American Homestar to Consolidate Production in Alabama; Move Improves Capacity Utilization as Part of Plan to Improve Profitability.

Business Editors

HOUSTON--(BUSINESS WIRE)--March 15, 2000

American Homestar Corporation (Nasdaq/NM:HSTR) today announced plans to consolidate production in its Alabama manufacturing facilities. The plant in Brilliant, Alabama, will temporarily be idled, and production will be shifted to the Company's plant in Lynn, Alabama. The transition will be seamless for retailers, who will receive the same products and be served by the same sales team.

The Lynn facility, at 140,000 square feet, is the largest and has the greatest production capacity of the Company's three plants in Alabama. It will manufacture the product lines of both the Lynn and Brilliant plants until market demand is sufficient to utilize the capacity of both plants. Most Brilliant employees will be offered transfers to the Lynn plant, which is located a short commuting distance away. The Company also operates a plant in Guin, Alabama, which is currently operating at solid production rates and will remain open.

Commenting on the plant consolidation, Chief Executive Officer Laurence Dawson, Jr. said, "We have seen some encouraging signs in this region during the last several weeks. Order input and production rates have been gradually improving, but have not yet reached levels that support all three Alabama plants at desired levels. This consolidation will allow us to improve capacity utilization rates at both Guin and our recently modernized Lynn facility. It is part of our plan to aggressively improve the performance of all of our operating units. Our goal is to ensure that all business units are profitable by the end of the fiscal year ending June 30, 2000."

The Company indicated that it will incur one-time charges in the third quarter ending March 31, 2000, to recognize certain restructuring expenses and other non-cash reserves in connection with the 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 12 manufacturing plants, 122 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, 21st Century Mortgage, 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