American Homestar Further Consolidates Production in Alabama; Improved Capacity Utilization and Profitability Should Result.

Business Editors

HOUSTON--(BUSINESS WIRE)--Aug. 7, 2000

American Homestar Corporation (Nasdaq/NM:HSTR) today announced that it is further consolidating production in Alabama. The plant in Lynn, Alabama, will be temporarily idled. The Brilliant multi-section product line is being shifted to the Company's 120,000-square-foot plant in Guin, Alabama, while the higher-priced Silhouette and Greystone Manor lines are being discontinued for now. The Company will offer transfers to approximately 30 of the 200 production associates at the Lynn plant and several of the sales and support staff. The closing is expected to be complete by the end of August.

Commenting on the plant consolidation, Chief Executive Officer Laurence Dawson Jr. said, "Demand in the deep south region, while steady, is at a level which does not allow for the efficient operation of our two remaining plants. This consolidation of all regional demand to the Guin facility should allow us to operate at full capacity and substantial profitability. As demand in the region eventually increases we will bring our idle facilities in Brilliant and Lynn back on-line."

The Company indicated that it will incur one-time charges in the first quarter of fiscal 2001, which ends September 30, to recognize certain restructuring expenses and other non-cash reserves in connection with this consolidation. Specific amounts of such charges are not yet available.

American Homestar is one of the leading vertically integrated manufactured housing companies. The Company currently operates 10 manufacturing facilities, 109 Company-owned retail sales centers, 11 joint venture retail sales centers and serves 67 retail franchisees and over 300 independent retail locations in 28 states. The Company also provides retail financing through its finance affiliate, Homestar 21, LLC and provides insurance and transportation services to its customers.

This press release may contain certain forward-looking statements and information based on the beliefs of the Company's management as well as assumptions made by, and information currently available to, the Company's management. Words like "anticipate," "believe," "estimate," "should," "expect," and similar expressions used in this press release are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties, and assumptions, including the risk factors described in the Company's most recently filed registration statement and Form 10-K. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual events or results may vary from those described herein as anticipated, expected, believed, or estimated.

For more information about the Company, visit its Website at www.americanhomestar.com