Contingent Liabilites and Commitments

12 Months Ended

Aug. 25, 2012

Commitments and Contingencies Disclosure [Abstract]

Contingent Liabilities and Commitments

Contingent Liabilities and Commitments

Repurchase Commitments

Generally, manufacturers in the RV industry enter into repurchase agreements with lending institutions which have provided wholesale floorplan financing to dealers. Most dealers' RVs are financed on a "floorplan" basis under which a bank or finance company lends the dealer all, or substantially all, of the purchase price, collateralized by a security interest in the recreation vehicles purchased.

Our repurchase agreements provide that, in the event of default by the dealer on the agreement to pay the lending institution, we will repurchase the financed merchandise. The terms of these agreements, which generally can last up to 18 months, provide that our liability will be the lesser of remaining principal owed by the dealer or dealer invoice less periodic reductions based on the time since the date of the original invoice. Our contingent liability on these repurchase agreements was approximately $165.4 million and $155.5 million at August 25, 2012 and August 27, 2011, respectively.

In certain instances, we also repurchase inventory from our dealers due to state law or regulatory requirements that govern voluntary or involuntary relationship terminations. Although laws vary from state to state, some states have laws in place that require manufacturers of recreation vehicles to repurchase current inventory if a dealership exits the business. Incremental repurchase exposure beyond existing repurchase agreements, related to dealer inventory in states that we have had historical experience of repurchasing inventory, totaled $5.0 million and $5.7 million at August 25, 2012 and August 27, 2011, respectively.

Our risk of loss related to these repurchase commitments is significantly reduced by the potential resale value of any products that are subject to repurchase and is spread over numerous dealers and lenders. The aggregate contingent liability related to our repurchase agreements represents all financed dealer inventory at the period reporting date subject to a repurchase agreement, net of the greater of periodic reductions per the agreement or dealer principal payments. Based on the repurchase exposure as previously described, we established an associated loss reserve. Our accrued losses on repurchases were $627,000 as of August 25, 2012 and $1.2 million as of August 27, 2011.

A summary of the activity for the fiscal years stated for repurchased units is as follows:

(Dollars in thousands)	Fiscal 2012		Fiscal 2011		Fiscal 2010
Inventory repurchased:
Units	18		25		4
Dollars	$	1,264	$	2,431	$	300
Inventory resold:
Units	18		25		5
Cash collected	$	1,113	$	2,144	$	328
Loss recognized	$	151	$	287	$	44
Units in ending inventory	—		—		—

Litigation

We are involved in various legal proceedings which are ordinary routine litigation incidental to our business, some of which are covered in whole or in part by insurance. We believe while the final resolution of any such litigation may have an impact on our results for a particular reporting period, the ultimate disposition of such litigation will not have any material adverse effect on our financial position, results of operations or liquidity.

Lease Commitments

We have operating leases for certain land, buildings and equipment. Lease expense was $864,000 for Fiscal 2012 (see Note 19), $642,000 for Fiscal 2011 and $220,000 for Fiscal 2010. Minimum future lease commitments under noncancelable lease agreements in excess of one year as of August 25, 2012 are as follows:

(In thousands)		Amount
Year Ended:	2013	$	958
	2014	685
	2015	223
	2016	—
	2017	—
	Total	$	1,866