Centex, Cavco Merger Will Join Conventional and Manufactured Home Builders.

DALLAS--(BUSINESS WIRE)--Dec. 5, 1996---Centex Corporation (NYSE:CTX) and Cavco Industries, Inc. (NASDAQ:CVCO) jointly announced today that they have entered into a definitive merger agreement providing for Centex's acquisition of approximately 80 percent of Cavco's outstanding common stock at a price of $26.75 per share. Following the merger, the remaining Cavco shares will be owned by Cavco founder Al Ghelfi and his affiliates. The estimated transaction value is approximately $75 million based on the anticipated 3.56 million Cavco shares outstanding as of the merger's effective date.

Dallas, Texas-based Centex, one of the nation's largest home builders and home mortgage originators, expects to deliver more than 12,500 homes during its fiscal year ending March 31, 1997. Phoenix, Ariz.-based Cavco delivered 4,893 manufactured housing units during its most recent fiscal year that ended Sept. 30, 1996. The contemplated merger will be the first combination in recent years of a manufactured housing company with a builder of conventional housing.

Centex said that the acquisition of Cavco will give Centex an additional way to serve the growing affordable housing market by creating a strategic base for its expansion into the manufactured housing industry. As part of its manufactured housing efforts, Centex also intends to pursue both the development of real estate communities utilizing manufactured homes and the financing of manufactured homes. Centex indicated it has been studying the manufactured housing business for some time and that the compatibility of the Cavco and the Centex cultures combined with Cavco's strong management team caused Centex to accelerate its plans to enter the industry.

Cavco is the largest producer of manufactured housing in Arizona and the nation's largest producer of park model homes (special manufactured homes of less than 400 square feet generally utilized in recreational vehicle parks). Cavco currently operates three manufactured housing facilities in the Phoenix area and is building a plant near Albuquerque, N.M., which will be the state's first manufactured housing facility.

Al Ghelfi will serve as Cavco's chairman and his son, Brent Ghelfi, will continue as the company's president and chief executive officer. Both have signed long-term contracts.

"The merger will preserve Cavco's management team and employee base," said Al Ghelfi, "and the additional financial strength and strategic input provided by Centex will greatly enhance the outstanding growth opportunities available for our company. I am impressed with Centex's management team and the company's culture as it relates to product quality, integrity, customer satisfaction and employee growth. Centex's philosophy is an excellent fit with Cavco's culture and core beliefs."

"We are excited about this transaction and I am delighted to continue as an owner of Cavco and a partner of Centex going forward." Brent Ghelfi added, "We believe there are significant opportunities for Cavco to utilize Centex's successful design, purchasing and marketing techniques to further improve the competitiveness and appeal of our homes. We are very enthusiastic about the synergies that will be created by combining Cavco's manufactured housing expertise with Centex's expertise in conventional home building, neighborhood development and mortgage financing."

Currently, Al Ghelfi and his affiliates own approximately 54 percent of Cavco's outstanding common stock, while the balance of the stock is publicly held. Ghelfi has agreed to sell the majority of his shares of Cavco stock to Centex pursuant to the merger and, under certain circumstances, even if the merger agreement is terminated. In addition, pursuant to the merger agreement, Cavco's public shareholders and Ghelfi will receive the same price for their shares. Ghelfi has agreed to vote his shares in favor of the merger and against any alternate transactions. Cavco also has granted Centex a right of first refusal in the event other offers are made for the company.

Cavco and Al Ghelfi and certain of his affiliates also will enter into a shareholders' agreement in connection with the merger, which will provide, among other things, that beginning in 2000 the Ghelfi parties will have a right to sell their remaining shares to Centex on an earnings multiple-based formula, and beginning in 2002, Centex will have an option to acquire such shares on the same basis.

The merger agreement has been approved by the Boards of Directors of both companies. The transactions contemplated by the merger agreement are subject to approval by Cavco shareholders and to certain regulatory filings and other customary conditions. Centex and Cavco expect the merger to be completed by the end of the first quarter of calendar 1997.

Centex, in addition to its home building and financial services operations, is one of the nation's leading general building contractors and owns 51 percent of Centex Construction Products, Inc. (NYSE:CXP), a producer of Cement, Gypsum Wallboard and Concrete and Aggregates. For the fiscal year ended March 31, 1996, Centex had total revenues of $3.1 billion and net earnings of $53.4 million or $1.83 per share. For the six months ended Sept. 30, 1996, Centex reported revenues of $1.9 billion and net earnings of $50.1 million of $1.71 per share.

Cavco is a diversified company that produces manufactured homes and, through its National Security Containers, Inc. subsidiary, sells and leases storage containers. For its fiscal year ended Sept. 30, Cavco reported revenues of $130.1 million and net earnings of $6.9 million or $2.05 per share from continuing operations.

CONTACT: Centex Corporation

Laurence E. Hirsch or Sheila E. Gallagher 214/981-5000

or

Cavco Industries, Inc.,

Al Ghelfi, chairman, or Brent Ghelfi, 602/256-6263