The manufactured housing industry offers several competitive advantages over site-built housing. Because of these intrinsic advantages, we believe that the market will eventually return to a shipment level of approximately 250,000 homes per year. This near doubling of the market, coupled with our belief that we can improve our market share while simultaneously improving our margins, bodes extremely well for future profitability.

The primary benefit of manufactured housing will always be affordability, as the average price of a site-built house is $76 per square foot and a manufactured home costs $32 per square foot, according to MHI statistics. There is no doubt that America will always need affordable housing, and current demographics are closely aligned with those of the typical manufactured housing customer. Unusually low mortgage rates for site-built homes over the past several years quite likely have been a detriment to our industry, as the gap between interest rates for financing a home-only, or chattel, loan and a mortgage loan exceeded 500 basis points. The disparity in more normal markets has approximated 300 basis points. According to published reports, it appears that several significant lenders, some of which had been involved in the past and some of which are new, will be participating in manufactured housing finance as calendar 2004 progresses. As a result, we believe that the current rise in mortgage rates will coincide with stability in chattel rates as some competition among lenders begins. That can only be helpful as the industry works to return to normal levels.

The industry, and Fleetwood in particular, continues to improve the aesthetics of manufactured housing, both inside and out. We are working toward breaking into new markets. And most importantly, we have developed a strong, vertically integrated Housing Group. We believe these initiatives will lead to increased growth and strong profitability in the future.