Overview
The Corporation designs, produces and distributes manufactured housing (single-section, multi-section and modular homes) and towable recreational vehicles (travel trailers, fifth wheels and park models) to independent dealers and manufactured housing communities located throughout the United States (U.S.). To better serve the needs of its dealers and communities, the Corporation has seventeen manufacturing facilities in ten states. Manufactured housing and recreational vehicles are sold to dealers and communities either through floor plan financing with various financial institutions or on a cash basis. While the Corporation maintains production of manufactured homes and recreational vehicles throughout the year, seasonal fluctuations in sales do occur. Sales and production of manufactured homes are affected by winter weather conditions at the Corporation's northern plants. Recreational vehicle sales are generally higher in the spring and summer months than in the fall and winter months.
Sales in both business segments are affected by the strength of the U.S. economy, interest rate levels, consumer confidence and the availability of wholesale and retail financing. The manufactured housing segment is currently affected by a protracted downturn. This downturn, caused primarily by restrictive credit standards, decreased availability of retail and wholesale financing, and economic uncertainty resulted in calendar 2007 industry sales of approximately 96,000 units, the lowest since 1961. In addition, the Manufactured Housing Institute's latest data shows industry unit sales for the first eight months of calendar 2008 are 10 percent lower than the same period in 2007. Manufactured housing sales are also negatively impacted by a recession in the site-built housing industry. For example, a potential buyer of a manufactured home may be prevented from purchasing due to an inability to sell his or her existing home. Likewise, a potential buyer of a manufactured home may be attracted to declining prices of both new and existing site-built homes. The site-built industry is presently experiencing declining existing home sales, housing starts and home prices. In addition, the industry is also hindered by increasing home foreclosures.
In the first quarter of fiscal 2009, the Corporation's manufactured housing segment had geographic markets where sales either declined consistent with the experience of the industry or declined less than the experience of the industry. There were, however, certain markets where the Corporation's unit sales declined at a greater rate than the industry.
In the recreational vehicle segment, the Corporation sells travel trailers, fifth wheels and park models. Sales of recreational vehicles are influenced by changes in consumer confidence, the availability of retail financing, and gasoline prices. Industry sales of travel trailers, fifth wheels and park models, as published by the Recreational Vehicle Industry Association and the Recreational Park Trailer Industry Association, Inc., declined from approximately 291,000 units in calendar 2006 to approximately 268,000 units in calendar 2007. In addition, the latest industry data shows sales of travel trailers and fifth wheels for the first eight months of 2008 are 18 percent lower than the same period in 2007. Throughout 2007 and 2008, the price of gasoline rose, the availability of retail financing decreased and consumer confidence fell. For the first quarter of fiscal 2009, recreational vehicle unit sales declined consistent with the towable segment of the industry.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued).

Overview - (Continued)
In light of the declining market, a manufactured housing facility in Ephrata, Pennsylvania was consolidated with the manufactured housing facility located in Leola, Pennsylvania. In addition, a consolidation of sales and administrative personnel occurred at the Corporation's two manufactured housing facilities in Ocala, Florida.
The Corporation encountered a challenging business environment in fiscal 2009's first quarter, and it cannot determine with certainty the business environment for the remainder of the fiscal year. The Corporation will continue to monitor its expenses, communicate with dealer and communities to take advantage of sales opportunities, and positioning its products to be competitive in the marketplace. With a healthy position in cash and U.S. Treasury Bills, no debt and experienced employees, the Corporation is prepared to meet the challenges ahead.
Results of Operations - Three-Month Period Ended August 31, 2008 Compared to Three-Month Period Ended August 31, 2007 (Unaudited)

Sales and Unit Shipments

                           August 31,                    August 31,
                              2008         Percent          2007         Percent      Decrease
                                                 (Dollars in thousands)

  Sales

  Manufactured housing    $     45,258         72.3     $     72,328         75.0     $  27,070

  Recreational vehicles         17,339         27.7           24,066         25.0         6,727


  Total Sales             $     62,597        100.0     $     96,394        100.0     $  33,797


  Unit Shipments

  Manufactured housing             985         47.0            1,497         47.4           512

  Recreational vehicles          1,112         53.0            1,663         52.6           551


  Total Unit Shipments           2,097        100.0            3,160        100.0         1,063

Manufactured housing unit sales decreased approximately 34 percent, while the industry during the June to August 2008 timeframe decreased approximately 17 percent. In certain geographic markets, unit sales decreased similar to the experience of the industry or decreased at a rate less than the industry. There were, however, markets where unit sales declined at a greater rate than the overall industry. Adverse conditions that affected unit sales to these markets include:
• sales strength in geographic areas where the Corporation has minimal presence due to the location of its manufacturing facilities

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued).

Results of Operations - Three-Month Period Ended August 31, 2008 Compared to Three-Month Period Ended August 31, 2007 (Unaudited) - (Continued)
• competitors owning retail sales centers, giving them an advantage in displaying their product

• decreased sales to manufactured housing communities as a result of the communities managing inventory levels

• changing consumer preference toward product with lower price points which the Corporation has limited models.

In addressing these conditions, the Corporation is working with the communities as they manage inventory levels, and developing product with lower price points that will meet consumer demand.
Recreational vehicle sales decreased due to an overall softening of demand. Unit sales for travel trailers and fifth wheels declined approximately 34 percent, while industry unit sales for the period from June to August 2008 compared to the same period in 2007 decreased approximately 33 percent. Current industry unit sales data for park models is not available.

Cost of Sales

                         August 31,       Percent        August 31,       Percent
                            2008         of Sales*          2007         of Sales*      Decrease
                                                 (Dollars in Thousands)

Manufactured housing    $     43,214           95.5     $     62,986           87.1     $  19,772

Recreational vehicles         17,180           99.1           23,089           95.9         5,909


Consolidated            $     60,394           96.5     $     86,075           89.3     $  25,681

* The percentages for manufactured housing and recreational vehicles are based on segment sales. The percentage for consolidated cost of sales is based on total sales.

Manufactured housing cost of sales decreased due to less sales volume and the variable nature of many of the direct manufacturing costs. As a percentage of sales, cost of sales increased as a result of material cost increases and certain manufacturing overhead costs remaining relatively constant despite lower sales. The Corporation raised prices on its manufactured housing product in response to the rise in material cost, but was unable to fully realize the increase by the end of the fiscal quarter. In addition, this segment incurred a one-time charge of approximately $100,000 associated with the consolidation of the two Pennsylvania facilities.
Recreational vehicle cost of sales decreased due to less sales volume and the variable nature of many direct manufacturing costs. As a percentage of sales, cost of sales increased due to certain manufacturing overhead costs remaining relatively constant despite lower sales.

Item 2.    Management's Discussion and Analysis of Financial Condition and Results
          of Operations - (Continued).


Results of Operations - Three-Month Period Ended August 31, 2008 Compared to
Three-Month Period Ended August 31, 2007 (Unaudited) - (Continued)
Selling and Administrative Expenses

                                       August 31,       Percent       August 31,       Percent
                                          2008         of Sales          2007         of Sales       Decrease
                                                               (Dollars in thousands)

Selling and Administrative Expenses   $      9,064          14.5     $     10,603          11.0     $    1,539

Selling and administrative expenses decreased due to a decrease in salaries, performance based compensation, a continuing effort to control costs and a change in the valuation of the Corporation's liability for retirement and death benefits offered to certain employees. As a percentage of sales, selling and administrative expenses increased due to certain costs being fixed. In addition, costs of approximately $300,000 were incurred related to consolidate the two Pennsylvania facilities, and to consolidate sales and administrative personnel at the two Florida facilities.

Operating (Loss) Earnings

                                August 31,        Percent        August 31,       Percent
                                   2008          of Sales*          2007         of Sales*
                                                  (Dollars in thousands)

  Manufactured housing         $     (4,240 )          (9.4 )   $      2,087            2.9

  Recreational vehicles              (2,233 )         (12.9 )         (1,757 )         (7.3 )

  General Corporate Expenses           (388 )          (0.6 )           (614 )         (0.6 )


  Total Operating Loss         $     (6,861 )         (11.0 )   $       (284 )         (0.3 )

* The percentages for manufactured housing and recreational vehicles are based on segment sales. The percentage for general corporate expenses and total operating
(loss) earnings are based on total sales.

The operating loss for manufactured housing was primarily due to the impact of decreased sales on the components of earnings as noted above. This segment was also negatively affected by the cost of consolidations in both Pennsylvania and Florida, and single-section unit sales increasing from 21 percent, as a percentage of segment sales, in the first quarter of fiscal 2008 to 30 percent in the first quarter of fiscal 2009. Single-section homes have lower margins as compared to multi-section homes.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued).

Results of Operations - Three-Month Period Ended August 31, 2008 Compared to the Three-Month Period Ended August 31, 2007 (Unaudited) - (Continued) The operating loss for recreational vehicles increased primarily due to the impact of decreased sales on the components of earnings as noted above. In addition, the operating loss was negatively impacted by this segment receiving a larger proportion of certain operating expenses allocated to industry segments based on a percentage of sales. Recreational vehicle sales were approximately 28 percent in the first quarter of fiscal 2009 as compared to 25 percent in the first quarter of fiscal 2008.
The decrease in general corporate expenses occurred primarily due to a change in valuation of the Corporation's liability for retirement and death benefits offered to certain employees as noted above. Interest Income

                                 August 31,       August 31,
                                    2008             2007         Decrease
                                          (Dollars in thousands)

              Interest Income   $        390     $      1,383     $     993

Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government Securities. In the first quarter of fiscal 2009, the weighted average amount available for investment was approximately $94 million with a weighted average yield of 1.7 percent. In the first quarter of fiscal 2008, the weighted average amount available for investment was approximately $113 million with a weighted average yield of 4.9 percent.
(Benefit) Provision for Income Taxes

                             August 31,       August 31,
                                2008             2007          Increase
                                       (Dollars in thousands)

                  Federal   $     (2,179 )   $        322     $    2,501

                  State             (146 )             68            214


                  Total     $     (2,325 )   $        390     $    2,715

The (benefit) provision for federal income taxes approximates the statutory rate and for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities. The benefit for federal and state income is the result of a pretax loss that occurred in the first quarter of fiscal 2009.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of
        Operations - (Continued).


Results of Operations - Three-Month Period Ended August 31, 2008 Compared to the
Three-Month Period Ended August 31, 2007 (Unaudited) - (Continued)
Liquidity and Capital Resources

                                                   August 31,        May 31,
                                                      2008            2008          Decrease
                                                             (Dollars in thousands)

Cash and U.S. Treasury Bills                      $    106,127      $ 111,579      $    5,452
Current assets, exclusive of cash and U.S.
Treasury Bills and Notes                          $     41,892      $  42,628      $      736
Current liabilities                               $     20,889      $  21,613      $      724
Working capital                                   $    127,130      $ 132,594      $    5,464

The Corporation's policy is to invest its excess cash, which exceeds its operating needs, in U.S. Government Securities. Cash and U.S. Treasury Bills decreased due to a net loss of $4,146,000, and payment of approximately $1,511,000 in dividends. Current assets, exclusive of cash and U.S. Treasury Bills, declined primarily due to a decrease in accounts receivable of $2,544,000. This decrease is attributed to lower sales in August 2008 as compared to May 2008. Other current assets increased $2,275,000 primarily due to an increase in the deferred tax asset for federal income taxes. Current liabilities decreased due to a $620,000 decline in other accrued liabilities, caused primarily by the timing and amount of payroll withholding taxes at August 31, 2008 as compared to May 31, 2008.
Capital expenditures totaled $239,000 for the three months ended August 31, 2008 as compared to $677,000 in the comparable period of the previous year. Capital expenditures were made primarily to replace or refurbish machinery and equipment in addition to improving manufacturing efficiencies.
The cash provided by operating activities, along with current cash and other short-term investments, is expected to be adequate to fund any capital expenditures and treasury stock purchases during the year. Historically, the Corporation's financing needs have been met through funds generated internally. Other Matters
The provision for federal income taxes in each year approximates the statutory rate and for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities.
In the first quarter of fiscal 2009, the Corporation adopted Statement of Financial Accounting Standards No. 157 and Financial Accounting Standards Board Staff Position No. 157-2 with no material effect on its financial position or results of operations.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued).

Other Matters - (Continued)
The consolidated financial statements included in this report reflect transactions in the dollar values in which they were incurred and, therefore, do not attempt to measure the impact of inflation. On a long-term basis, the Corporation has demonstrated an ability to adjust selling prices in reaction to changing costs due to inflation. During the first quarter of fiscal 2009, however, the Corporation was unable to fully realize raised selling prices on its manufactured housing product following an increase in material costs. Forward Looking Information
Certain statements in this report are considered forward looking as indicated by the Private Securities Litigation Reform Act of 1995. These statements involve uncertainties that may cause actual results to materially differ from expectations as of the report date. These uncertainties include but are not limited to:
• Cyclical nature of the manufactured housing and recreational vehicle industries

• General or seasonal weather conditions affecting sales

• Potential impact of hurricanes and other natural disasters on sales and raw material costs

• Potential periodic inventory adjustments by independent retailers

• Availability of wholesale and retail financing

• Interest rate levels

• Impact of inflation

• Impact of rising fuel costs

• Cost of labor and raw materials

• Competitive pressures on pricing and promotional costs

• Catastrophic events impacting insurance costs

• The availability of insurance coverage for various risks to the Corporation

• Consumer confidence and economic uncertainty

• The health of the U.S. housing market as a whole

• Market demographics

• Management's ability to attract and retain executive officers and key personnel

• Increased global tensions, market disruption resulting from a terrorist or other attack and any armed conflict involving the United States.