

0.61 $
0.60 $

1.04 $
1.03 $

1.37 $
1.35 $

1.21 $
1.19 $

4.23
4.17

161,668 $
31,834
5,385

191,964 $
39,555
8,070

181,427 $
36,390
8,098

177,293 $
36,666
6,988

712,352
144,445
28,541

0.61 $
0.60 $

0.91 $
0.89 $

0.78 $
0.77 $

3.21
3.15

F-44

About Cavco Industries, Inc.

Cavco is the second largest designer and builder of manufactured homes, modular homes,

commercial buildings, park model RVs and vacation cabins. We produce and sell some of

the most widely recognized brand names in the industry including Cavco Homes, Fleetwood

Homes, Palm Harbor Homes, Fairmont Homes, Friendship Homes, Chariot Eagle and Lexington

Homes. Standard Casualty Company offers a range of insurance products for manufactured

home owners and CountryPlace Mortgage supplies a variety of homebuyer financing options.

Commitment, Experience, Stability and Strength

Cavco is publicly traded on the Nasdaq Global Select Market (symbol CVCO). We are

committed to increasing the value of our shareholders’ investment, providing quality,

affordable housing to our customers and offering a rewarding work environment for our

associates. Forbes Magazine selected Cavco as one of the 100 Best Managed Companies in

the U.S. and the company has been listed as one of America’s Best Small Companies. Cavco

Industries is a seven time recipient of the prestigious MHI Manufacturer of the Year Award in

recognition of its innovation, customer service and long-term stability.

Excellence in Innovation, Quality and Value

Cavco precision builds in controlled indoor environments at an attractive value and within

shorter completion times than on-site construction methods. Homes are sold through both

independent and company-owned retail centers. We offer a vast array of styles and will custom

build to home buyers’ specifications. The company also designs models for the exclusive use of

land/lease communities, subdivision developers, resort properties and workforce housing.

Building Green, Energy Efficient and Sustainable Homes

The processes and systems we utilize to build homes in our factories is inherently more

efficient and environmentally beneficial than on-site construction methods. In addition, we can

build homes with substantial utilization of renewable materials and high-tech energy saving

features, and that are designed for the use of solar and wind power.

11 12

1 Fleetwood Pacific Northwest

WOODBURN, OR

2 Palm Harbor Northwest

MILLERSBURG, OR

3 Fleetwood Northwest/

Mountain

NAMPA, ID

4 Fleetwood West

RIVERSIDE, CA

5 Cavco West

GOODYEAR, AZ

6 Durango Homes by Cavco

PHOENIX, AZ

7 Palm Harbor Ft. Worth

FT. WORTH, TX

8 Fleetwood Southwest

WACO, TX

9 Palm Harbor Austin

AUSTIN, TX

10 Cavco Homes of Texas

SEGUIN, TX

11 Friendship Homes - I

MONTEVIDEO, MN

12 Friendship Homes - II

MONTEVIDEO, MN

13 Fairmont Homes

NAPPANEE, IN

14 Fleetwood Midwest/Central

LAFAYETTE, TN

15 Lexington Homes

LEXINGTON, MS

16 Fleetwood East

ROCKY MT., VA

17 Nationwide Homes

MARTINSVILLE, VA

18 Fleetwood South

DOUGLAS, GA

19 Chariot Eagle

OCALA, FL

20 Palm Harbor Florida

PLANT CITY, FL

Directors, Officers and Corporate Information

Board of Directors
William C. Boor
Chief Executive Officer
Great Lakes Brewing Company

Officers
Joseph H. Stegmayer
Chairman, President & Chief
Executive Officer

Daniel L. Urness
Executive Vice President
Chief Financial Officer &
Treasurer

Charles E. Lott
President
Fleetwood Homes, Inc.

Steven K. Like
Senior Vice President

James P. Glew
General Counsel & Secretary

Steven G. Bunger
Chief Executive Officer &
President
Pro Box Storage, Inc.

David A. Greenblatt
Former Senior Vice President
& Deputy General Counsel
Eagle Materials, Inc.

Jack Hanna
Principal
Jack Hanna Productions

Joseph H. Stegmayer
Chairman, President & Chief
Executive Officer
Cavco Industries, Inc.

Headquarters
Cavco Industries, Inc.
1001 North Central Avenue
Suite 800
Phoenix, Arizona 85004
Telephone: (602) 256-6263
www.cavco.com

Investor Relations
investor_relations@cavco.com

The Company’s filings with
the Securities and Exchange
Commission can be found in
the SEC EDGAR database at
www.sec.gov

Transfer Agent and Registrar
Computershare Investor
Services
250 Royall Street
Canton, MA 02021
Telephone: (888) 525-8755
www.computershare.com

Stock Trading
The Company’s common stock
is listed on the Nasdaq Global
Select Market and is traded
under the Symbol CVCO

Stock Price Range

Year ended April 1, 2017

4th Quarter
3rd Quarter
2nd Quarter
1st Quarter

High
$121.70
$105.75
$110.67
$102.53

Low
$93.65
$88.65
$90.63
$85.56

Year ended April 2, 2016

4th Quarter
3rd Quarter
2nd Quarter
1st Quarter

High
$95.25
$106.55
$78.28
$78.75

Low
$70.28
$66.71
$66.22
$64.54

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