Cavalier Homes to Close Texas Plant; Company Comments on Fourth Quarter Outlook.

ADDISON, Ala. -- Cavalier Homes, Inc. (AMEX:CAV) today announced that it will close an under-performing home manufacturing plant in Fort Worth, Texas. The plant, Cavalier's only facility in that state, accounted for about 10% of Cavalier's total revenue and 11% of floor shipments in 2004.

Cavalier noted that the plant has been hurt by ongoing weakness in the Texas market, where floor shipments are down approximately 50% from the 2001 level - considerably worse than the overall decline seen in floor shipments nationwide during the same period. The plant has consistently incurred operating losses over the past five years, with net losses of approximately $2.5 million in each of the last two years. Furthermore, it was Cavalier's only unprofitable home manufacturing facility in 2004.

The Company's Fort Worth plant currently services approximately 60 dealer locations in Texas and three other states, representing approximately 15% of the Company's total network of independent dealers. Cavalier will continue to provide comparable products to some of this market, where delivery costs are practical, using available capacity at its plants in Alabama.

In connection with the plant closing, although evaluation is ongoing, Cavalier currently expects to record asset impairment charges ranging from $200,000-$300,000 in the fourth quarter ended December 31, 2004. The Company also expects to incur employee termination costs related to the plant's current workforce of approximately 150 people. These termination costs, which are expected to range from $800,000-$900,000, will be recorded primarily in the first quarter of 2005.

Despite the additional costs recorded due to the plant's closing, Cavalier currently expects to report a profit for both the fourth quarter and full year ended December 31, 2004. The Company plans to report results for these periods later this month.

Cavalier Homes, Inc. and its subsidiaries produce, sell, and finance manufactured housing. The Company markets its homes primarily through independent dealers, including exclusive dealers that carry only Cavalier products, and provides financial services primarily to retail purchasers of manufactured homes.

With the exception of historical information, the statements made in this press release, including those containing the words "will," "may," "likely," "expect," and "plans," and words of similar import, and those relating to industry trends and conditions, Cavalier's expectations for its results of operations in future periods, acceptance of Cavalier's new product initiatives and the effect of these and other steps taken in the last several years on Cavalier's future sales and earnings, and Cavalier's plans and expectations for addressing current and future industry and business conditions, constitute forward-looking statements, are based upon current expectations, and are made pursuant to the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve certain known and unknown assumptions, risks and uncertainties that could cause actual results to differ materially from those included in or contemplated by the statements, including among other matters, significant competitive activity, including promotional and price competition; interest rates; increases in raw material and energy costs; changes in customer demand for Cavalier's products; inherent risks in the market place associated with new products and new product lines; and other risk factors listed from time to time in Cavalier's reports filed with the Securities and Exchange Commission, including, but not limited to, those discussed or indicated in Cavalier's Annual Report on Form 10-K for the period ended December 31, 2003, under the heading "Item 1. Business-Risk Factors," and its Quarterly Report on Form 10-Q for the period ended September 25, 2004, under the heading "Safe Harbor Statement under the Private Litigation Reform Act of 1995," as filed with the Securities and Exchange Commission. Cavalier disclaims any obligation to update any forward-looking statements as a result of developments occurring after the issuance of this press release.