-- (10) POST-RETIREMENT HEALTH CARE BENEFITS --

The Company provides health care benefits to certain retired employees from retirement age to when they become eligible for Medicare coverage. Employees become eligible for benefits after meeting certain age and service requirements. The cost of providing retiree health care benefits is actuarially determined and accrued over the service period of the active employee group.

The components of the net periodic post-retirement benefit cost are as follows:

(AMOUNTS IN THOUSANDS)			2004				2003			2002
Service cost - benefits earned during the year		$	381			$	270		$	588
Interest cost on projected benefit obligation			658				596			463
Recognized net actuarial gain or loss			738				637			597
Amortization of unrecognized prior service cost			(917	)			(917	)		(753	)
Net periodic post-retirement benefit cost		$	860			$	586			895

The changes in the benefit obligation and plan assets and the funded status of the post-retirement benefit plan are as follows:

(AMOUNTS IN THOUSANDS)		April 25, 2004				April 27, 2003
Change in projected post-retirement benefit obligation:   Projected benefit obligation at beginning of year		$	11,231			$	7,832
Service cost			381				270
Interest cost			658				596
Actuarial loss			4,219				3,486
Net benefits paid			(1,064	)			(502	)
Plan amendments			(3,704	)			(451	)
Projected benefit obligation at end of year		$	11,721			$	11,231
Funded status		$	11,721			$	11,231
Unrecognized net actuarial loss			(11,763	)			(8,283	)
Unrecognized prior service cost			4,693				1,906
Accrued post-retirement benefits		$	4,651			$	4,854

The discount rate was 6.25 percent and 6.00 percent in fiscal years 2004 and 2003, respectively. The health care cost trend rate begins at 10.00 percent and grades down over seven years to an ultimate level of 5.00 percent per year. A 1.00 percent increase in the assumed health care cost trend rate would increase the total service cost and interest cost by $102,000 and the accumulated postretirement benefit obligation (APBO) by $888,000. A 1.00 percent decrease in the assumed health care cost trend rate would decrease the total service cost and interest cost by $93,000 and the APBO by $808,000.

-- (11) RETAIL FLOORING LIABILITY -- --

Retail flooring liability represents amounts borrowed by Company-owned retail sales centers to finance inventory purchases of manufactured homes. The entire amount outstanding at April 25, 2004, was financed under agreements with two national floorplan lenders that provide for a security interest in the units financed and repayment at the time the units are sold. Amounts outstanding bear interest at rates ranging from prime rate plus 0.75 percent to prime plus 3.00 percent, depending upon the age of the inventory being financed. For unsold units, mandatory curtailment payments that reduce the balance outstanding are due in various increments and at various intervals, beginning at one year and extending up to 21 or 24 months, at which time the obligation is due in full. One of the floorplan agreements includes cross-default provisions tied to the covenants in the senior secured credit facility.

-- (12) OTHER SHORT-TERM BORROWINGS --

On December 30, 2003, our financial services subsidiary, HomeOne, entered into a Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. (Greenwich) that provides up to $75 million in warehouse funding. The facility expires on December 22, 2004. Collateral for borrowings under the facility will be manufactured housing consumer loans originated by HomeOne. The availability of financing under the facility is dependent on a number of factors, including the borrowing base represented by the loans pledged to Greenwich. The advance rate for eligible loans varies between 72% and 80% of the principal amount of the loans, depending on the weighted average credit scores of the borrowers under loans and the interest rate selected by HomeOne. Available interest rates charged by Greenwich currently vary from 2.00% to 2.50% over LIBOR. As the selected interest rate decreases, so does the available advance rate. The Company and HomeOne agreed to guarantee the facility in an aggregate amount not to exceed 10 percent of the amount of principal and interest outstanding. The Company's guaranty includes financial and other covenants, including maintenance of specified levels of tangible net worth, total indebtedness to tangible net worth and liquidity. As of fiscal year end, HomeOne had borrowings of $4.7 million under this facility and was in compliance with all covenants.

On July 27, 2001, we entered into an agreement for a senior secured credit facility to be funded by a syndicate of lenders led by Bank of America. As amended, the senior secured credit facility was structured as a three-year revolving credit line for up to $190 million plus a $30 million two-year term loan. Prior to fiscal 2004, various amendments to the credit agreement were executed mainly to redefine several financial performance covenants and to reset financial covenants to preempt possible covenant defaults. The structure of the resultant facility contained customary affirmative and negative covenants including an EBITDA (earnings before interest, taxes, depreciation and amortization) covenant and a covenant to maintain liquidity, as defined, of at least $80 million on a consolidated basis and $50 million within the subsidiaries designated as borrowers. The term loan was repaid in full and eliminated from the facility, along with a property, plant and equipment subfacility. As a result of subsequent amendments, the total lending commitments, as at fiscal year end, were established at $130 million in combination with a $75 million subfacility to support letters of credit and a minimum unused borrowing capacity requirement of $30 million. Also, financial covenants were again reset to preempt possible covenant defaults.

The balance outstanding on the revolver as reflected on the balance sheet at the end of fiscal 2004 and 2003 in other short-term borrowings was $5.7 million and $16.1 million, respectively. The revolving credit line bears interest, at our option, at variable rates based on either Bank of America’s prime rate or one-, two- or three-month LIBOR. As amended, the facility is secured by virtually all of the Company’s receivables and a significant portion of its inventories, plus, at fiscal 2004 year end, $75 million in appraised value of real estate. Advances under the revolving credit line are limited by the available borrowing base of eligible accounts receivable and inventories. The borrowing base is revised weekly for changes in receivables and monthly for changes in inventory balances. At the end of the fiscal year, the borrowing base totaled $170 million. After consideration of the $30 million unused minimum requirement, collateral reserves of $2.5 million, $47.7 million in standby letters of credit and the outstanding borrowings, unused borrowing capacity was approximately $40.8 million.

Subsequent to our fiscal year end, on May 17, 2004, we announced the early renewal and extension of the credit facility to July 31, 2007, under a fully underwritten arrangement with Bank of America. The terms of the amended and restated agreement provide for an increase of $20 million in the amount of the facility, to a commitment level of $150 million. Among other changes was the elimination of the previous requirement for the Company to maintain $30 million in unused borrowing capacity, which directly enhances our potential borrowing availability. The requirement for excess “boot” collateral, held in the form of a security interest in real estate, was also reduced from $75 million to $50 million.

Under the new agreement, we are not subject to a financial performance covenant, except in the case that our average monthly liquidity, defined as cash, cash equivalents and unused borrowing capacity, falls below $60 million within the borrowing subsidiaries or $90 million including the parent company. Under these circumstances we are required to meet a designated cumulative EBITDA requirement. In addition, pricing under the new facility was reduced in all areas, including lower fees for letters of credit, unused facility fees and generally lower interest charges on borrowings. Simultaneous with the signing of the agreement, we paid closing and administrative fees to the bank equal to 0.55 percent of the new $150 million credit commitment.

In conjunction with the restatement of the credit agreement, we executed covenant amendments to our flooring finance agreement with Textron Financial Corp. that mirror the new bank agreement.

The weighted average interest rate on these short-term borrowings was 5.00 percent and 5.25 percent at the end of fiscal 2004 and 2003, respectively.

At April 25, 2004, and April 27, 2003, long-term debt consisted of the following:

(AMOUNTS IN THOUSANDS)			2004				2003
5% Convertible senior subordinated debentures		$	100,000			$	—
Other			2,159				2,357
		$	102,159			$	2,357

On December 22, 2003, we completed the sale of $100 million aggregate principal amount of 5% convertible senior subordinated debentures due in 2023. Interest on the debentures is payable semi-annually at the rate of 5.00%. The debentures are convertible, under certain circumstances, into the Company’s common stock at an initial conversion rate of 85.0340 shares per $1,000 principal amount of debentures, equivalent to an initial conversion price of $11.76 per share of common stock.

Holders of the debentures have the ability to require the Company to repurchase the debentures, in whole or in part, on December 15, 2008; December 15, 2013; and December 15, 2018. The repurchase price is 100 percent of the principal amount of the debentures plus accrued and unpaid interest. The Company may, at its option, elect to pay the repurchase price in cash, its common stock or a combination of cash and its common stock. The Company has the option to redeem the debentures after December 15, 2008, in whole or in part, for cash, at a price equal to 100 percent of the principal amount plus accrued and unpaid interest. Subsequent to the end of the fiscal year, the debentures and the common stock potentially issuable upon conversion of the debentures were registered for resale under the Securities Act of 1933.

The Company used a portion of the net proceeds of the offering to repay amounts outstanding under its senior secured credit facility and for the redemption of a portion of the 9.5% convertible subordinated debentures subsequent to fiscal year end, and plans to use the remainder for working capital and other general corporate purposes.