<PAGE>
                                                                EXHIBIT 13

ELEVEN  YEAR  REVIEW

<TABLE>
<CAPTION>
(in thousands except per
share data)               2000       1999       1998      1997      1996      1995     1994     1993     1992      1991     1990
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>       <C>         <C>        <C>       <C>       <C>      <C>       <C>      <C>       <C>      <C>
INCOME STATEMENT DATA
Revenues
   Net Sales            $993,916 $1,040,668   $880,856   $822,906 $762,396 $621,351  $510,153 $384,491  $296,849  $257,557 $219,443
   Financial services
     and other income    299,429    303,615    246,923    198,797  166,345  136,741   118,083   91,750    74,330    62,392   40,316
-----------------------------------------------------------------------------------------------------------------------------------
                       1,293,345  1,344,283  1,127,779  1,021,703  928,741  758,092   628,236  476,241   371,179   319,949  259,759
-----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
   Cost of sales         660,429    705,128    598,589    559,274  521,200  431,826   357,698  267,201   206,049   176,374  153,786
   SG&A                  384,067    367,430    302,598    270,996  236,188  188,835   153,698  113,695    84,785    76,420   60,220
   Financial services
     interest              1,032      7,981      2,015      2,885    3,649    5,533     8,196   11,819    16,585    18,198   11,595
   Other expenses         20,800     12,459      7,976      1,000        -        -         -        -     3,300     3,772    2,213
-----------------------------------------------------------------------------------------------------------------------------------
                       1,066,328  1,092,998    911,178    834,155  761,037  626,194   519,592  392,715   310,719   274,764  227,814
-----------------------------------------------------------------------------------------------------------------------------------
Operating income         227,017    251,285    216,601    187,548  167,704  131,898   108,644   83,526    60,460    45,185   31,945
Interest income
   (expense), net/other    1,608     (5,317)     5,499      5,152    4,596    3,902      (359)    (170)     (317)     (592)   (575)
-----------------------------------------------------------------------------------------------------------------------------------
Income before
   income taxes          228,625    245,968    222,100    192,700  172,300  135,800   108,285   83,356    60,143    44,593   31,370
Provision for
   income taxes          (84,600)   (91,000)   (84,400)   (73,200) (65,500) (48,800)  (39,000) (29,600)  (20,800)  (16,000)(11,500)
-----------------------------------------------------------------------------------------------------------------------------------
Income before
   accounting change     144,025    154,968    137,700    119,500  106,800   87,000    69,285   53,756    39,343    28,593   19,870
Cumulative effect of
   accounting change           -          -          -          -        -        -     3,000        -         -         -        -
-----------------------------------------------------------------------------------------------------------------------------------
Net income              $144,025   $154,968   $137,700   $119,500 $106,800  $87,000   $72,285  $53,756   $39,343   $28,593  $19,870
-----------------------------------------------------------------------------------------------------------------------------------
Net income per share
   Basic                   $1.03      $1.07      $0.93      $0.81    $0.72    $0.59     $0.51    $0.39     $0.30     $0.27    $0.21
   Diluted                 $1.03      $1.06      $0.92      $0.80    $0.72    $0.59     $0.49    $0.37     $0.29     $0.24    $0.18
Average shares
  outstanding
   Basic                 139,474    145,211    148,463    148,324  148,253  147,020   141,046  136,391   130,103   106,884   94,785
   Diluted               139,815    145,931    149,504    149,346  149,183  148,285   149,875  149,106   142,100   126,216  120,217
Dividends per common
  share                    $.064      $.064      $.064      $.061    $.049    $.030         -        -         -         -        -
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
 Total assets         $1,506,378 $1,417,245 $1,457,757 $1,045,761 $886,350 $761,151  $701,148 $587,032  $554,780  $488,817 $339,099
 Debt obligations         99,216     96,477    247,591     22,806   30,290   48,737    70,680  137,038   192,931   227,444  177,374
 Shareholders' equity $1,036,375 $  947,768 $  881,019 $  754,526 $650,189 $544,187  $462,154 $348,630  $292,950  $200,992 $108,334

KEY FINANCIAL RATIOS
As a % of revenue
 Operating income          17.6%      18.7%      19.2%      18.4%    18.1%    17.4%     17.3%    17.5%     16.3%     14.1%    12.3%
 Net income                11.1%      11.5%      12.2%      11.7%    11.5%    11.5%     11.5%    11.3%     10.6%      8.9%     7.6%
Debt as a % of
   total capital            8.7%       9.2%      21.9%       2.9%     4.5%     8.2%     13.3%    28.2%     39.7%     53.1%    62.1%
OTHER DATA
 Company-owned
   retail centers            318        306        273        245     216       192       165      143       127       123       96
 Independent retailer        707        671        702        663     580       421       372      371       312       330      322
 Manufacturing plants         20         19         18         17      17        16        13       13        11        10       10
 Communities                  76         75         71         67      64        55        46       33        20        12        9
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                   12
<PAGE>


QUARTERLY  RESULTS (unaudited)

<TABLE>
<CAPTION>
                                                                  2000                                  1999
--------------------------------------------------------------------------------------------------------------------------------
                                             First      Second      Third    Fourth     First     Second      Third      Fourth
(in thousands except per share data)        Sept. 30    Dec. 31    Mar. 31   June 30   Sept. 30   Dec. 31    Mar. 31     June 30
--------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>        <C>       <C>       <C>        <C>        <C>         <C>        <C>
Revenues                                    $337,297   $309,159   $306,981  $339,908   $314,686   $319,120   $308,306   $402,171
Operating income                              56,277     55,551     56,725    58,464     53,690     56,841     57,314     83,440
Income before income taxes                    56,424     55,831     56,993    59,377     52,697     55,613     55,432     82,226
Net income                                    35,524     35,231     35,893    37,377     33,197     35,013     34,932     51,826
Earnings per share   - Basic                    $.25       $.25       $.26      $.27       $.23       $.24       $.24       $.36
                     - Diluted                  $.25       $.25       $.26      $.27       $.22       $.24       $.24       $.36
Price range of stock - High                   $11.88     $11.94     $10.13    $10.38     $16.35     $13.81     $15.19     $13.25
                     - Low                     $8.56      $8.50      $7.81     $7.94     $12.35     $10.80     $10.69     $10.69
Dividends per common share                     $.016      $.016      $.016     $.016      $.016      $.016      $.016      $.016
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

RESULTS  OF  OPERATIONS
     The  following  table  reflects  the  percentage  changes  in  sales by the
Company's  retail  and  community  sales  centers  and  in  wholesale  sales  to
independent  retailers.  It  also  shows  the  percentage changes in the average
number  of  Company-owned retail centers, communities and independent retailers,
the  average  sales  per  location,  and the average price per home sold in each
category.

<TABLE>
<CAPTION>
                                                   Year ended June 30,
                                              2000 vs 1999        1999 vs 1998
------------------------------------------------------------------------------
<S>                                            <C>                 <C>
RETAIL
      Dollar sales                               -0.4%               +25.8%
      Number of retail centers                   +7.8%               +11.8%
      Dollar sales per retail center             -7.6%               +12.5%
      Price of home                              +8.2%                +6.8%
------------------------------------------------------------------------------
WHOLESALE
      Dollar sales                              -16.2%                +6.8%
      Number of independent retailers            +0.4%                +0.6%
      Dollar sales per independent retailer     -16.6%                +6.2%
      Price of home                              +2.4%                +5.0%
------------------------------------------------------------------------------
COMMUNITIES
      Dollar sales                              +28.4%                +2.5%
      Number of communities                      +3.4%                +5.8%
      Dollar sales per community                +24.1%                -3.1%
      Price of home                              +2.6%                +4.5%
------------------------------------------------------------------------------
</TABLE>

FISCAL  2000  COMPARED  TO  FISCAL  1999
     Total  revenues decreased 4% to $1.3 billion, as manufactured housing sales
decreased  4%  to  $994  million, financial services income decreased 2% to $229
million  and  rental  and  other  income  increased  1%  to  $71  million.
     Current  conditions  in  the  manufactured  housing  industry  are  highly
competitive  at  both  the  retail  and  wholesale  levels. For fiscal 2000, the
industry was faced with over-capacity in manufacturing, too many retail centers,
and  high  product inventories.  This competitive environment, as well as rising
interest  rates  and  general  credit  tightening,  has contributed to decreased
industry  and  Company  sales.
     Net  sales  of the Retail group fell slightly to $670 million. This decline
was  the result of an 8% decrease in homes sold, offset by an 8% increase in the
average number of Company-owned retail centers and an 8% increase in the average
price  per  home.  Multi-section homes accounted for 51% of total new homes sold
versus  49%  last  year.
     During  the  year,  the  Company  opened  26  retail  centers  and  closed
14 under-performing  retail  centers.  The  Company  continually evaluates
specific markets  and opens, acquires or closes retail centers as conditions
warrant.  Of the  26 new openings, 10 were acquired and 16 were greenfield
start-ups.  Eleven of  the  new  retail  centers  were  opened  in  the  fourth
quarter.
     Net  sales  of the Manufacturing group to independent retailers
decreased 16% to $279  million, as the number of homes sold fell 18%. The
average wholesale price increased  2%  principally  due  to  a  shift  toward
multi-section  homes.  Multi-section  homes  accounted for 49% of total
shipments versus 48% last year.
     Net  sales  of  the  Communities  group increased 28% to
$45 million as 25% more homes  were sold while the average home selling price
increased 3%.  The Company added  460  sites  during  the  year  bringing  the
total  to  20,168  sites.
     Within  the  Financial  Services  segment,  interest and loan servicing
revenues increased  $8  million,  and insurance related revenues rose $6
million.  Rental and  other  income  increased  1%  on  a  9%  rise in
Communities rental income.
     The average  outstanding  balance  of  receivables  owned  declined 27% to
$440 million  with  a  weighted  average  interest  rate of 11.9%, up from
10.3%.  The average  outstanding  balance  of receivables sold rose 29% to $3.3
billion, And the  weighted  average loan service spread decreased to  3.3% from
3.7%, as the Federal  Reserve  increased  interest  rates.
     Financial Services  interest  expense  decreased $7 million to $1 million.
Debt collateralized  by installment contract receivables dropped 26% to an
average of $10  million, and  the  weighted  average interest rate increased to
10.5% from 10.4%.  Loan  covenants  preclude  prepaying  these  higher  cost
obligations.
     Gross  profit  margins  increased  to  33.6%  from  32.2%.  This  increase
is attributable to a higher percentage of retail sales in the total sales mix
as well  as  a  shift  in  mix  to  multi-section  units.
     Selling,  general  and  administrative expenses were 29.7% and 27.3% of
revenues for  the  years  ended June 30, 2000, and 1999, respectively. This
increase as a percentage of revenues was primarily due to a decline in overall
sales volume, in  addition to  growth  of Company-owned sales centers without a
corresponding increase in sales.  Additional  set  up costs associated with the
shift in mix toward  multi-section  units  and  sales  of  larger  homes  was
also a factor.


                                         13
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS(continued)

     Net losses as  a percentage of loans outstanding for fiscal 2000 remained
steady at 1.4% while delinquency rates on all loans increased to 2.2% on a unit
basis from 2.1%.  The size, character and rate of change in the credit loss and
contingent liability  reserves  are dependent upon many factors, including, but
not limited to, origination volume, portfolio performance and market conditions.
     The changes in inventory levels at June 30, 2000, compared to June 30,
1999, are shown  below  in  millions:

<TABLE>
<CAPTION>
                                              Increase
<S>                                             <C>
MANUFACTURING
Raw materials                                   $ 2.1
Finished goods                                    3.6

RETAIL
Inventory to stock 12 new Company-owned
   sales centers                                  8.6
Increase in inventory levels at 306
   Company-owned sales centers open at
   June 30, 1999                                 21.0

COMMUNITIES
Inventory to stock one new community              0.3
Increase in inventory levels at 75 communities
  open at June 30, 1999                           2.4
-------------------------------------------------------
                                                $38.0
-------------------------------------------------------
</TABLE>

FISCAL  1999  COMPARED  TO  FISCAL  1998
     Total  revenues  grew  19% on an 18% increase in manufactured housing sales
and  a  23%  rise  in  financial  services  and  other  income.
     Net  sales  of  the  Retail  group rose 26% to $673 million. This growth
was the result  of a 12% increase in the average number of Company-owned retail
centers, a  7% increase in the average price per home, and an 18% increase in
homes sold.  Multi-section  homes  accounted  for 49% of total new homes sold
versus 46% last year.
     During  the  year,  the  Company  opened  38  retail  centers  and  closed
five under-performing  retail  centers.  The  Company  continually evaluates
specific markets  and opens, acquires or closes retail centers as conditions
warrant.  Of the  38 new openings, 15 were acquired and 23 were greenfield
start-ups.  Ten of the  new  retail  centers  were  opened  in  the  fourth
quarter.
     Net  sales  of  the Manufacturing group to independent retailers increased
7% to $333 million, and the number of homes sold rose 2%. The average wholesale
price increased 5% principally due to a shift toward multi-section homes.
Multi-section homes accounted for 48% of total shipments versus 44% last year.
     Net  sales of the Communities group increased 3% to $35 million as 2% less
homes were  sold  while the average home selling price increased 5%.  Two
acquisitions and  two  greenfield  start-ups  brought the number of communities
to 75 at year end.
     Within  the  Financial  Services  segment,  interest and loan servicing
revenues increased 42% to $166 million, and insurance related revenues rose $8
million.  Rental  and  other  income  increased  23%  on  a 19% rise in
Communities rental income.
     The  average  outstanding  balance of receivables owned rose 55% to $600
million with  a  weighted  average  interest  rate of 10.3%, up from 10.2%. The
average outstanding balance  of  receivables  sold  rose  35%  to $2.5 billion,
and the weighted  average loan  service  spread  was  3.7%  compared  to  3.6%.
     Financial Services interest  expense  increased $6 million to $8 million.
Debt collateralized  by installment contract receivables dropped 28% to an
average of $13  million, and  the  weighted  average interest rate increased to
10.4% from 10.1%.  Loan covenants preclude  prepaying  these  relatively higher
cost obligations.
     Gross  profit  margins  increased  slightly  to  32.2%  from  32.0%.
     Selling,  general  and  administrative expenses were 27.3% and 26.8% of
revenues for  the  years  ended June 30, 1999, and 1998, respectively. Expenses
associated with  the start-up of 38 new sales centers, four additional
communities, one new plant,  the  reconstruction  of  the  Waycross  plant, and
costs associated with portfolio  acquisitions  were  primary  causes  of  the
increase.
     Net  losses  as  a  percentage of loans outstanding for fiscal 1999
increased to 1.4%  from  .8% while delinquency rates on all loans decreased to
2.1% on a unit basis  from  3.3%.  Increases in  the  reserve for credit losses
and contingent liabilities  were  related  to  purchases  of  installment
contract  receivable portfolios.  The  size, character and rate of change in
the credit loss and contingent  liability  reserves  are dependent upon many
factors, including, but not limited to, origination volume, portfolio
performance and market conditions.
     The changes in inventory levels at June 30, 1999, compared to June 30,
1998, are shown  below  in  millions:

<TABLE>
<CAPTION>
                                          Increase(decrease)
<S>                                             <C>
MANUFACTURING
Raw materials                                   $(0.5)
Finished goods                                    0.4

RETAIL
Inventory to stock 33 new Company-owned
   sales centers                                 14.1
Increase in inventory levels at 273
   Company-owned sales centers open at
   June 30, 1998                                  2.0

COMMUNITIES
Inventory to stock four new communities           0.8
Increase in inventory levels at 71 communities
  open at June 30, 1998                           0.5
-------------------------------------------------------
                                                $17.3
-------------------------------------------------------
</TABLE>

LIQUIDITY  AND  CAPITAL  RESOURCES
     The  Company anticipates meeting cash requirements with proceeds from asset
securitizations,  cash  provided  from  operations,  a  commercial paper conduit
facility,  revolving  credit  lines and long-term debt.  A principal strength of
the Company is its ability to access global capital markets; continued access to
the  public  and private capital markets is critical to the Company's ability to
continue  to  fund its finance operations.  During the year ended June 30, 2000,
the  Company  raised  $1.3  billion  through  asset  securitizations.
     At  June  30,  2000,  the Company had long-term debt outstanding of $99
million.  Short-term  debt  available  consists  of $171 million committed and
$66 million uncommitted  lines  of  credit  for  working  capital  needs.  Long-
term  debt outstanding  principally  consists  of  $75  million  of privately
issued senior notes,  $8  million  of installment paper collateralized debt and
$16 million of tax-exempt  bonds  and  other  long-term  debt.
     During  fiscal  2000,  the  Company  renewed its committed one-year $300
million commercial  paper  conduit  facility  used  to  facilitate  sales of
manufactured housing  contracts. At June 30, 2000, the conduit facility was not
utilized, as compared  to  $105  million  being  outstanding at June 30, 1999.


                                         14
<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS(continued)

    In fiscal 2000, the Company repurchased 5.4 million shares for $50 million.
Under board  approved  repurchase  programs,  all  shares  may  be acquired, at
management's discretion, over time on the open market.  Shares repurchased will
be  retired.
     The  Company  originated  and acquired approximately $1.2 billion of
installment contracts  and  mortgage  loan  receivables  during  fiscal  2000.
Additional investments  were  made  of  approximately  $10  million  to expand,
develop, or improve manufactured housing communities and $2 million in related
rental units, $12  million  for opening and upgrading of Company-owned retail
centers, and $10 million  for  construction and  improvement  of  manufacturing
facilities.
     In  fiscal  2001,the Company expects to originate approximately $1 billion
of installment  contract  and  mortgage  loan  receivables.  It  expects  to
invest approximately  $24  million  in  acquisitions  or  construction  of
manufactured housing  communities,  up to $13 million for opening and upgrading
Company-owned retail  centers  and  up  to  $5  million  for  construction  and
improvement of manufacturing  facilities.

MARKET  RISK
     The Company is exposed to market risks related to fluctuations in interest
rates on  its installment paper contract receivables, servicing receivables and
variable rate debt, which principally consists of revolving credit lines.  The
Company  uses  interest  rate  swaps to minimize interest rate risk on certain
credit lines, effectively converting these to fixed rate debt. Foreign currency
and commodity price risk  are not considered to have a material impact on the
Company.
     As of June 30, 2000, the Company has outstanding long-term debt of $99
million.  There is no significant exposure to changes in interest rates on debt
obligations as the majority of its long-term debt, $83 million, carries fixed
interest rates.  Remaining long-term  debt  of  $16  million  carries variable
interest rates, which reprice weekly.  Holding the variable rate debt constant,
each one percentage point increase in interest rates occurring on the first day
of the year would result in an increase in interest expense for the coming year
of  approximately  $99,000,  net  of  tax.
     The Company  has  variable  interest  rate  installment  paper  contract
receivables of $43 million on June 30, 2000.  Holding the outstanding principal
amount constant, each one percentage point increase in interest rates occurring
on the first day of the year would result in an increase in interest income for
the  coming  year  of  approximately  $209,000,  net  of  tax.
     The Company has outstanding regular REMIC interests with variable interest
rates collateralized by variable and fixed installment contract receivables of
$1.2 billion  on  June  30,  2000.  Holding the outstanding regular interests
amounts constant, each one percentage point increase in interest rates
occurring on the first  day  of  the  year would result in a decrease in
servicing income for the coming  year  of  approximately  $5.7  million,  net
of  tax.

NEW  ACCOUNTING  PRONOUNCEMENTS
     In  June  1998, the  Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS)  No. 133, Accounting for
Derivative Instruments and Hedging Activities, which was subsequently amended
by SFAS  No.  137,  Accounting  for  Derivative  Instruments  and  Hedging
Activities-Deferral of  the  Effective  Date of FASB Statement No. 133, in June
1999 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging  Activities, in  June  2000.  SFAS  No.  133 establishes accounting and
reporting standards for derivative instruments embedded in other contracts and
for hedging activities. The Company will adopt SFAS No. 133, as amended, in the
first quarter of 2001. Such adoption is not expected to have a material impact
on the Company's reported  results  of operations, financial position or cash
flows.
     In  December  1999,  the  Securities  and Exchange Commission (SEC) issued
Staff Accounting  Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements.  It summarizes the  SEC's  views  in  applying  generally  accepted
accounting principles to selected revenue recognition issues.  An amendment was
issued in June 2000, which  delays the implementation of SAB 101 until no later
than the fourth quarter of fiscal years beginning after December 15, 1999.  The
Company believes  that  its practices already comply with the provisions of SAB
No. 101, and  its  adoption  is  expected  to  have  no  material impact on the
Company's reported results of operations, financial  position  or  cash  flows.

EFFECTS  OF  INFLATION
     Inflation  has  had  an insignificant impact on the Company during the past
several  years.

FORWARD  LOOKING  STATEMENTS
     Certain  statements in this annual report are forward looking as defined in
the  Private Securities Litigation Reform Law.  These statements involve certain
risks  and uncertainties that may cause actual results to differ materially from
expectations  as  of the date of this report.  These risks fall generally within
three broad categories consisting of industry factors, management expertise, and
government  policy  and  economic  conditions.  Industry  factors  include  such
matters  as  potential  periodic  inventory  adjustments  by  both  captive  and
independent  retailers,  availability of wholesale and retail financing, general
or seasonal weather conditions affecting sales and revenues, catastrophic events
impacting  insurance  reserves,  cost of labor and/or raw materials and industry
consolidation  trends  creating  fewer,  but  stronger,  competitors  capable of
sustaining  competitive  pricing  pressures.
     Management  expertise  is  affected  by  it's  overall  ability  to
anticipate  and  meet  consumer  preferences,  maintain  successful  marketing
programs,  continue  quality manufacturing output, keep a strong cost management
oversight,  and  project  stable  gain  on sale accounting assumptions.  Lastly,
management  has the least control over government policy and economic conditions
such as prevailing interest rates, capital market liquidity, government monetary
policy,  stable  regulation  of  manufacturing  standards,  consumer confidence,
favorable  trade  policies,  and  general  prevailing  economic  and  employment
conditions.

                                         15
<PAGE>

Clayton  Homes,  Inc.  and  Subsidiaries
REPORT  OF  INDEPENDENT  ACCOUNTANTS

     In  our  opinion,  the  accompanying  consolidated  balance  sheets and the
related  consolidated  statements of income, of shareholders' equity and of cash
flows  present  fairly,  in  all  material  respects,  the financial position of
Clayton  Homes, Inc. and Subsidiaries at June 30, 2000 and 1999, and the results
of  their  operations  and  their  cash flows for each of the three years in the
period  ended  June 30, 2000, in conformity with accounting principles generally
accepted  in  the  United  States.  These  financial  statements  are  the
responsibility  of the Company's management; our responsibility is to express an
opinion  on  these  financial  statements based on our audits.  We conducted our
audits  of  these  statements  in  accordance  with auditing standards generally
accepted  in  the United States which require that we plan and perform the audit
to  obtain  reasonable assurance about whether the financial statements are free
of  material  misstatement.  An  audit  includes  examining,  on  a  test basis,
evidence  supporting  the  amounts  and disclosures in the financial statements,
assessing  the  accounting  principles  used  and  significant estimates made by
management,  and  evaluating  the  overall financial statement presentation.  We
believe  that  our  audits  provide a reasonable basis for the opinion expressed
above.


PricewaterhouseCoopers  LLP
Knoxville,  Tennessee
August  8,  2000

CONSOLIDATED  BALANCE  SHEETS

<TABLE>
<CAPTION>
                                                                                              June  30,
(in thousands)                                                                              2000        1999
---------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>          <C>
ASSETS
    Cash and cash equivalents                                                           $   43,912   $    2,680
    Trade receivables                                                                       21,796       24,998
    Other receivables, principally installment contracts, net of  reserves for credit
      losses and unamortized discounts of $4,217 and $9,133, respectively                  500,942      551,744
    Residual interests in installment contract receivables                                 150,329      131,146
    Inventories                                                                            222,431      184,444
    Securities available-for-sale                                                           47,734       19,047
    Restricted cash                                                                         96,904      100,127
    Property, plant and equipment                                                          305,479      291,503
    Deferred income taxes                                                                   24,284       20,505
    Other assets                                                                            92,567       91,051
---------------------------------------------------------------------------------------------------------------
Total assets                                                                            $1,506,378   $1,417,245
---------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
    Accounts payable and accrued liabilities                                            $  122,760   $  130,579
    Debt obligations                                                                        99,216       96,477
    Other liabilities                                                                      248,027      242,421
---------------------------------------------------------------------------------------------------------------
Total liabilities                                                                          470,003      469,477
---------------------------------------------------------------------------------------------------------------

Shareholders' equity
    Preferred stock, $.10 par value, authorized 1,000 shares, none issued                       -            -
    Common stock, $.10 par value, authorized 200,000 shares, issued 137,499
       at June 30, 2000, and 142,373 at June 30, 1999                                       13,750       14,237
    Additional paid-in capital                                                              39,500       85,236
    Retained earnings                                                                      983,806      849,116
    Accumulated other comprehensive income (loss)                                             (681)        (821)
---------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                               1,036,375      947,768
---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                              $1,506,378   $1,417,245
---------------------------------------------------------------------------------------------------------------
</TABLE>
The  accompanying  notes  are  an  integral part of these consolidated financial
statements.

                                         16
<PAGE>

Clayton  Homes,  Inc.  and  Subsidiaries

CONSOLIDATED  STATEMENTS  OF  INCOME

<TABLE>
<CAPTION>
                                                     Year ended June 30,
(in thousands except per share data)           2000         1999         1998
---------------------------------------------------------------------------------
<S>                                      <C>          <C>          <C>
Revenues
    Net sales                                $  993,916   $1,040,668   $  880,856
    Financial services                          228,642      233,848      190,204
    Rental and other income                      70,787       69,767       56,719
---------------------------------------------------------------------------------
                                              1,293,345    1,344,283    1,127,779
---------------------------------------------------------------------------------
Costs and expenses
    Cost of sales                               660,429      705,128      598,589
    Selling, general and administrative         384,067      367,430      302,598
    Financial services interest                   1,032        7,981        2,015
    Provision for credit losses                  20,800       12,459        7,976
---------------------------------------------------------------------------------
                                              1,066,328    1,092,998      911,178
---------------------------------------------------------------------------------
Operating income                                227,017      251,285      216,601
Interest income (expense), net / other            1,608       (5,317)       5,499
---------------------------------------------------------------------------------
Income before income taxes                      228,625      245,968      222,100
Provision for income taxes                      (84,600)     (91,000)     (84,400)
---------------------------------------------------------------------------------
Net income                                   $  144,025   $  154,968   $  137,700
---------------------------------------------------------------------------------
Net income per common share
    Basic                                    $     1.03   $     1.07   $     0.93
    Diluted                                  $     1.03   $     1.06   $     0.92
Average shares outstanding
    Basic                                       139,474      145,211      148,463
    Diluted                                     139,815      145,931      149,504
---------------------------------------------------------------------------------
</TABLE>

CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                          Total                  Additional                 Other
                                                      Shareholders'    Common      Paid-in     Retained  Comprehensive
(in thousands except per share data)                      Equity        Stock      Capital     Earnings  Income (Loss)
----------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>          <C>         <C>          <C>          <C>
Balance at June 30, 1997                                $  754,526     $14,812     $163,191     $576,523     $   -
Net income                                                 137,700           -            -      137,700         -
  Purchase of 713 shares of common stock                    (9,506)        (71)      (9,435)           -         -
  Dividends declared ($.064 per common share)              (10,469)          -            -      (10,469)        -
  Issuances related to stock incentive, employee
    benefit plans and other                                  8,768         111        8,657            -         -
----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998                                   881,019      14,852      162,413      703,754         -
Net income                                                 154,968           -            -      154,968         -
  Other comprehensive income, net of tax
    Unrealized loss on securities available-for-sale          (821)          -            -            -      (821)
                                                        -----------
      Comprehensive income                                 154,147
  Purchase of 6,465 shares of common stock                 (81,394)       (647)     (80,747)           -         -
  Dividends declared ($.064 per common share)               (9,606)          -            -       (9,606)        -
  Issuances related to stock incentive, employee
    benefit plans and other                                  3,602          32        3,570            -         -
----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999                                   947,768      14,237       85,236      849,116      (821)
NET  INCOME                                                144,025           -            -      144,025         -
  OTHER COMPREHENSIVE INCOME, NET OF TAX
    UNREALIZED LOSS ON SECURITIES AVAILABLE-
       FOR-SALE DURING THE YEAR                               (627)          -            -            -      (627)
    REALIZED  LOSS ON SECURITIES AVAILABLE-
       FOR-SALE INCLUDED IN NET INCOME                         767           -            -            -       767
                                                        -----------                                          ------
  OTHER COMPREHENSIVE INCOME                                   140                                             140
                                                        -----------
      COMPREHENSIVE INCOME                                 144,165
  PURCHASE OF 5,382 SHARES OF COMMON STOCK                 (49,776)       (538)     (49,238)           -         -
  DIVIDENDS DECLARED ($.064 PER COMMON SHARE)               (9,335)          -            -       (9,335)        -
  ISSUANCES RELATED TO STOCK INCENTIVE,
    EMPLOYEE BENEFIT PLANS AND OTHER                         3,553          51        3,502            -         -
----------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 2000                                $1,036,375     $13,750     $ 39,500     $983,806     $(681)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
The  accompanying  notes  are  an  integral part of these consolidated financial
statements.

                                         17
<PAGE>

Clayton  Homes,  Inc.  and  Subsidiaries

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS

<TABLE>
<CAPTION>
                                                                                 Year  ended  June  30,
(in thousands)                                                               2000         1999         1998
----------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                  $ 144,025     $ 154,968     $137,700
    Adjustments to reconcile net income to net cash provided
    by operating activities
        Depreciation and amortization                                          20,422        17,795       14,733
        Amortization of installment contract receivables, net of
          gain on sale                                                          3,256       (15,089)     (31,699)
        Provision for credit losses                                            20,800        12,459        7,976
        Realized loss on securities available-for-sale                          1,218             -            -
        Deferred income taxes                                                  (3,861)       (8,267)     (25,830)
        Increase in other receivables, net                                    (12,954)     (103,070)     (25,700)
        Increase in inventories                                               (37,987)      (17,331)     (47,679)
        Increase (decrease) in accounts payable, accrued
          liabilities, and other                                              (41,510)       24,687       55,429
----------------------------------------------------------------------------------------------------------------
    Cash provided by operations                                                93,409        66,152       84,930
        Origination of installment contract receivables                      (983,090)   (1,085,484)    (801,865)
        Proceeds from sales of originated installment contract receivables    886,040     1,030,442      705,420
        Principal collected on originated installment contract receivables     48,040        80,610       50,260
----------------------------------------------------------------------------------------------------------------
    Net cash provided by operating activities                                  44,399        91,720       38,745

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of installment contract receivables                          (206,154)     (253,625)    (520,912)
    Proceeds from sales of acquired installment contract receivables          229,412       389,866      230,311
    Principal collected on acquired installment contract receivables           19,836        73,200       27,703
    Proceeds from sales of securities available-for-sale                       37,733             -            -
    Acquisition of property, plant and equipment                              (34,398)      (47,749)     (62,210)
    Decrease (increase) in restricted cash                                      3,223       (13,951)     (15,179)
----------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) investing activities                        49,652       147,741     (340,287)

CASH FLOWS FROM FINANCING ACTIVITIES
    Dividends                                                                  (9,335)       (9,606)     (10,469)
    Net borrowings (repayment) on credit facilities                                 -      (227,873)     227,873
    Proceeds from (repayment of) long-term debt                                 2,739        76,759       (3,088)
    Issuance of stock for incentive plans and other                             3,553         3,602        8,768
    Repurchase of common stock                                                (49,776)      (81,394)      (9,506)
----------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) financing activities                       (52,819)     (238,512)     213,578
----------------------------------------------------------------------------------------------------------------
    Net increase (decrease) in cash and cash equivalents                       41,232           949      (87,964)
    Cash and cash equivalents at beginning of year                              2,680         1,731       89,695
----------------------------------------------------------------------------------------------------------------
    Cash and cash equivalents at end of year                                $  43,912     $   2,680    $   1,731
----------------------------------------------------------------------------------------------------------------
    Supplemental disclosures for cash flow information
    Cash paid during the year for
       Interest                                                             $   6,781     $  19,976    $   4,285
       Income taxes                                                         $  97,903     $  95,931    $  93,832
----------------------------------------------------------------------------------------------------------------
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.

                                         18
<PAGE>

Clayton  Homes,  Inc.  and  Subsidiaries
               NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
Consolidated  Financial  Statements
     The  consolidated  financial  statements  include  the  accounts of Clayton
Homes,  Inc.  (CMH) and its wholly- and majority-owned subsidiaries. CMH and its
subsidiaries are collectively referred to herein as the Company.  The Company is
a  vertically-integrated  manufactured  housing  company  headquartered  near
Knoxville,  Tennessee.  Employing approximately 7,400 people and operating in 33
states,  the  Company builds, sells, finances and insures manufactured homes, as
well  as  owns  and  operates  residential  manufactured  housing  communities.
Significant  intercompany  accounts and transactions have been eliminated in the
financial  statements.  See  Note  10  for  information related to the Company's
business  segments.

Income  Recognition
     Sales  to  independent retailers of homes produced by CMH are recognized as
revenue  upon  shipment.  Retail  sales  are  recognized  when:  cash payment is
received, or in the case of credit sales, which represent the majority of retail
sales,  when  a  down  payment  is  received  and  the home buyer enters into an
installment sales contract; construction of the home is complete; the home buyer
has  inspected  and  accepted  the home; and title has passed to the retail home
buyer.  Most  of  these  installment sales contracts, which are normally payable
over  84  to  360  months, are financed by Vanderbilt Mortgage and Finance, Inc.
(VMF),  the  Company's  financing  subsidiary.
     The  Company  acts  as agent on physical damage, family protection and home
buyer  protection  plan  insurance  policies  written  by unaffiliated insurance
companies  (ceding  companies)  for  the  purchasers of manufactured homes.  The
insurance policies are in turn reinsured by certain subsidiaries of the Company.
Premiums  from  policies represent short-duration contracts with terms of one to
10  years  and  are  deferred  and  recognized  as revenue over the terms of the
policies.  Claims  expenses  are recorded as insured events occur.  Expenses are
matched  to  revenue  over  the  terms  of the policies by means of deferral and
amortization  of  policy  acquisition  costs.  Such  costs  include commissions,
premium  taxes  and ceding fees, which vary with and are directly related to the
production  of  insurance policies and are deferred and amortized over the terms
of  the  related  policies.

Installment  Contract  Receivables  and  Mortgage  Loan  Receivables
     Installment  contract  receivables and mortgage loan receivables originated
or  purchased  by  VMF  are  generally sold to investors through an asset backed
securities  facility,  with  VMF  retaining servicing on the contracts.  Certain
purchased  mortgage  loan  receivables  are  sold to financial institutions with
servicing  released.
     Installment  contract  receivables  held  for  sale  are  included in other
receivables and are carried at the lower of aggregate cost or market. Certain of
the  installment  contract  receivables are purchased in bulk at a discount. The
purchase  discounts  are allocated between unamortized discount and reserves for
credit  losses  and  contingent  liabilities based on management's assessment of
risks existing in the portfolio. Unamortized discount is amortized over the life
of  the related portfolio after giving consideration to anticipated prepayments.
Adjustments  between  the  reserves for credit losses and contingent liabilities
and  unamortized  discount  are  made  to  reflect  changes  in  the  estimated
collectibility  of  each  portfolio  purchased.
     VMF  provides  servicing for investors in installment contract receivables.
Total  contracts  serviced  at June 30, 2000, and 1999, including contracts held
for  investment, were approximately $3.9 billion and $3.5 billion, respectively.
Most  of  the  installment  contract receivables are with borrowers in the east,
south  and  southwest  portions  of  the United States and are collateralized by
manufactured  homes.  Interest  income  on  installment  contract receivables is
recognized  by  a method which approximates the simple interest method.  Service
fee  income  is recognized as the service is performed.  The Company accrues for
obligations  related  to  cash collections from sold and serviced only loans and
remits  these  collections  to  investors  on  a  monthly basis.  See "Investors
payable"  in  Note  11.
     The  Company  utilizes  a  financial  components  approach to transfers and
servicing  of  financial  assets,  requiring  that  the  carrying  amount of the
receivables  sold  be  allocated  between  the  assets  sold  and  the  assets
(liabilities)  created, if any, based upon their fair value at the date of sale.
The  assets  (liabilities) created are:  1) an interest-only strip valued as the
discounted  present  value  of the excess (deficiency) interest due the residual
interest  owner  (VMF)  during  the  expected life of the contracts over: i) the
stated  investor  yield;  ii)  the contractual servicing fee; and iii) estimated
credit  losses;  and 2) servicing asset (liability), representing the discounted
present  value  of  the contractual servicing fee over the cost of servicing the
contracts.  Profit  (loss)  recorded  at the time of the sale is computed as the
difference between the allocated carrying amount of the receivables sold and the
proceeds realized from the sale. The servicing asset at June 30, 2000, and 1999,
is  as  follows:

<TABLE>
<CAPTION>
(in  thousands)                           2000          1999
---------------------------------------------------------------
<S>                                    <C>           <C>
Servicing asset beginning balance       $ 27,024      $ 13,043
Servicing asset recognized                23,781        20,718
Amortization                             (10,101)       (6,737)
---------------------------------------------------------------
Servicing asset ending balance          $ 40,704      $ 27,024
---------------------------------------------------------------
</TABLE>

     The  balance represents the estimated fair value of the aggregate servicing
assets  at June 30, 2000.  The estimate of fair value assumes: 1) discount rates
which,  at the time the asset was created, approximate current market rates; and
2)  expected  prepayment  rates  based on loan prepayment experience for similar
transactions.  The  servicing  assets are amortized using the effective interest
method  over  the  estimated weighted average life of the underlying securities.
     The  residual  interests in the installment receivables sold are classified
as  available-for-sale  securities  (as  defined by SFAS No. 115, Accounting for
Certain  Investments  in Debt and Equity Securities), and changes in their value
are  recorded  as  adjustments  to  equity in the period of change.  The Company
assesses the fair value of the residual interests periodically.  Amortization of
the residual interest balances is calculated using the effective interest method
over  the  estimated  weighted  average life of the underlying securities and is
reflected  as  a  reduction  of  net  financial  services  revenues.

Cash  Equivalents
     For  purposes  of  the  statements  of  cash flows, all unrestricted highly
liquid  debt  instruments purchased with an original maturity of three months or
less  are  considered  to  be  cash  equivalents.

                                         19
<PAGE>

       NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  (CONTINUED)

Investment  Securities
     The Company follows SFAS No. 134, Accounting for Mortgage-Backed Securities
Retained  after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking  Enterprise,  which  requires  that the Company classify mortgage-backed
securities  retained  after  a  securitization  in accordance with SFAS No. 115.
Accordingly,  these  securities are classified as available-for-sale, are stated
at  fair  value,  and  can  be reasonably expected to mature in 6-10 years.  The
Company  also  has  certain  other  investments  that  had  been  designated  as
available-for-sale  and  accordingly  have  been  stated at fair value. The fair
value  of  these  securities  is  estimated  based on quoted market prices, when
available.  If not available, fair value is estimated using quoted market prices
for  similar  financial instruments. Net unrealized holding gains and losses are
reported  as  a  separate  component  of other comprehensive income, net of tax,
until  realized.

Inventories
     New  homes  and  raw  materials  are valued at the lower of cost or market,
using  the  last-in,  first-out  (LIFO)  method  of  inventory  valuation.
Previously-owned  manufactured  homes  are recorded at estimated wholesale value
(cost)  but  not  in  excess  of  net  realizable  value.

Property,  Plant  and  Equipment
     Land and improvements, buildings, and furniture and equipment are valued at
cost.  Major  renewals  and  improvements  are  capitalized  while replacements,
maintenance  and  repairs,  which  do  not  improve  or  extend  the life of the
respective  assets,  are expensed currently. When depreciable assets are sold or
retired,  the  cost  and  related  accumulated depreciation are removed from the
accounts,  and  any  gain  or  loss  is  included  in  earnings  for the period.
Depreciation  is  computed  primarily  by  the  straight-line  method  over  the
estimated  useful lives of the respective assets ranging from three to 40 years.
     The  Company  follows  SFAS  No.  121,  Accounting  for  the  Impairment of
Long-Lived  Assets  and for Long-Lived Assets to Be Disposed Of , which requires
recognition  of  impairment  losses  for  long-lived  assets  whenever events or
changes  in  circumstances result in the carrying amount of the assets exceeding
the  sum  of  the  expected  future undiscounted cash flows associated with such
assets.  The  measurement  of  the  impairment losses recognized is based on the
difference between the fair values and the carrying amounts of the assets.  SFAS
121  also requires that long-lived assets held for sale be reported at the lower
of  carrying  amount  or  fair  value  less  cost  to sell.  The Company has not
experienced  any  impairment  losses.

Reserves  for  Credit  Losses  and  Contingent  Liabilities
     Reserves  for  credit  losses  and  contingent  liabilities are established
related to installment contract receivables. Actual credit losses are charged to
the  reserves  when  incurred.  The  reserves  established  for  such losses are
determined based on the Company's historical loss experience after adjusting for
current  economic  conditions.  Management, in assessing the loss experience and
economic  conditions,  adjusts reserves through periodic provisions. The Company
also  maintains  a  reserve  for contingent liabilities related to guarantees of
installment  contract  receivables  sold  with  recourse.

Interest  Rate  Swaps
     The  Company  uses  interest  rate  swaps  to assist in minimizing interest
incurred  on  its short-term variable rate debt.  The difference between amounts
received  and  amounts paid under such agreements is recorded as a reduction of,
or  addition  to,  interest  expense  as  incurred  over  the  life of the swap.

Restricted  Cash
     Restricted  cash  primarily  represents:  1)  trust  account  cash balances
required by certain VMF servicing agreements, and 2) insurance reserves required
by  custodial  or  trust  agreements.

Income  Taxes
     Deferred  income taxes are recorded to reflect the net tax effect of
temporary differences between the carrying amounts of assets and liabilities for
financial  reporting  purposes  and  the  amounts  used for income tax purposes.

Accumulated  Other  Comprehensive  Income
     Accumulated other comprehensive income is presented net of income taxes and
is  comprised  of  unrealized gains and losses on securities available-for-sale.

Management  Estimates
     The  preparation  of  financial  statements  in  conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amounts  of assets and liabilities and
disclosures  of  contingent  assets and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.  Actual  results  could  differ  from  those  estimates.

Other
     Per  share  and  share  data  have been retroactively adjusted to reflect a
5-for-4  stock  split paid in December 1998. Certain reclassifications have been
made  to  the  1998  and  the  1999  financial statements to conform to the 2000
presentation.

New  Accounting  Pronouncements
     In  June  1998,  the  Financial  Accounting  Standards  Board (FASB) issued
Statement  of  Financial  Accounting  Standards  (SFAS)  No. 133, Accounting for
Derivative Instruments and Hedging Activities, and subsequently amended by
SFAS  No.  137,  Accounting  for  Derivative  Instruments  and  Hedging
Activities-Deferral  of  the  Effective  Date of FASB Statement No. 133, in June
1999 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging  Activities,  in  June  2000.  SFAS  No.  133 establishes accounting and
reporting  standards  for derivative instruments embedded in other contracts and
for hedging activities.  The Company will adopt SFAS No. 133, as amended, in the
first  quarter of 2001.  Such adoption is not expected to have a material impact
on  the  Company's  reported  results  of operations, financial position or cash
flows.
     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting  Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
It  summarizes  the  SEC's  views  in  applying  generally  accepted  accounting
principles  to  selected revenue recognition issues.  An amendment was issued in
June  2000,  which  delays the implementation of SAB 101 until no later than the
fourth  quarter  of fiscal years beginning after December 15, 1999.  The Company
believes  that  its practices already comply with the provisions of SAB No. 101,
and  its  adoption  is  expected  to  have  no  material impact on the Company's
reported  results  of  operations,  financial  position  or  cash  flows.

                                         20
<PAGE>

         NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  (CONTINUED)

NOTE  2  -  INVENTORIES
     Inventories  at  June  30,  2000,  and  1999,  are  as  follows:

<TABLE>
<CAPTION>
(in thousands)                2000              1999
------------------------------------------------------
<S>                          <C>             <C>
Manufactured homes
   New                       $148,658         $125,456
   Previously-owned            53,593           40,956
Raw materials                  20,180           18,032
------------------------------------------------------
                             $222,431         $184,444
------------------------------------------------------
</TABLE>

     If  the  first-in,  first-out (FIFO) method of inventory valuation had been
used,  inventories would have been higher by $21,633,000 and $20,591,000 at June
30,  2000,  and  1999,  respectively.

NOTE  3  -  PROPERTY,  PLANT  AND  EQUIPMENT
     Property,  plant  and equipment at June 30, 2000, and 1999, are as follows:

<TABLE>
<CAPTION>
(in thousands)                             2000            1999
-------------------------------------------------------------------
<S>                             <C>        <C>
Land and improvements                    $199,329         $183,449
Buildings                                 156,689          147,252
Furniture and equipment                    45,964           42,392
-------------------------------------------------------------------
                                          401,982          373,093
Less: accumulated depreciation
   and amortization                       (96,503)         (81,590)
-------------------------------------------------------------------
                                         $305,479         $291,503
-------------------------------------------------------------------
</TABLE>

NOTE  4  -  DEBT  OBLIGATIONS
     Debt  obligations  at  June  30, 2000, and 1999, are summarized as follows:

<TABLE>
<CAPTION>
(in thousands)                                                   2000          1999
--------------------------------------------------------------------------------------
<S>                                                             <C>          <C>
Senior notes, 6.25%, due December 2003                          $75,000       $75,000
Debt collateralized by installment contract
    receivables, average effective rate 10.19% on
    June 30, 2000, due through 2004                               8,373        11,625
Tax-exempt bonds, effective rate of 4.90% on
    June 30, 2000, due through 2030                              15,230         9,230
Lines of credit                                                       -             -
Other notes payable                                                 613           622
--------------------------------------------------------------------------------------
                                                                $99,216       $96,477
--------------------------------------------------------------------------------------
</TABLE>

Annual  maturities  of  long-term  debt  as  of  June  30, 2000, are as follows:

<TABLE>
<CAPTION>
          (in  thousands)
          --------------------------          ----------------------------
<S>                          <C>              <C>               <C>
           2001              $3,143            2004              $75,200
           2002               3,053            2005                    -
           2003               1,977            Thereafter         15,843
</TABLE>

     In  December  1998,  the  Company  issued  $75  million  of  6.25%  Senior
Subordinated Notes due December 2003 (the "6.25% Notes"), with interest payable
each June and December.  The 6.25% Notes  are  redeemable  at  the  option
of the Company, in whole, at 100% of the principal  amount  plus a  make-whole
premium at any time prior to December 30, 2003.  The 6.25% Notes are  not
subject  to  any  sinking  fund  requirements.
     In  January  2000,  the Company renewed its committed one-year $300 million
commercial  paper  conduit  facility to facilitate sales of manufactured housing
contracts.  Commitment  fees  are payable quarterly on the unused portion of the
facility.  At  June 30, 2000, the conduit facility was not utilized, as compared
to  $105  million  being  outstanding  at  June  30,  1999.
     The Company has a $150 million five-year revolving credit facility with its
bank  group.  This  facility's pricing is based on LIBOR rates; commitment fees
are  payable  quarterly  on  the  unused  portion  of  the  facility.
     The  Company's  tax-exempt manufacturing facilities' bonds carry no sinking
fund  requirements  and  bear  interest  at  weekly  adjustable  rates.
     The  preceding facilities are governed by various financial covenants which
require  maintenance  of  certain financial ratios and are uncollateralized.  In
addition, the Company has committed and uncommitted lines of credit amounting to
$87  million  with  several banks, prices based on LIBOR rates.  These lines are
subject  to  periodic  review by each bank and may be canceled by the Company at
any  time.
     Under  certain interest rate swap agreements, the Company agrees with other
parties to exchange the difference between fixed rate and variable rate interest
amounts calculated by reference to an agreed upon notional principal amount.  At
June  30,  2000,  the Company's interest rate swap agreements have an aggregrate
notional  amount of $100 million and fix the interest rate on the Company's debt
to  rates  ranging from 5.42% to 5.62%.  If the Company had terminated all swaps
as  of  June  30,  2000,  it  would  have received a net amount of approximately
$1,946,000  based  on  quoted  market  values from the other parties holding the
swaps.

NOTE  5  -  RESERVES  FOR  CREDIT  LOSSES  AND  CONTINGENT  LIABILITIES
     An  analysis of the reserves for losses on installment contract receivables
and  contingent  liabilities  for the years ended June 30, 2000, 1999, and 1998,
are  as  follows:

<TABLE>
<CAPTION>
(in thousands)                                          2000        1999         1998
--------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>         <C>
Balance, beginning of year                            $ 44,275      $35,828     $ 8,051
    Provision                                           20,800       12,459       7,976
    Charges, net of recoveries applicable
      to installment contract receivables
         Purchased                                     (12,199)     (13,384)     (2,762)
         Other                                         (20,044)     (11,951)     (3,981)
    Reserves transferred from (to) unamortized
      discounts                                         (6,000)      (1,981)      2,318
    Reserves associated with receivables
      purchased                                          8,893       23,304      24,226
--------------------------------------------------------------------------------------------
Balance, end of year                                  $ 35,725      $44,275     $35,828
--------------------------------------------------------------------------------------------
Reserves for credit losses                            $  3,650      $ 8,541     $29,964
Reserve for contingencies                               32,075       35,734       5,864
--------------------------------------------------------------------------------------------
                                                      $ 35,725      $44,275     $35,828
--------------------------------------------------------------------------------------------
</TABLE>

     The  reserves  for  credit  losses  are  netted against receivables and the
reserve  for  contingencies is included in other liabilities on the consolidated
balance  sheets.  The Company is contingently liable as guarantor on installment
contract  receivables  sold  with  recourse.  At  June  30,  2000, and 1999, the
outstanding  principal  balances of these receivables totaled approximately $117
million  and  $164 million, respectively. The associated contingent liability is
approximately  $14  million  and  $22  million,  respectively.  There  were  no
receivables  sold  with  recourse  in  2000,  1999  and  1998.

                                         21
<PAGE>

         NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  (CONTINUED)

NOTE  6  -  SHAREHOLDERS'  EQUITY
Stock  Option  Plan
     In  1983,  1985, 1991, and 1997, the Company established Stock Option Plans
for  a  total  of  17,021,036  shares of common stock which provide for granting
"incentive  stock  options"  or  "non-qualified  options" and stock appreciation
rights  to  officers  and  key  employees  of  the  Company.  In  addition,
non-management members of the Board of Directors have, with shareholder approval
of  prices  and provisions for exercise, been granted options to purchase shares
of  common  stock.  The option prices were established at not less than the fair
market  value as of the date of grant. Options are exercisable after one or more
years  and  expire  no later than 10 years from the date of grant.  Activity and
price  information  regarding  the  plans  are  as  follows:

<TABLE>
<CAPTION>
                                                              Weighted                Weighted
                                                                 Avg        Stock        Avg
                                           Stock Option       Exercise     Options    Exercise
                            Shares          Price Range        Price     Exercisable    Price
----------------------------------------------------------------------------------------------
<S>                      <C>             <C>       <C>        <C>        <C>           <C>
Balance June 30, 1997      4,416,948      $1.10  -  $13.70     $ 7.74     1,888,935     $6.32
   Granted                 1,529,856      $8.19  -  $12.60     $11.61
   Exercised              (1,193,195)     $1.10  -  $13.70     $ 6.21
   Canceled                 (450,571)     $1.41  -  $13.70     $ 9.90
----------------------------------------------------------------------------------------------
Balance June 30, 1998      4,303,038      $1.41  -  $13.70     $ 9.32     1,187,395     $7.29
   Granted                 1,477,846      $8.19  -  $15.75     $12.73
   Exercised                (162,002)     $1.41  -  $13.70     $ 5.03
   Canceled                 (757,731)     $1.76  -  $15.75     $11.55
----------------------------------------------------------------------------------------------
Balance June 30, 1999      4,861,151      $1.41  -  $15.75     $10.15     1,449,866     $8.13
   GRANTED                   762,325      $9.38  -  $11.88     $ 9.91
   EXERCISED                (208,725)     $1.41   -  $8.27     $ 2.65
   CANCELED                 (309,295)     $3.64  -  $15.75     $11.11
----------------------------------------------------------------------------------------------
BALANCE JUNE 30, 2000      5,105,456      $2.16  -  $15.75     $10.36     1,655,984     $9.18
----------------------------------------------------------------------------------------------
</TABLE>

     Options  available  for  future  grant  at  June  30,  2000, and 1999, were
4,939,727 and 5,077,035, respectively.  Options were held by 950 persons at June
30,  2000.
     The  following  table summarizes information about the plans' stock options
at  June 30, 2000, including weighted average remaining life (Life) and weighted
average  exercise  price  (Price):

<TABLE>
<CAPTION>
                                Options Outstanding                Options Exercisable
                        -------------------------------------    ---------------------
      Range              Number          Life        Price           Number      Price
--------------------------------------------------------------------------------------
<S>                    <C>           <C>            <C>            <C>          <C>
   $ 2.16 - $ 3.63        14,895      0.4 years      $ 2.16          14,895      $ 2.16
   $ 3.64 - $ 5.05       290,256      1.4 years      $ 4.02         132,044      $ 3.83
   $ 7.22 - $10.32     2,239,675      5.5 years      $ 8.53         981,236      $ 7.94
   $11.50 - $15.75     2,560,630      7.0 years      $12.73         527,809      $13.01
</TABLE>

     The  Company  has elected to continue following Accounting Principles Board
Opinion  No.  25 (APB 25), Accounting for Stock Issued to Employees, and related
interpretations  in  accounting  for  its  stock  option  plans  rather than the
alternative  fair  value  accounting provided for under SFAS 123, Accounting for
Stock-Based  Compensation.  Under  APB  25,  because  the  exercise price of the
Company's  employee  and  director  stock options equals the market price of the
underlying  stock on the date of grant, no compensation expense is recognized in
the  accompanying  financial  statements.  Pro  forma  information regarding net
income  and  net  income  per  common share is required by SFAS 123 and has been
determined  as if the Company has accounted for its stock options under the fair
value  method  of  that  standard.  For  purposes  of pro forma disclosures, the
estimated  fair  value  of the options is amortized to expense over the options'
vesting  periods.  The  pro forma results do not purport to indicate the effects
on  reported  net income for recognizing compensation expense which are expected
to  occur  in  future years.  The Company's pro forma information is as follows:

<TABLE>
<CAPTION>
                                                                    June 30,
(in thousands except per share data)                     2000         1999          1998
--------------------------------------------------------------------------------------------
<S>                                                 <C>       <C>       <C>
Net income - as reported                               $144,025      $154,968      $137,700
Net income - pro forma                                  141,634       153,610       136,643
Net income per diluted common share - as reported         $1.03         $1.06         $0.92
Net income per diluted common share - pro forma            1.01          1.05          0.91
--------------------------------------------------------------------------------------------
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing  model  with  the  following weighted average
assumptions  used  for  grants issued from 1998 to 2000; dividend yields ranging
from  0.41% to 0.78% with a weighted average yield of 0.56%; expected volatility
of  0.29%,  risk-free interest rates ranging from 5.70% to 6.25% with a weighted
average  rate of 5.98%; and expected lives ranging from 6.47 to 10.00 years with
a  weighted  average  life  of 7.19 years.  The weighted average grant date fair
value  of options granted in fiscal years  2000, 1999 and 1998 was $4.66, $5.66,
and  $5.02  per  share,  respectively.

NOTE  7  -  INCOME  TAXES
     The components of deferred tax assets and liabilities at June 30, 2000, and
1999,  are  as  follows:

<TABLE>
<CAPTION>
(in  thousands)                                      2000            1999
---------------------------------------------------------------------------
<S>                                               <C>           <C>
Reserves for credit losses and contingencies
   and discounts                                   $  9,258       $ 11,618
Insurance reserves                                    9,911         10,216
Unearned premiums                                     9,348          8,001
Residual interest in installment contract
   receivables                                       11,781          7,934
---------------------------------------------------------------------------
     Total deferred tax assets                     $ 40,298       $ 37,769
---------------------------------------------------------------------------
Deferred costs                                     $ (6,728)      $ (5,931)
Other                                                (9,286)       (11,333)
---------------------------------------------------------------------------
     Total deferred tax liabilities                 (16,014)       (17,264)
---------------------------------------------------------------------------
     Net deferred tax asset                        $ 24,284       $ 20,505
---------------------------------------------------------------------------
</TABLE>

                                         22
<PAGE>

          NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  (CONTINUED)

     The  provision  for  income  tax  is  composed  of  the  following:

<TABLE>
<CAPTION>
(in thousands)             2000            1999             1998
-------------------------------------------------------------------
<S>                     <C>       <C>       <C>
Current tax provisions
   Federal                $82,654         $92,706         $103,336
   State                    5,807           6,561            6,894
Total current             $88,461         $99,267         $110,230
Deferred tax benefit       (3,861)         (8,267)         (25,830)
-------------------------------------------------------------------
                          $84,600         $91,000         $ 84,400
-------------------------------------------------------------------
</TABLE>

     At  June  30,  2000,  1999, and 1998, a deferred tax provision (benefit) of
$82,000,  ($482,000),  and  $0,  respectively,  was  allocated  directly  to
shareholders'  equity  for the unrealized loss on securities available-for-sale.
The  provision for income tax reflected in the financial statements differs from
income taxes calculated at the statutory federal income tax rate of 35% in 2000,
1999  and  1998,  as  follows:

<TABLE>
<CAPTION>
(in  thousands)                                     2000       1999        1998
---------------------------------------------------------------------------------
<S>                                                <C>        <C>        <C>
Income taxes at the statutory rate                 $80,019    $86,089    $77,735
State income taxes, net of federal benefit           3,775      4,265      4,481
Other, net                                             806        646      2,184
---------------------------------------------------------------------------------
                                                   $84,600    $91,000    $84,400
---------------------------------------------------------------------------------
</TABLE>

NOTE  8  -  EMPLOYEE  BENEFIT  PLANS
     The  Company has a 401(k) defined contribution plan covering all employees
who meet participation requirements.  The amount of the Company's contribution
is discretionary as determined by the Board  of  Directors,  up to the maximum
deduction  allowed  for  federal  income tax purposes. Contributions accrued and
paid  were  $3,169,000,  $3,162,000, and $2,488,000 for the years ended June 30,
2000,  1999  and  1998,  respectively.

NOTE  9  -  COMMITMENTS  AND  CONTINGENCIES
     Certain  operating  properties  are  rented  under non-cancelable operating
leases  which  expire  at various dates through 2009. Total rental expense under
operating  leases  was $5,340,000 in 2000, $5,210,000 in 1999, and $4,440,000 in
1998.  Minimum  rental  commitments  under  non-cancelable  operating  leases,
primarily for retail centers, in effect at June 30, 2000 were 2001 - $4,308,000;
2002  - $3,548,000; 2003 - $2,896,000; 2004 - $2,005,000; 2005 - $1,109,000; and
thereafter  -  $1,807,000.
     Institutions  financing  independent retailer purchases require the Company
to  execute repurchase agreements.  As a result of these agreements, the Company
is  contingently  liable for repurchasing homes in the event of a default by the
dealer  to  the  lending  institution.  These  agreements  are  customary in the
manufactured  housing  industry,  and  the Company's losses in the past have not
been  significant.  The maximum potential repurchase obligation is approximately
$72  million  at  June  30,  2000,  excluding  any  resale  value.
     At  June  30, 2000, the Company has letters of credit, primarily related to
insurance  reserves  and  performance  guarantees  related  to  asset  backed
securitizations  of  approximately  $113 million and $257 million, respectively.
The  Company  believes  a  significant  loss  from any such guarantee is remote.
Please  see  Note  5  for  discussion  of  guarantees  of  installment  contract
receivables.

NOTE  10  -  BUSINESS  SEGMENT  INFORMATION
     The  Company  has  identified  four  major  business  segments:  Retail,
Manufacturing,  Financial  Services, and Communities. The Retail group purchases
homes  from the Company's manufacturing operations and third party manufacturers
to  sell  to  retail  customers.  The  Manufacturing  group  builds  homes  for
Company-owned  and  independent  retailers.  Financial  Services provides retail
financing  of  manufactured homes, reinsures risk on family protection, physical
damage,  and  homebuyer  protection  plan insurance policies, and offers certain
specialty  finance  products. Communities owns and operates manufactured housing
communities.  Income  from  operations  consists  of total revenues less cost of
sales  and operating expenses.  Identifiable assets are used in the operation of
each  business  segment.
     Information  concerning  operations  by  business  segment  follows:

<TABLE>
<CAPTION>

(in thousands)                      2000              1999              1998
--------------------------------------------------------------------------------
<S>                         <C>               <C>              <C>
Revenues
  Retail                         $  733,916        $  737,044        $  590,256
  Manufacturing                     624,586           654,471           599,561
  Financial Services                188,365           198,527           158,828
  Communities                        92,492            78,902            70,740
  Intersegment sales               (346,014)         (324,661)         (291,606)
--------------------------------------------------------------------------------
                                 $1,293,345        $1,344,283        $1,127,779
--------------------------------------------------------------------------------
Income from operations
  Retail                         $   53,623        $   66,364        $   59,272
  Manufacturing                      62,729            72,377            65,437
  Financial Services                108,792           117,385            99,685
  Communities                        16,130            15,850            14,133
  Eliminations/Other                (14,257)          (20,691)          (21,926)
--------------------------------------------------------------------------------
                                 $  227,017        $  251,285        $  216,601
Interest
  Interest expense                   (5,749)          (11,995)           (2,270)
  Interest revenue/Other income       7,357             6,678             7,769
--------------------------------------------------------------------------------
Income before taxes              $  228,625        $  245,968        $  222,100
--------------------------------------------------------------------------------
Identifiable assets
  Retail                         $  287,705        $  247,009        $  208,064
  Manufacturing                     100,112            94,773            80,487
  Financial Services                902,913           901,769         1,003,528
  Communities                       185,784           177,723           166,871
  Eliminations/Other                 29,864            (4,029)           (1,193)
--------------------------------------------------------------------------------
                                 $1,506,378        $1,417,245        $1,457,757
--------------------------------------------------------------------------------
Depreciation and amortization
  Retail                         $    5,639        $    4,684        $    3,725
  Manufacturing                       6,516             5,478             5,016
  Financial Services                    472               235               121
  Communities                         6,724             6,412             5,418
  Eliminations/Other                  1,071               986               453
--------------------------------------------------------------------------------
                                 $   20,422        $   17,795        $   14,733
--------------------------------------------------------------------------------
Capital expenditures
  Retail                         $   11,535        $   18,152        $   15,147
  Manufacturing                       9,558            12,971             5,721
  Financial Services                    454               576               931
  Communities                        12,059            14,703            31,316
  Eliminations/Other                    792             1,347             9,095
--------------------------------------------------------------------------------
                                 $   34,398        $   47,749        $   62,210
--------------------------------------------------------------------------------
</TABLE>

                                         23
<PAGE>

          NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  (CONTINUED)

NOTE  11  -  OTHER  ASSETS  AND  LIABILITIES
     At  June  30,  2000,  and  1999, other assets and liabilities consisted of:

<TABLE>
<CAPTION>
(in thousands)                              2000           1999
------------------------------------------------------------------
<S>                                      <C>            <C>
Other assets
  Interest and other receivables          $ 52,605       $ 56,674
  Deferred policy acquisition costs         19,304         16,693
  Prepaid expenses and other                20,658         17,684
------------------------------------------------------------------
                                          $ 92,567       $ 91,051
------------------------------------------------------------------
Other liabilities
  Investors payable                       $ 85,161       $ 89,925
  Reserve for contingencies (Note 5)        32,075         35,734
  Escrow deposits                           10,603         11,378
  Unearned insurance premiums               94,669         82,199
  Other                                     25,519         23,185
------------------------------------------------------------------
                                          $248,027       $242,421
------------------------------------------------------------------
</TABLE>

NOTE  12  -  FAIR  VALUE  DISCLOSURE  OF  FINANCIAL  INSTRUMENTS
     SFAS  No.  107,  Disclosures  About  Fair  Value  of Financial Instruments,
requires  that  the  Company disclose the estimated fair values of its financial
instruments.  The  following  methodologies  and  assumptions  were  used by the
Company  to  estimate  its  fair  value  disclosures  for financial instruments.
     Fair  value  estimates  are  made  at  a  specific  point in time, based on
relevant  market  data  and  information  about  the  financial  instrument. The
estimates do not reflect any premium or discount that could result from offering
for  sale  in a single transaction the Company's entire holdings of a particular
financial  instrument.  The lack of uniform valuation methodologies introduces a
greater  degree of subjectivity to these estimated fair values. Comparability to
financial instruments between similar companies may not be reasonable because of
varying  assumptions  concerning  the  estimates  of  fair  value.

Cash  and  Cash  Equivalents
     The  carrying  values  for  cash  and  cash  equivalents,  including  those
restricted  by  agreement,  approximate  the  fair  value  of  the  assets.

Residual  Interests  in  Installment  Contract  Receivables
     Residual interests in installment contract receivables are calculated using
prepayment,  default and interest rate assumptions that the Company believes are
appropriate  at  the  time  of the sale of the installment contract receivables.
Projected  performance  is  monitored  after the sale.  The fair value primarily
assumes  an appropriate discount rate to be applied to the asset as a whole. The
Company  used  a  discount  rate and such other assumptions as it believed to be
used  for  similar  instruments.

Contracts  Held  For  Sale  and  as  Collateral
     Contracts  held  for  sale  are  generally recent originations or purchased
portfolios  which  will be sold with limited or no recourse during the following
year.  The  Company  does  not charge fees to originate loans, and, as such, its
contracts have origination rates in excess of rates on the securities into which
they  will be pooled. The Company estimates the fair value of the contracts held
for  sale  using  expected  future cash flows of the portfolio discounted at the
current  origination  rate.
     The carrying values of contracts pledged as collateral to long-term lenders
are  estimated  using  discounted  cash  flow  analyses and interest rates being
offered  for similar contracts. The carrying amount of contracts with a variable
rate of interest is estimated to be at fair value. The carrying value of accrued
interest  adjusted  for  credit  risk  equals  its  fair  value.

Debt  Collateralized  by  Installment  Contract  Receivables
     Debt  collateralized by installment contract receivables consists primarily
of  notes  collateralized  by  contracts  with maturities that coincide with the
underlying contract maturities. The fair value of these financial instruments is
based on the current rates offered to the Company for debt of similar maturities
using  a  discounted  cash flow calculation. Loan covenants preclude prepayment.
     The  carrying  amounts and estimated fair values of the Company's financial
assets  and  liabilities  are  as  follows:

<TABLE>
<CAPTION>
                                                                      JUNE 30, 2000             June 30, 1999
                                                                  CARRYING    ESTIMATED     Carrying    Estimated
(in thousands)                                                     AMOUNT     FAIR VALUE     Amount     Fair Value
-------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>         <C>          <C>          <C>
Financial assets
   Cash and cash equivalents, including restricted cash            $140,816     $140,816     $102,807     $102,807
   Residual interests in installment contract receivables           150,329      150,329      131,146      131,146
   Contracts held for sale and as collateral, including accrued
     interest receivable                                            450,531      448,446      486,717      482,881
Financial liabilities
   Senior notes, 6.25%                                               75,000       72,160       75,000       72,661
   Debt collateralized by installment contract receivables            8,373        9,006       11,625       12,190
-------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE  13  -  EARNINGS  PER  SHARE
     The  following  reconciliation details the numerators and denominators used
to  calculate  basic  and diluted earnings per share for the respective periods:

<TABLE>
<CAPTION>
(in  thousands  except  per  share  data)      2000         1999           1998
----------------------------------------------------------------------------------
<S>                                       <C>       <C>       <C>
Net income                                   $144,025      $154,968      $137,700
Average shares outstanding
   Basic                                      139,474       145,211       148,463
   Add: common stock equivalents                  341           720         1,041
   Diluted                                    139,815       145,931       149,504
Earnings per share - Basic                   $   1.03      $   1.07      $   0.93
                   - Diluted                 $   1.03      $   1.06      $   0.92
----------------------------------------------------------------------------------
</TABLE>

NOTE  14  -  RELATED  PARTY  TRANSACTIONS

     The Company maintains an agreement to purchase certain installment contract
receivables  originated  or acquired by 21st Century Mortgage Corp. in which the
Company  maintains a 50% ownership interest.  The Company acquired approximately
$92,000,000,  $147,000,000, and $192,000,000 in installment contract receivables
and  received interest and other related fees totaling approximately $1,618,000,
$2,038,000,  and  $1,735,000  during  fiscal  2000, 1999 and 1998, respectively.
     The  Company  paid  approximately  $82,000, $89,000, and $196,000, in 2000,
1999  and  1998,  respectively,  for  legal  services  provided by a law firm, a
partner  of  which  serves  as  a  director  of  the  Company.

                                         24