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 continuing decline in industry sales. This decline, 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 eleven months of calendar 2008 are 14 percent lower than the same period in 2007. This decrease is influenced by the slowing economy, rising unemployment, decreasing consumer confidence and tightening credit markets for both retail and wholesale financing.
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 housing industry is currently experiencing a decline in existing home sales, housing starts and home prices. In addition, the industry is also hindered by increasing home foreclosures.
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 and fifth wheels, as published by the Recreational Vehicle Industry Association, declined from approximately 243,000 units in the first eleven months of calendar 2007 to approximately 180,000 units in the same period in 2008. This 26 percent decrease, like the decrease in manufactured housing sales, is the result of a slowing economy, decreasing consumer confidence, tightening credit markets for retail and wholesale financing and rising gasoline prices throughout most of 2008.

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

Overview- (Continued)
As a result of the declining market, the Corporation consolidated the operations of a manufactured housing facility in Ephrata, Pennsylvania and a manufactured housing facility in Leola, Pennsylvania during the first quarter of fiscal 2009. In addition, the Corporation consolidated the sales and administrative workforce at the Corporation's two manufactured housing facilities in Ocala, Florida. Subsequent to November 30, 2008, the Corporation announced the consolidation of manufacturing operations and personnel at the two manufactured housing facilities in Ocala, Florida. The consolidation was completed by December 31, 2008. Also, subsequent to November 30, 2008, the Corporation completed the sale of an idle recreational vehicle facility located in McMinnville, Oregon. The Corporation encountered a challenging business environment in the first half of fiscal 2009, and it cannot determine with certainty the business environment for the remainder of the fiscal year. This environment includes the Manufactured Housing Institute estimating industry shipments for 2008 at 84,500, the lowest on record. The Recreational Vehicle Industry Association forecasts a decline of travel trailer and fifth wheel unit shipments from approximately 259,000 in calendar 2007 to approximately 193,000 units in calendar 2008, and 149,000 units in calendar 2009.
The Corporation will continue to monitor its expenses, communicate with dealers and communities to take advantage of sales opportunities, and position 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.

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


Results of Operations - Three-Month Period Ended November 30, 2008 Compared to
Three-Month Period Ended November 30, 2007 (Unaudited)
Sales and Unit Shipments

                         November 30,                    November 30,
                             2008          Percent           2007          Percent      Decrease
                                                 (Dollars in thousands)

Sales

Manufactured housing    $       38,310         81.1     $       58,383         75.6     $  20,073

Recreational vehicles            8,900         18.9             18,815         24.4         9,915


Total Sales             $       47,210        100.0     $       77,198        100.0     $  29,988


Unit Shipments

Manufactured housing               856         58.4              1,283         51.8           427

Recreational vehicles              609         41.6              1,192         48.2           583


Total Unit Shipments             1,465        100.0              2,475        100.0         1,010

Manufactured housing unit sales decreased approximately 33 percent, while the industry during the September to November 2008 period decreased approximately 24 percent. In certain geographic markets, such as Florida and Ohio, unit sales declined at a greater rate than the overall industry. Adverse conditions that affected the Corporation's unit sales include:
• 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 where 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.

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


Results of Operations - Three-Month Period Ended November 30, 2008 Compared to
Three-Month Period Ended November 30, 2007 (Unaudited) - (Continued)
Recreational vehicle sales decreased due to an overall softening of demand. Unit
sales for travel trailers, fifth wheels and park models declined approximately
49 percent, while industry unit sales for travel trailers and fifth wheels
during September to November 2008 compared to the same period in 2007 decreased
approximately 52 percent. Current industry unit sales data for park models is
not available.
Cost of Sales

                             November 30,         Percent         November 30,         Percent
                                 2008            of Sales*            2007            of Sales*        Decrease
                                                           (Dollars in Thousands)

Manufactured housing        $       36,861             96.2      $       52,715             90.3      $   15,854

Recreational vehicles                9,520            107.0              18,660             99.2           9,140


Consolidated                $       46,381             98.2      $       71,375             92.5      $   24,994

* 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 and recreational vehicle 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 certain manufacturing overhead costs such as depreciation and property taxes remaining relatively constant despite lower sales. Selling and Administrative Expenses

                            November 30,        Percent        November 30,        Percent
                                2008            of Sales           2007            of Sales        Decrease
                                                         (Dollars in thousands)

Selling and
Administrative Expenses     $       8,165            17.3      $       9,747            12.6      $    1,582

Selling and administrative expenses decreased due to a decrease in salaries, performance based compensation, and a continuing effort to control costs. As a percentage of sales, selling and administrative expenses increased due to certain costs being fixed.

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


Results of Operations - Three-Month Period Ended November 30, 2008 Compared to
Three-Month Period Ended November 30, 2007 (Unaudited) - (Continued)
Operating Loss

                                        November 30,         Percent         November 30,         Percent
                                            2008            of Sales*            2007            of Sales*
                                                              (Dollars in thousands)

Manufactured housing                   $       (3,965 )          (10.4 )    $         (944 )           (1.6 )

Recreational vehicles                          (2,760 )          (31.0 )            (2,352 )          (12.5 )

General Corporate Expenses                       (611 )           (1.3 )              (628 )           (0.8 )


Total Operating Loss                   $       (7,336 )          (15.5 )    $       (3,924 )           (5.1 )

* 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 single-section unit sales increasing from 28 percent, as a percentage of segment sales, in the second quarter of fiscal 2008 to 39 percent in the second quarter of fiscal 2009. Single-section homes have lower margins as compared to multi-section homes. In addition, this segment received a larger proportion of certain operating expenses allocated to industry segments based on a percentage of sales. Manufactured housing sales were approximately 81 percent in the second quarter of fiscal 2009 as compared to 76 percent in the second quarter of fiscal 2008.
The operating loss for recreational vehicles increased primarily due to the impact of decreased sales on the components of earnings as noted above. Income from Life Insurance Proceeds
The Corporation has arrangements with certain employees which provide benefits to be paid to the employee's estates in the event of death during active employment. To fund such arrangements, the Corporation purchased life insurance contracts on the covered employees. The Corporation realized non-taxable income from life insurance proceeds in the amount of $380,000, which is separately stated in the Consolidated Statement of Operations for the three-month and six-month periods ended November 30, 2008.

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


Results of Operations - Three-Month Period Ended November 30, 2008 Compared to
the Three-Month Period Ended November 30, 2007 (Unaudited) - (Continued)
Interest Income

                               November 30,      November 30,
                                   2008              2007          Decrease
                                          (Dollars in thousands)

             Interest Income   $         330     $       1,158     $     828

Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government Securities. In the second quarter of fiscal 2009, the average amount available for investment was approximately $97 million with a weighted average yield of 1.6 percent. In the second quarter of fiscal 2008, the average amount available for investment was approximately $114 million with a weighted average yield of 4.2 percent. (Benefit) Provision for Income Taxes

                         November 30,       November 30,       Increase in
                             2008               2007             Benefit
                                      (Dollars in thousands)

              Federal   $       (2,232 )   $         (911 )   $       1,321

              State               (296 )               31               327


              Total     $       (2,528 )   $         (880 )   $       1,648

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 tax is the result of a pretax loss that occurred in the second quarter of fiscal 2009.

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


Results of Operations - Six-Month Period Ended November 30, 2008 Compared to
Six-Month Period Ended November 30, 2007 (Unaudited)
Sales and Unit Shipments

                         November 30,                    November 30,
                             2008          Percent           2007          Percent      Decrease
                                                 (Dollars in thousands)

Sales

Manufactured housing    $       83,568         76.1     $      130,711         75.3     $  47,143

Recreational vehicles           26,239         23.9             42,881         24.7        16,642


Total Sales             $      109,807        100.0     $      173,592        100.0     $  63,785


Unit Shipments

Manufactured housing             1,841         51.7              2,780         49.3           939

Recreational vehicles            1,721         48.3              2,855         50.7         1,134


Total Unit Shipments             3,562        100.0              5,635        100.0         2,073

Manufactured housing unit sales decreased approximately 34 percent, while the industry during the June to November 2008 period decreased approximately 20 percent. In certain geographic markets, such as Florida and Ohio, unit sales declined at a greater rate than the overall industry. Adverse conditions that affected the Corporation's unit sales include:
• 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 where 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.

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


Results of Operations - Six-Month Period Ended November 30, 2008 Compared to
Six-Month Period Ended November 30, 2007 (Unaudited) - (Continued)
Sales and Unit Shipments - (Continued)
Recreational vehicle sales decreased due to an overall softening of demand. Unit
sales for travel trailers, fifth wheels and park models declined approximately
40 percent, while industry unit sales for travel trailers and fifth wheels
during June to November 2008 compared to the same period in 2007 decreased
approximately 42 percent. Current industry unit sales data for park models is
not available.
Cost of Sales

                             November 30,         Percent         November 30,         Percent
                                 2008            of Sales*            2007            of Sales*        Decrease
                                                           (Dollars in Thousands)

Manufactured housing        $       80,075             95.8      $      115,701             88.5      $   35,626

Recreational vehicles               26,700            101.8              41,749             97.4          15,049


Consolidated                $      106,775             97.2      $      157,450             90.7      $   50,675

* 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 and recreational vehicle 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 certain manufacturing overhead costs such as depreciation and property taxes remaining relatively constant despite lower sales. Selling and Administrative Expenses

                             November 30,        Percent         November 30,        Percent
                                 2008            of Sales            2007            of Sales        Decrease
                                                          (Dollars in thousands)

Selling and
Administrative Expenses     $       17,229            15.7      $       20,350            11.7      $    3,121

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 discount rate used to value 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.

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


Results of Operations - Six-Month Period Ended November 30, 2008 Compared to
Six-Month Period Ended November 30, 2007 (Unaudited) - (Continued)
Operating (Loss) Earnings

                              November 30,        Percent        November 30,       Percent
                                  2008           of Sales*           2007          of Sales*
                                                  (Dollars in thousands)

Manufactured housing         $       (8,205 )          (9.8 )   $        1,143            0.9

Recreational vehicles                (4,993 )         (19.0 )           (4,109 )         (9.6 )

General Corporate Expenses             (999 )          (0.9 )           (1,242 )         (0.7 )


Total Operating Loss         $      (14,197 )         (12.9 )   $       (4,208 )         (2.4 )

* 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 single-section unit sales increasing from 25 percent, as a percentage of segment sales, in the second quarter of fiscal 2008 to 34 percent in the second quarter of fiscal 2009. Single-section homes have lower margins as compared to multi-section homes.
The operating loss for recreational vehicles increased primarily due to the impact of decreased sales on the components of earnings as noted above. The decrease in general corporate expenses occurred primarily due to a change in the discount rate used to value the Corporation's liability for retirement and death benefits offered to certain employees as noted above. Income from Life Insurance Proceeds
The Corporation has arrangements with certain employees which provide benefits to be paid to the employee's estates in the event of death during active employment. To fund such arrangements, the Corporation purchased life insurance contracts on the covered employees. The Corporation realized non-taxable income from life insurance proceeds in the amount of $380,000, which is separately stated in the Consolidated Statement of Operations for the three-month and six-month periods ended November 30, 2008.

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


Results of Operations - Six-Month Period Ended November 30, 2008 Compared to
Six-Month Period Ended November 30, 2007 (Unaudited) - (Continued)
Interest Income

                               November 30,      November 30,
                                   2008              2007           Decrease
                                           (Dollars in thousands)

             Interest Income   $         720     $       2,541     $    1,821

Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government Securities. In the first six months of fiscal 2009, the average amount available for investment was approximately $97 million with a weighted average yield of 1.7 percent. In the first six months of fiscal 2008, the average amount available for investment was approximately $115 million with a weighted average yield of 4.6 percent. (Benefit) Provision for Income Taxes

                         November 30,       November 30,       Increase in
                             2008               2007             Benefit
                                      (Dollars in thousands)

              Federal   $       (4,411 )   $         (589 )   $       3,822

              State               (442 )               99               541


              Total     $       (4,853 )   $         (490 )   $       4,363

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 tax is the result of a pretax loss that occurred in the first six months of fiscal 2009.
Subsequent Events
Subsequent to November 30, 2008, the Corporation announced to its employees that the consolidation of production and personnel would occur at the two manufactured housing facilities located in Ocala, Florida. The cost to consolidate, which is not expected to exceed $200,000, will be recognized in the third quarter of fiscal 2009. Also, subsequent to November 30, 2008, the Corporation completed the sale of an idle recreational vehicle facility located in McMinnville, Oregon. The pretax gain on the sale of this facility, which will be recognized in the third quarter, will be approximately $3,400,000.

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

                                                   November 30,        May 31,
                                                       2008             2008          Decrease
                                                             (Dollars in thousands)

Cash and U.S. Treasury Bills                      $      103,409      $ 111,579      $    8,170
Current assets, exclusive of cash and U.S.
Treasury Bills                                    $       36,605      $  42,628      $    6,023
Current liabilities                               $       18,475      $  21,613      $    3,138
Working capital                                   $      121,539      $ 132,594      $   11,055

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 $8,244,000, and payment of approximately $3,021,000 in dividends. Current assets, exclusive of cash and U.S. Treasury Bills, declined primarily due to a decrease in accounts receivable of $9,893,000. This decrease is attributed to lower sales in November 2008 as compared to May 2008. Other current assets increased $4,220,000 primarily due to an increase in the deferred tax asset for federal income taxes.
Current liabilities decreased due to a $2,223,000 decline in accounts payable, caused primarily by lower sales occurring in November 2008 as compared to May 2008.
Capital expenditures totaled $725,000 for the six months ended November 30, 2008 as compared to $1,260,000 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 . . .