ELEVEN YEAR REVIEW

<TABLE>
<CAPTION>

(in thousands except per share and other data)     2002         2001         2000         1999         1998         1997
----------------------------------------------------------------------------------------------------------------------------

<S>                                             <C>          <C>          <C>          <C>          <C>          <C>
INCOME STATEMENT DATA
Revenues
  Net sales                                     $  871,108   $  849,157   $  993,916   $1,040,668   $  880,856   $  822,906
  Financial services
    and other income                               327,740      301,799      299,429      303,615      246,923      198,797
----------------------------------------------------------------------------------------------------------------------------
                                                 1,198,848    1,150,956    1,293,345    1,344,283    1,127,779    1,021,703
----------------------------------------------------------------------------------------------------------------------------
Costs and expenses
  Cost of sales                                    565,322      562,267      660,429      705,128      598,589      559,274
  SG&A                                             406,655      374,628      384,067      367,430      302,598      270,996
  Financial services
    interest                                           404          706        1,032        7,981        2,015        2,885
  Provision for credit
    losses                                          25,100       42,500       20,800       12,459        7,976        1,000
----------------------------------------------------------------------------------------------------------------------------
                                                   997,481      980,101    1,066,328    1,092,998      911,178      834,155
----------------------------------------------------------------------------------------------------------------------------
Operating income                                   201,367      170,855      227,017      251,285      216,601      187,548
Interest income
  (expense), net/other                              (4,321)      (1,504)       1,608       (5,317)       5,499        5,152
----------------------------------------------------------------------------------------------------------------------------
Income before
  income taxes                                     197,046      169,351      228,625      245,968      222,100      192,700
Provision for
  income taxes                                     (72,900)     (62,700)     (84,600)     (91,000)     (84,400)     (73,200)
----------------------------------------------------------------------------------------------------------------------------
Income before
  accounting change                                124,146      106,651      144,025      154,968      137,700      119,500
Cumulative effect of
  accounting change                                      -            -            -            -            -            -
----------------------------------------------------------------------------------------------------------------------------
Net income                                      $  124,146   $  106,651   $  144,025   $  154,968   $  137,700   $  119,500
----------------------------------------------------------------------------------------------------------------------------
Net income per share
  Basic                                         $     0.90   $     0.77   $     1.03   $     1.07   $     0.93   $     0.81
  Diluted                                       $     0.89   $     0.77   $     1.03   $     1.06   $     0.92   $     0.80
Average shares
  outstanding
  Basic                                            137,726      137,702      139,474      145,211      148,463      148,324
  Diluted                                          138,872      138,340      139,815      145,931      149,504      149,346
  Dividends per common
    share                                       $     .064   $     .064   $     .064   $     .064   $     .064   $     .061
----------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
  Total assets                                  $1,828,403   $1,654,170   $1,506,378   $1,417,245   $1,457,757   $1,045,761
  Debt obligations                                  92,912      141,862       99,216       96,477      247,591       22,806
  Shareholders' equity                          $1,261,957   $1,147,478   $1,036,375   $  947,768   $  881,019   $  754,526

KEY FINANCIAL RATIOS
As a % of revenue
  Operating income                                   16.8%        14.8%        17.6%        18.7%        19.2%        18.4%
  Net income                                         10.4%         9.3%        11.1%        11.5%        12.2%        11.7%
Debt as a % of
  total capital                                       6.9%        11.0%         8.7%         9.2%        21.9%         2.9%

OTHER DATA
  Company-owned
    retail centers                                     287          297          318          306          273          245
  Independent retailers                                601          634          707          671          702          663
  Manufacturing plants                                  20           20           20           19           18           17
  Communities                                           82           81           76           75           71           67
----------------------------------------------------------------------------------------------------------------------------


(in thousands except per share and other data)     1996         1995         1994         1993         1992
----------------------------------------------------------------------------------------------------------------

<S>                                             <C>          <C>          <C>          <C>          <C>
INCOME STATEMENT DATA
Revenues
  Net sales                                       $762,396     $621,351     $510,153     $384,491     $296,849
  Financial services
    and other income                               166,345      136,741      118,083       91,750       74,330
----------------------------------------------------------------------------------------------------------------
                                                   928,741      758,092      628,236      476,241      371,179
----------------------------------------------------------------------------------------------------------------
Costs and expenses
  Cost of sales                                    521,200      431,826      357,698      267,201      206,049
  SG&A                                             236,188      188,835      153,698      113,695       84,785
  Financial services
    interest                                         3,649        5,533        8,196       11,819       16,585
  Provision for credit
    losses                                               -            -            -            -        3,300
----------------------------------------------------------------------------------------------------------------
                                                   761,037      626,194      519,592      392,715      310,719
----------------------------------------------------------------------------------------------------------------
Operating income                                   167,704      131,898      108,644       83,526       60,460
Interest income
  (expense), net/other                               4,596        3,902         (359)        (170)        (317)
----------------------------------------------------------------------------------------------------------------
Income before
  income taxes                                     172,300      135,800      108,285       83,356       60,143
Provision for
  income taxes                                     (65,500)     (48,800)     (39,000)     (29,600)     (20,800)
----------------------------------------------------------------------------------------------------------------
Income before
  accounting change                                106,800       87,000       69,285       53,756       39,343
Cumulative effect of
  accounting change                                      -            -        3,000            -            -
----------------------------------------------------------------------------------------------------------------
Net income                                        $106,800     $ 87,000     $ 72,285     $ 53,756     $ 39,343
----------------------------------------------------------------------------------------------------------------
Net income per share
  Basic                                           $   0.72     $   0.59     $   0.51     $   0.39     $   0.30
  Diluted                                         $   0.72     $   0.59     $   0.49     $   0.37     $   0.29
Average shares
  outstanding
  Basic                                            148,253      147,020      141,046      136,391      130,103
  Diluted                                          149,183      148,285      149,875      149,106      142,100
Dividends per common
  share                                           $   .049     $   .030            -            -            -
----------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
  Total assets                                    $886,350     $761,151     $701,148     $587,032     $554,780
  Debt obligations                                  30,290       48,737       70,680      137,038      192,931
  Shareholders' equity                            $650,189     $544,187     $462,154     $348,630     $292,950

KEY FINANCIAL RATIOS
As a % of revenue
  Operating income                                    18.1%        17.4%        17.3%        17.5%        16.3%
  Net income                                          11.5%        11.5%        11.5%        11.3%        10.6%
Debt as a % of
  total capital                                        4.5%         8.2%        13.3%        28.2%        39.7%

OTHER DATA
  Company-owned
    retail centers                                     216          192          165          143          127
  Independent retailers                                580          421          372          371          312
  Manufacturing plants                                  17           16           13           13           11
  Communities                                           64           55           46           33           20
----------------------------------------------------------------------------------------------------------------
</TABLE>

                                        6
<PAGE>


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

CRITICAL  ACCOUNTING  POLICIES
The  Company believes the following represents its critical accounting policies:

Revenue  Recognition
     Retail  sales  are  recognized  when:  1)cash  payment is received, or down
payment  is  received  for  credit  sales  and  the  home  buyer  enters into an
installment sales contract, and 2) the home buyer has inspected and accepted the
completed  home  at  the  home buyer's site, and 3) title has passed to the home
buyer.
     Sales  to  independent  retailers  of  homes  produced  by  the Company are
recognized  as  revenue  upon  shipment.
     Revenue  from rental of homesites and homes is accrued and recognized based
on  the  terms  of  the  resident's  lease  agreement  with  the  Company.
     Premiums  from  insurance  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.
     Vanderbilt  Mortgage  and  Finance,  Inc.  (VMF),  the  Company's financing
subsidiary,  originates  and  sells  installment  contract  and  mortgage  loan
receivables  (receivables),  retaining  the  servicing thereon. It also provides
servicing  for  investors in receivables on a contract basis. Interest income on
receivables  held,  either  for  sale  or  as  an  investment,  is recognized in
accordance  with  the  terms  of  the  underlying  installment  contracts.  For
receivables  sold  with  servicing  retained  and  receivables  serviced  under
servicing  agreements,  service  fee  income  is  recognized  as  the service is
performed.  Interest income on interest-only residual interests is recognized in
accordance with the consensus of the Emerging Issues Task Force in its Issue No.
99-20  (EITF  99-20), Recognition of Interest Income and Impairment on Purchased
and  Retained  Beneficial Interests in Securitized Assets. Accordingly, interest
income  is recognized through an effective yield method, with the yield computed
prospectively  over  the life of the residual interests after adjustments in the
estimated  cash  flows  are  made  to  reflect  prepayments,  defaults and other
factors.

Valuation  of  Residual  Interests
     The Company engages in securitization activities in connection with certain
of  its businesses.  Gains and losses from securitizations are recognized in the
consolidated  statements  of income when the Company relinquishes control of the
transferred  financial  assets  in  accordance with SFAS No. 140, Accounting for
Transfers  and Servicing of Financial Assets and Extinguishments of Liabilities.
The gain or loss on the sale of financial assets depends in part on the previous
carrying  amount  of  the assets involved in the transfer, allocated between the
assets  sold  and the retained interests based upon their respective fair values
at  the  date  of  the  sale.
     Interest-only  securities  are  periodically valued using a discounted cash
flow  model.  The  future  cash flows for the estimated life of each securitized
pool  are  projected  as  the  excess  interest received from borrowers over the
interest  paid  to  the  security  holders,  less contractual servicing fees and
estimated credit losses, after giving effect to estimated prepayments. Estimates
for  prepayments, defaults, and losses are determined based on a model developed
by  the  Company  that  considers  both  Company-specific experience and current
economic  conditions.
     The  residual  interests in the installment receivables sold are classified
as  available-for-sale securities. Accordingly, changes in fair market value are
recorded  as  other  comprehensive  income (loss) unless an other than temporary
adverse  change  is  determined.  Those  impairment charges are reflected in net
income.

Reserves  for  Credit  Losses  and  Contingent  Liabilities
     Reserves  for  credit losses and contingent liabilities are established for
receivables  held  for  sale  or investment and certain inventory. 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.

RESULTS  OF  OPERATIONS

FISCAL  2002  COMPARED  TO  FISCAL  2001
     Total  revenues increased 4% to $1.2 billion, as manufactured housing sales
increased  3%  to  $871 million, financial services income increased 11% to $252
million  and  rental  and other income increased 2% to $75 million.  Total units
sold  declined  3%  to  25,322  from  26,215  last  year as total floors shipped
declined  1%  to  37,789  from  38,171  in  the  prior  year.
     Gross  profit  margins  on  retail,  manufacturing  and  communities  sales
increased to 35.1% from 33.8%, primarily due to a higher rate of internalization
of  retail sales, improved efficiencies, and higher average retail and wholesale
selling  prices.  Selling,  general  and  administrative expenses were 33.9% and
32.5%  of  revenues  for  the years ended June 30, 2002, and 2001, respectively.
Additional  costs  associated  with  portfolio  acquisitions  contributed to the
increase.   The  provision  for credit losses was $25.1 million (excluding $40.2
million that has been included in Financial Services revenue for 2002 related to
the  losses  on  securitized mortgages), as compared to $42.5 million last year.
This  combined  increase  was  primarily  due  to  the  additional  contracts in
foreclosure  from the same period last year. Operating margin increased to 16.8%
from  14.8%  last  year.
     Interest  and  other  expense  increased to $4.3 million. This increase was
partially  due  to  an  overall  declining interest rate outlook which adversely
impacted  the value of the Company's interest rate swaps. During the fiscal year
ended  June 30, 2002, there was an unfavorable mark-to-market adjustment of $3.3
million  relating  to  the  swaps,  as  compared  to  a $2.1 million unfavorable
adjustment  in the same period last year. Income tax for the year ended June 30,
2002,  was  $72.9  million,  which  represents  an  effective  tax  rate of 37%.
     Conditions  in  the manufactured housing industry remain highly competitive
at both the retail and wholesale levels. For fiscal 2002, the industry was faced
with  manufacturing  over-capacity and too many retail centers. This competitive
environment,  as  well  as an increase in industry foreclosures and aging retail
inventory,  has  contributed  to the idling and closing of manufacturing plants,
and  declining  wholesale  shipments resulting in significant closings of retail
centers.
     RETAIL.  Within  the Retail segment, the group experienced a 5% increase in
net  sales  to $616 million as the total number of homes sold decreased slightly
to  15,877  and the average home price increased 5%. The average number of homes
sold  per  sales  center increased 5% as same store sales dollars increased 12%.
The  average  number of Company-owned retail centers declined 5%. Retail segment
operating  income  increased  12%  to  $32  million  from $29 million last year.

                                        7
<PAGE>

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

<TABLE>
<CAPTION>
                                                        Year ended June 30,    %
                                                          2002      2001    Change
                                                        --------  --------  -------
<S>                                                     <C>       <C>       <C>
Dollar sales (in thousands)                             $616,224  $586,261     5.1%
Number of retail centers (average)                           292       308    -5.0%
Dollar sales per retail center (in thousands)           $  2,110  $  1,907    10.7%
Average price of home                                   $ 38,812  $ 36,867     5.3%
New homes sold                                            12,772    12,346     3.5%
Previously-owned homes sold                                3,105     3,556   -12.7%
Percentage single-section/multi-section mix (new only)     47/53     50/50
</TABLE>

     During  the  year,  the  Company  opened seven retail centers and closed 17
under-performing  retail  centers.  The  Company  continually evaluates specific
markets  and opens, acquires or closes retail centers as conditions warrant.  Of
the  seven  new  openings, six were acquired and one was a startup.  Four of the
new  retail  centers  were  opened  in  the  fourth  quarter.
     MANUFACTURING. Within the Manufacturing segment, the group experienced a 4%
decline  in net sales to independent retailers to $215 million, while the number
of  homes  sold  decreased  10%  to  8,240.  The  average  number of independent
retailers  decreased 8%. Manufacturing segment operating income increased 28% to
$47  million  from $37 million in the prior year. Capacity utilization increased
to  60%,  as  compared to 57% last year. On June 30, 2002, the order backlog for
the  Manufacturing  group  (consisting of Company-owned and independent retailer
orders)  decreased  36%  to  $22  million,  compared  to  $35 million last year.

<TABLE>
<CAPTION>
                                                      Year ended June 30,   %
                                                        2002      2001    Change
                                                      --------  --------  -------
<S>                                                   <C>       <C>       <C>
Dollar sales (wholesale - in thousands)               $214,769  $223,476    -3.9%
Number of plants operating                                  20        20      --
Number of independent retailers (average)                  618       671    -7.9%
Dollar sales per independent retailer (in thousands)  $    348  $    333     4.4%
Average price of home                                 $ 26,064  $ 24,507     6.4%
New homes sold to independent retailers                  8,240     9,119    -9.6%
Percentage single-section/multi-section mix              39/61     45/55
</TABLE>

     FINANCIAL  SERVICES.  Financial  Services  revenues  increased  12% to $206
million, primarily due to a larger servicing portfolio and improved spreads over
last  year.  Insurance  related  revenues  increased  $4  million,  primarily
attributable  to  the  impact of multi-year policies generated in prior periods.
Receivable  originations  of  $913 million and acquisitions of $1.2 billion were
completed  during  the  year,  bringing  the  total  serviced  portfolio to $5.0
billion,  an  increase  of  15%  over  the  prior  year.  Loans  sold  through
asset-backed  securities  totaled $1.9 billion, as compared to $886 million last
year.  Overall  delinquency  (past  due over 30 days) increased slightly to 2.8%
from 2.6% last year.  Total Financial Services operating income increased 31% to
$125  million.
     The  average  outstanding  balance  of  installment  contract  and mortgage
receivables  increased 19% to $520 million with a weighted average interest rate
of  9.0%,  down  from  9.8%. The average outstanding balance of receivables sold
rose 12% to $4.1 billion, and the weighted average loan service spread increased
to 3.5% from 3.4%. Net credit losses, including losses on securitized mortgages,
as  a  percentage  of  loans  outstanding for fiscal 2002 increased to 2.2% from
1.8%.
     COMMUNITIES.  Within  the Communities segment revenues, net sales increased
2%  to $40 million as the number of homes sold increased 1% and the average home
selling price increased 1%. Communities rental income rose 2%. Segment operating
income  declined  1%.  The  Company added 261 sites during the year bringing the
total  to  21,382  sites  at  June  30,  2002.

<TABLE>
<CAPTION>
                                           Year ended June 30,   %
                                             2002      2001    Change
                                           --------  --------  -------
<S>                                        <C>       <C>       <C>
Dollar sales (in thousands)                $40,115   $39,420      1.8%
Average number of communities                   82        79      3.8%
Dollar sales per community (in thousands)  $   492   $   502     -2.0%
Average price of home                      $33,290   $33,015      0.8%
New homes sold                                 724       755     -4.1%
Previously-owned homes sold                    481       439      9.6%
Sites owned                                 21,382    21,121      1.2%
Sites rented                                16,156    15,737      2.7%
Percent occupied                              75.6%     74.5%
</TABLE>

FISCAL  2001  COMPARED  TO  FISCAL  2000
     Total revenues decreased 11% to $1.2 billion, as manufactured housing sales
decreased  15%  to $849 million, financial services income decreased slightly to
$228  million  and  rental  and other income increased 4% to $74 million.  Total
units  sold  declined 17% to 26,215 from 31,520 last year as total floor shipped
declined  16%  to  38,171  from  45,384  in  the  prior  year.
     Gross  profit  margins  on  retail,  manufacturing  and  communities  sales
increased  to  33.8%  from  33.6%.  Selling, general and administrative expenses
were  32.5%  and  29.7% of revenues for the years ended June 30, 2001, and 2000,
respectively.  This  increase  was  primarily  due to a decline in overall sales
volume  and  reduced  capacity  utilization  in manufacturing.  Additional costs
associated  with  portfolio acquisitions and fixed costs being spread over lower
revenues  were  also  a  factor.  The provision for credit losses and contingent
liabilities  increased to $42.5 million in 2001 from $20.8 million in 2000 which
was  primarily  due  to  the  additional  number  of contracts in foreclosure as
compared to the same period last year.  Operating margin decreased to 14.8% from
17.6%  last  year.
     Interest  and  other  expense  increased  to  $2 million. This increase was
partially  due  to  an  overall  declining interest rate outlook which adversely
impacted  the value of the Company's interest rate swaps. During the fiscal year
ended  June 30, 2001, there was an unfavorable mark-to-market adjustment of $2.1
million  relating to the swaps. Income tax for the year ended June 30, 2001, was
$62.7  million,  which  represented  an  effective  tax  rate  of  37%.
     Conditions  in  the manufactured housing industry remain highly competitive
at both the retail and wholesale levels. For fiscal 2001, the industry was faced
with  manufacturing  over-capacity and too many retail centers. This competitive
environment,  as  well  as an increase in industry foreclosures and aging retail
inventory,  has  contributed  to  decreased  industry  and  Company  sales,  and
significant  closings  of  retail  centers.
     RETAIL.  Within the Retail segment, the group experienced a 13% decrease in
net  sales  to  $586  million as the total number of homes sold decreased 11% to
15,902 and the average home price decreased 1%. The average number of homes sold
per  sales  center  decreased 10% as same store sales dollars decreased 14%. The
average  number  of  Company-owned  retail  centers  declined 1%. Retail segment
operating  income  decreased  46%  to  $29  million  from  $54  million.

                                        8
<PAGE>

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

<TABLE>
<CAPTION>
                                                        Year ended June 30,   %
                                                          2001      2000    Change
                                                        --------  --------  -------
<S>                                                     <C>       <C>       <C>
Dollar sales (in thousands)                             $586,261  $670,038   -12.5%
Number of retail centers (average)                           308       312    -1.4%
Dollar sales per retail center (in thousands)           $  1,907  $  2,148   -11.2%
Average price of home                                   $ 36,867  $ 37,365    -1.3%
New homes sold                                            12,346    14,022   -12.0%
Previously-owned homes sold                                3,556     3,910    -9.1%
Percentage single-section/multi-section mix (new only)     50/50     49/51
</TABLE>

     During  the  year,  the  Company  opened seven retail centers and closed 28
under-performing  retail  centers.  The  Company  continually evaluates specific
markets and opens, acquires or closes retail centers as conditions warrant.  All
of  the  sales  centers opened in fiscal 2001 were acquisitions.  Two of the new
retail  centers  were  opened  in  the  fourth  quarter.
     MANUFACTURING.  Within  the  Manufacturing segment, the group experienced a
20%  decrease  in  net sales to independent retailers to $223 million, while the
number  of  homes sold decreased 26% to 9,119. The average number of independent
retailers  decreased 3%. Manufacturing segment operating income decreased 42% to
$37  million  from $63 million in the prior year. Capacity utilization decreased
to  57%,  compared to 77% last year. On June 30, 2001, the order backlog for the
Manufacturing  group  (consisting  of  Company-owned  and  independent  retailer
orders)  increased  118%  to  $35  million,  compared  to $16 million last year.

<TABLE>
<CAPTION>
                                                      Year ended June 30,   %
                                                        2001      2000    Change
                                                      --------  --------  -------
<S>                                                   <C>       <C>       <C>
Dollar sales (wholesale - in thousands)               $223,476  $278,943   -19.9%
Number of plants operating                                  20        20      --
Number of independent retailers (average)                  671       689    -2.7%
Dollar sales per independent retailer (in thousands)  $    333  $    405   -17.7%
Average price of home                                 $ 24,507  $ 22,776     7.6%
New homes sold to independent retailers                  9,119    12,247   -25.5%
Percentage single-section/multi-section mix              45/55     51/49
</TABLE>

     FINANCIAL  SERVICES.  Interest  and  loan  servicing  revenues  within  the
Financial  Services  segment  increased $16 million.  Insurance related revenues
rose  $6  million.  Receivable  originations of $815 million and acquisitions of
$315  million  were  completed  during  the  year,  bringing  the total serviced
portfolio  to  $4.3 billion.  Loans sold through asset-backed securities totaled
$886 million, compared to $1.2 billion last year.  Overall delinquency (past due
over  30  days) increased to 2.6% from 2.2% last year.  Total Financial Services
operating  income  decreased  12%  to  $95  million.
     The  average  outstanding  balance  of  installment  contract  and mortgage
receivables  declined  slightly to $437 million with a weighted average interest
rate  of  9.8%,  down from 11.9%. The average outstanding balance of receivables
sold  rose  12%  to  $3.7  billion, and the weighted average loan service spread
increased  to  3.4%  from  3.3%.
     Net  credit  losses  as  a  percentage of loans outstanding for fiscal 2001
increased  to  1.8%  from 1.4% while delinquency rates on all loans increased to
2.6%  on  a  unit  basis  from  2.2%.
     COMMUNITIES.  Within  the Communities segment revenues, net sales decreased
12%  to  $39  million  as 11% fewer homes were sold and the average home selling
price  decreased 1%. Communities rental income rose 8%. Segment operating income
declined  13%. The Company added 953 sites during the year bringing the total to
21,121  sites  at  June  30,  2001.

<TABLE>
<CAPTION>
                                           Year ended June 30,   %
                                             2001      2000    Change
                                           --------  --------  -------
<S>                                        <C>       <C>       <C>
Dollar sales (in thousands)                $39,420   $44,935    -12.3%
Average number of communities                   79        76      4.0%
Dollar sales per community (in thousands)  $   502   $   595    -15.6%
Average price of home                      $33,015   $33,509     -1.5%
New homes sold                                 755       862    -12.4%
Previously-owned homes sold                    439       479     -8.4%
Sites owned                                 21,121    20,168      4.7%
Sites rented                                15,737    15,177      3.7%
Percent occupied                              74.5%     75.3%
</TABLE>


LIQUIDITY  AND  CAPITAL  RESOURCES
     The  Company  anticipates  meeting  cash  requirements  with  proceeds from
asset-backed  securitizations,  cash  provided from operations, revolving credit
lines, a sales facility 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, 2002, the Company
raised  $1.82  billion through asset securitizations as compared to $886 million
in  the  prior  year  period.  The  origination  and  acquisition of installment
contract  receivables  used  $1.96  billion  in  2002 and $1.14 billion in 2001.
     Cash and cash equivalents at June 30, 2002, were $84 million as compared to
$48  million  at  June  30, 2001.  Cash provided by operating activities was $97
million for the year ending June 30, 2002, as compared to $50 million last year.
Cash  used  for  investing activities was $8 million, as compared to $82 million
last  year.  In addition, $53 million in cash was used for financing activities,
mostly  for  repayment of short-term lines of credit, as compared to $36 million
provided  by  financing activities in the same period last year. The Company had
restricted  cash balances of $126 million at June 30, 2002, which includes trust
account  cash  balances  required  by  certain  VMF  servicing  agreements,  and
insurance reserves required by ceding companies.  The majority of the restricted
cash  balance  represents  funds  held  in  accordance  with  certain  servicing
agreements  that  will  be disbursed within 15 days of the end of the accounting
period.
     At June 30, 2002, and at June 30, 2001, the Company had debt outstanding of
$93  million  and  $142  million,  respectively.  Debt  outstanding  principally
consists  of  $75  million  of  privately  issued  senior  notes,  $2 million of
installment  paper  collateralized debt and $15 million of tax-exempt bonds. The
Company's  debt  to  total capital ratio decreased to 7% as compared to 11% last
year.  Short-term  debt  available  consists  of  $165 million committed and $71
million  uncommitted  lines  of  credit.  These  lines  of credit do not require
collateral  and  are  priced  on  LIBOR  rates.  The  committed credit lines are
guaranteed  by  all  significant subsidiaries of the Company and are governed by
various  financial  covenants  that  require  maintenance  of  certain financial
ratios.
     The  Company  has  $75 million of 6.25% Senior Notes due December 30, 2003,
which  are  primarily to facilitate the purchase, origination and warehousing of
loan  portfolios.  The  Senior  Notes  are  guaranteed  by  all  significant
subsidiaries  of  the  Company  and  are  governed  by  various

                                        9
<PAGE>

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

financial  covenants  that  require  maintenance  of  certain  financial ratios.
     On December 21, 2001, the Company acquired manufactured housing installment
contract  receivables  with  an  aggregate outstanding principal balance of $900
million.  In conjunction with that transaction, the Company sold the receivables
through a committed one-year sales facility of $500 million, while retaining the
servicing rights and residual cash flows. This facility was not utilized at June
30,  2002, and was subsequently amended to $300 million of which $150 million is
committed. In addition, a committed one-year $150 million participation facility
is  also  available  to  facilitate  the  future  sale  of  manufactured housing
contracts.  This  participation  facility  was not utilized at June 30, 2002. In
accordance  with  the  agreements  of  the  sales  facility,  utilization of any
unfunded  commitment  is  permitted  as  long  as criteria, that includes credit
rating, financial covenants, and performance triggers, are met. The Company owns
its  inventory;  therefore,  no  inventory financing arrangements are necessary.
     The  following  table  summarizes  the  Company's  significant  contractual
obligations  and  other  contingencies  as  of  June  30,  2002:


<TABLE>
<CAPTION>

(in  thousands)
Contractual Obligations (1)                           Payments due by period
------------------------------------------------------------------------------------------------------------
                             Total        FY03         FY04       FY05        FY06        FY07    Thereafter
                           ---------------------------------------------------------------------------------
<S>                         <C>       <C>         <C>        <C>          <C>         <C>          <C>
  Debt obligations          $ 92,912    $  2,097    $ 75,325    $    134    $     35    $      -    $ 15,321
  Capital leases            $    532    $    291    $    241    $      -    $      -    $      -    $      -
  Operating leases          $ 10,762    $  3,620    $  2,648    $  1,826    $  1,199    $    688    $    781

Other Contingencies (2)                        Amount of contingency expiration per period
------------------------------------------------------------------------------------------------------------
                             Total        FY03         FY04       FY05        FY06        FY07    Thereafter
                           ---------------------------------------------------------------------------------
  Letters of credit        $127,203     $127,203    $      -    $      -    $      -    $      -    $      -
  Guarantees               $416,661     $    610    $  2,154    $  3,016    $ 26,539    $ 30,751    $353,591
  Repurchase agreements    $ 59,600     $ 59,600    $      -    $      -    $      -    $      -    $      -
<FN>
(1)  Debt  obligations  consist primarily of $75 million Senior Notes due December 2003, and $15 million tax-exempt bonds
due  through  2030.  Capital  leases  represent  amounts  due  on computer-related equipment.  Operating leases represent
minimum  rental  commitments  primarily  for  retail  centers  in  effect  on  June  30,  2002.
(2)  Letters of credit primarily relate to insurance reserves and guarantees relate to asset-backed securitizations.  The
Company  believes  the probability of having to make guarantee payments under the terms of the guarantees is remote.  The
repurchase  agreements represent the maximum potential repurchase obligations in the event of a default by an independent
retailer  to the institution providing its floorplan lending.  These agreements are customary in the manufactured housing
industry,  and  the  Company's losses  in  the  past  have  not  been  significant.
</TABLE>

     In  fiscal  2002,  the Company repurchased 827,000 shares of Company common
stock for $9.6 million. Under Board approved repurchase programs, all shares may
be  acquired,  at management's discretion, over time on the open market.  Shares
repurchased  are  retired.
     Acquisitions of property, plant and equipment were made of approximately $7
million  to  expand,  develop,  or  improve manufactured housing communities, $6
million  for  opening and upgrading Company-owned retail centers, $6 million for
construction  and  improvement  of  manufacturing facilities, and $1 million for
other  fixed  assets.
     In fiscal 2003, the Company expects to originate approximately $950 million
of  installment  contract  and  mortgage  loan receivables. It expects to invest
approximately  $12  million  in  acquisitions  or  construction  of manufactured
housing  communities,  up  to $8 million for opening and upgrading Company-owned
retail  centers,  up  to  $7  million  for  construction  and  improvement  of
manufacturing  facilities,  and  up  to  $5  million  for  other  fixed  assets.

MARKET  RISK
      The Company is exposed to market risks related to fluctuations in interest
rates  on  certain  of  its  assets  and liabilities.  These instruments include
certain  installment  contract  receivables,  residual interests in asset-backed
securitizations  and variable rate debt, which principally consists of revolving
credit  lines.  The  Company  utilizes  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.
     The  Company had variable interest rate installment contract receivables of
approximately  $5.6  million at June 30, 2002. 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 cash flow for the
coming  year  of  approximately  $28,000.
     Certain  of  the  coupon  rates  on  certificates  payable  to investors in
asset-backed  securities  are  based  on  variable  interest  rates.  These
certificates  total  $923  million at June 30, 2002.  The balance of installment
contract  receivables  with  variable  interest rate terms collateralizing these
certificates  was  $757  million,  with the remainder having fixed interest rate
terms.  Holding  the  receivable  balances  constant,  each one percentage point
increase  in  interest rates occurring on the first day of the year would result
in  a  net  decrease  in  cash  flow  for  the coming year of approximately $5.3
million.
     Of  the  $93 million outstanding debt as of June 30, 2002,  $15 million had
terms  that  included  variable interest rates that reset weekly.  The remaining
$78  million  of  outstanding  debt  had fixed interest rate terms.  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.

NEW  ACCOUNTING  PRONOUNCEMENTS
     In  June 2001, the FASB issued Statement No. 143 (SFAS 143), Accounting for
Asset Retirement Obligations. SFAS 143 requires that obligations associated with
the retirement of a tangible long-lived asset to be recorded as a liability when
those  obligations  are  incurred,  with  the  amount of the liability initially
measured  at fair value. SFAS 143 will be effective for financial statements for
fiscal years beginning after June 15, 2002. The Company evaluated the retirement
of long-lived assets and determined the adoption of this statement will not have
a  material  impact  on  the Company's reported results of operations, financial
position  or  cash  flows.
     In  August  2001,  the FASB issued Statement No. 144 (SFAS 144), Accounting
for  the  Impairment  or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS
121 and applies to all long-lived assets (including discontinued operations) and
consequently  amends  Accounting  Principles  Board  Opinion  No.  30  (APB 30),
Reporting  Results  of Operations Reporting the Effects of Disposal of a Segment
of  a  Business.  SFAS  144  requires  that


                                       10
<PAGE>

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

long-lived assets that are to be disposed of by sale be measured at the lower of
book  value or fair value less cost to sell. SFAS 144 is effective for financial
statements  issued  for  fiscal  years  beginning  after  December 15, 2001, and
generally, its provisions are to be applied prospectively. The Company evaluated
the  disposal of long-lived assets and determined the adoption of this statement
will not have a material impact on the Company's reported results of operations,
financial  position  or  cash  flows.
     In  April  2002,  the  FASB  issued  Statement  No. 145, Rescission of FASB
Statements  No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.  This  Statement rescinds FASB Statement No. 4, Reporting Gains and
Losses  from  Extinguishment  of  Debt, and an amendment of that Statement, FASB
Statement  No.  64,  Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements.  This  Statement  amends  FASB  Statement  No.  13, Accounting for
Leases,  to  eliminate  an  inconsistency  between  the  required accounting for
sale-leaseback  transactions  and  the  required  accounting  for  certain lease
modifications  that  have  economic  effects  that are similar to sale-leaseback
transactions.  This  Statement  also  amends  other  existing  authoritative
pronouncements  to  make  various  technical  corrections,  clarify meanings, or
describe their applicability under changed conditions.  The Company did not have
any  transactions  applicable to the provisions of this statement in the current
fiscal  year.  Therefore,  the  Company does not anticipate the adoption of this
statement  to  have  a  material  impact  on  the  Company's reported results of
operations,  financial  position  or  cash  flows.
     In  June 2002, the FASB issued Statement No. 146 (SFAS 146), Accounting for
Costs  Associated  with  Exit  or  Disposal Activities. This Statement addresses
financial  accounting  and  reporting for costs associated with exit or disposal
activities  and  nullifies  Emerging  Issues  Task  Force (EITF) Issue No. 94-3,
Liability  Recognition for Certain Employee Termination Benefits and Other Costs
to  Exit  an  Activity.  This  Statement  requires  that  a liability for a cost
associated  with  an  exit  or  disposal  activity  be  recognized  and measured
initially  at  fair  value  only  when  the  liability is incurred.  SFAS 146 is
effective  for exit or disposal activities that are initiated after December 31,
2002,  and  the  Company does not anticipate the provisions of this statement to
have  a  material  impact  on  the  Company's  reported  results  of operations,
financial  positions,  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  costs,  cost  of  labor  and/or raw materials and industry
consolidation  trends  creating  fewer,  but  stronger,  competitors  capable of
sustaining  competitive  pricing  pressures.
     Management  expertise  and  experience  affects  its  overall  ability  to
anticipate  and  meet  consumer  preferences,  maintain  successful  marketing
programs,  continue  quality manufacturing output, keep a strong cost management
oversight,  and  achieve  stable  results  from  its  securitization activities.
     Lastly,  management  has little 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.

<TABLE>
<CAPTION>

                                                QUARTERLY RESULTS Unaudited
                                                         2002                                      2001
-------------------------------------------------------------------------------------------------------------------------
                                          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 (1)                            $ 296,370  $296,820  $269,908  $335,750  $ 300,807  $284,853  $272,070  $293,226
Operating income                           47,122    53,408    43,823    57,014     45,408    45,468    38,620    41,359
Income before income taxes                 42,120    53,408    46,381    55,137     45,982    43,565    37,752    42,052
Net income                                 26,520    33,708    29,181    34,737     28,982    27,465    23,752    26,452
Earnings per share   - Basic            $    0.19  $   0.25  $   0.21  $   0.25  $    0.21  $   0.20  $   0.17  $   0.19
                     - Diluted          $    0.19  $   0.24  $   0.21  $   0.25  $    0.21  $   0.20  $   0.17  $   0.19
Price range of stock - High             $   16.50  $  17.41  $  17.21  $  19.28  $   10.00  $  12.88  $  14.50  $  15.82
                     - Low              $   10.75  $  12.60  $  14.49  $  15.10  $    8.13  $   8.75  $  12.05  $  11.55
Dividends per common share                      -         -  $  0.064         -  $   0.016  $  0.016  $  0.016  $  0.016
-------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Revenues for 2002 reflect losses related to securitized mortgages of approximately $9,700,000, $10,000,000, $10,800,000, and
$9,700,000  for  the  quarters  ending  September  30, 2001, December 31, 2001, March 31, 2002, and June 30, 2002, respectively.
</TABLE>

                                       11
<PAGE>


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, 2002, and 2001, and the results
of  their  operations  and  their  cash flows for each of the three years in the
period  ended  June 30, 2002, in conformity with accounting principles generally
accepted  in  the  United States of America.  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 of America 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  our opinion.



PricewaterhouseCoopers  LLP
Knoxville,  Tennessee
August  7,  2002


                                     CONSOLIDATED  BALANCE  SHEETS


<TABLE>
<CAPTION>
                                                                                                    June 30,
(in thousands)                                                                                  2002        2001
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>         <C>
ASSETS
  Cash and cash equivalents                                                                 $   83,729  $   47,763
  Trade receivables                                                                              9,308      14,683
  Other receivables, principally installment contracts, net of reserves for credit losses
    of $18,876 in 2002 and $20,560 in 2001                                                     744,074     649,924
  Inventory finance receivables                                                                 43,859       7,300
  Residual interests in installment contract and mortgage receivables sold                     129,348     124,994
  Servicing assets from installment contract and mortgage receivables sold                      51,996      45,128
  Inventories, net                                                                             189,976     185,695
  Securities available-for-sale                                                                 25,729      30,956
  Restricted cash                                                                              126,155     111,060
  Property, plant and equipment, net                                                           310,764     309,438
  Deferred income taxes                                                                         19,793      22,710
  Other assets                                                                                  93,672     104,519
-------------------------------------------------------------------------------------------------------------------
Total assets                                                                                $1,828,403  $1,654,170
-------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable and accrued liabilities                                                  $  139,308  $  118,057
  Debt obligations                                                                              92,912     141,862
  Other liabilities                                                                            334,226     246,773
-------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                              566,446     506,692
-------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Notes 2, 6, 7, 11 & 16)
Shareholders' equity
  Preferred stock, $.10 par value, authorized 1,000 shares, none issued                              -           -
  Common stock, $.10 par value, authorized 200,000 shares, issued 138,002
    at June 30, 2002, and 137,991 at June 30, 2001                                              13,800      13,799
  Additional paid-in capital                                                                    44,193      43,593
  Retained earnings                                                                          1,196,146   1,081,137
  Accumulated other comprehensive income                                                         7,818       8,949
-------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                                   1,261,957   1,147,478
-------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                                  $1,828,403  $1,654,170
-------------------------------------------------------------------------------------------------------------------
<FN>
The  accompanying  notes  are  an  integral  part  of  these  consolidated  financial  statements.
</TABLE>

                      Clayton Homes, Inc. and Subsidiaries

                                       12
<PAGE>

                      CONSOLIDATED  STATEMENTS  OF  INCOME

<TABLE>
<CAPTION>
                                                 Year ended June 30,
(in thousands except per share data)       2002         2001         2000
----------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>
Revenues
  Net sales                            $  871,108   $  849,157   $  993,916
  Financial services                      252,499      227,916      228,642
  Rental and other income                  75,241       73,883       70,787
----------------------------------------------------------------------------
                                        1,198,848    1,150,956    1,293,345
----------------------------------------------------------------------------
Costs and expenses
  Cost of sales                           565,322      562,267      660,429
  Selling, general and administrative     406,655      374,628      384,067
  Financial services interest                 404          706        1,032
  Provision for credit losses              25,100       42,500       20,800
----------------------------------------------------------------------------
                                          997,481      980,101    1,066,328
----------------------------------------------------------------------------
Operating income                          201,367      170,855      227,017
  Interest expense                         (8,975)      (5,561)      (5,749)
  Interest revenue/ other                   4,654        4,057        7,357
----------------------------------------------------------------------------
Income before income taxes                197,046      169,351      228,625
Provision for income taxes                (72,900)     (62,700)     (84,600)
----------------------------------------------------------------------------
Net income                             $  124,146   $  106,651   $  144,025
----------------------------------------------------------------------------
Net income per common share
  Basic                                $     0.90   $     0.77   $     1.03
  Diluted                              $     0.89   $     0.77   $     1.03
Average shares outstanding
  Basic                                   137,726      137,702      139,474
  Diluted                                 138,872      138,340      139,815
----------------------------------------------------------------------------
<FN>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.
</TABLE>

                     Clayton Homes, Inc. and Subsidiaries

                                       13
<PAGE>

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                       Total                 Additional                    Other
                                                    Shareholders'    Common    Paid-in    Retained     Comprehensive
(in thousands except share data)                       Equity        Stock     Capital    Earnings     Income (Loss)
-----------------------------------------------------------------------------------------------------------------------
<S>                                                <C>              <C>       <C>        <C>          <C>
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 of $82
    Unrealized loss on securities available-for-sale
      during the year                                        (627)        -          -            -             (627)
    Realized  loss on securities available-for-sale
      included in net income                                  767         -          -            -              767
                                                   ---------------
      Comprehensive income                                144,165
  Purchase of 5,382,000 shares of common stock            (49,776)     (538)   (49,238)           -                -
  Dividends declared ($.064 per common share)              (8,885)        -          -       (8,885)               -
  Issuances related to stock incentive,
    employee benefit plans and other                        3,103        51      3,502         (450)               -
-----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2000                                1,036,375    13,750     39,500      983,806             (681)
Net income                                                106,651         -          -      106,651                -
  Other comprehensive income, net of tax of $5,656
    Unrealized gain on residual interests                   7,591         -          -            -            7,591
    Unrealized gain on securities available-for-sale
      during the year                                       1,732         -          -            -            1,732
    Realized  loss on securities available-for-sale
      included in net income                                  307         -          -            -              307
                                                   ---------------
      Comprehensive income                                116,281
  Purchase of 60,000 shares of common stock                  (482)       (6)      (476)           -                -
  Dividends declared ($.064 per common share)              (8,814)        -          -       (8,814)               -
  Issuances related to stock incentive,
    employee benefit plans and other                        4,118        55      4,569         (506)               -
-----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2001                                1,147,478    13,799     43,593    1,081,137            8,949
NET INCOME                                                124,146         -          -      124,146                -
  OTHER COMPREHENSIVE INCOME, NET OF TAX OF ($665)
    UNREALIZED LOSS ON RESIDUAL INTERESTS                  (2,134)        -          -            -           (2,134)
    UNREALIZED GAIN ON SECURITIES AVAILABLE-FOR-SALE
      DURING THE YEAR                                       1,350         -          -            -            1,350
    REALIZED GAIN ON SECURITIES AVAILABLE-FOR-SALE
      INCLUDED IN NET INCOME                                 (347)        -          -            -             (347)
                                                   ---------------
      COMPREHENSIVE INCOME                                123,015
  PURCHASE OF 827,400 SHARES OF COMMON STOCK               (9,637)      (83)    (9,554)           -                -
  DIVIDENDS PAID ($.064 PER COMMON SHARE)                  (8,800)        -          -       (8,800)               -
  ISSUANCES RELATED TO STOCK INCENTIVE,
  EMPLOYEE BENEFIT PLANS AND OTHER                          9,901        84     10,154         (337)               -
-----------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 2002                           $    1,261,957   $13,800   $ 44,193   $1,196,146   $        7,818
-----------------------------------------------------------------------------------------------------------------------
<FN>
The  accompanying  notes  are  an  integral  part  of  these  consolidated  financial  statements.
</TABLE>

                     Clayton Homes, Inc. and Subsidiaries

                                       14
<PAGE>


CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS

<TABLE>
<CAPTION>
                                                                                          Year ended June 30,
(in thousands)                                                                       2002        2001        2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>       <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                          $124,146   $ 106,651   $ 144,025
  Adjustments to reconcile net income to net cash provided
    by operating activities
    Depreciation and amortization                                                     19,161      20,600      20,422
    Amortization associated with sale of installment contract receivables             13,201      39,798      40,597
    Gain on sale of installment contract receivables                                 (39,875)    (25,593)    (37,341)
    Income accretion from residual interests in installment contract receivables     (75,543)          -           -
    Provision for credit losses                                                       25,100      42,500      20,800
    Realized loss (gain) on securities available-for-sale                               (550)        488       1,218
    Deferred income taxes                                                              3,582      (4,082)     (3,861)
    Decrease (increase) in other receivables, net                                    (54,848)      1,200       5,720
    Decrease (increase) in inventories                                                (4,281)     36,736     (37,987)
    Increase (decrease) in accounts payable, accrued
      liabilities, and other                                                          87,070     (54,074)    (59,490)
--------------------------------------------------------------------------------------------------------------------
  Cash provided by operations                                                         97,163     164,224      94,103
    Origination of installment contract receivables                                 (912,536)   (815,546)   (983,090)
    Proceeds from sales of originated installment contract receivables               871,619     660,802     886,040
    Principal collected on originated installment contract receivables                40,725      40,686      48,040
--------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                           96,971      50,166      45,093

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of installment contract receivables                                 (1,049,851)   (321,711)   (206,154)
  Proceeds from sales of acquired installment contract receivables                   944,253     225,654     229,412
  Principal collected on acquired installment contract receivables                    54,530      23,154      19,836
  Proceeds from sales of securities available-for-sale                                25,312      29,527      37,733
  Proceeds from residual interests in installment contract receivables                52,972           -           -
  Acquisition of property, plant and equipment                                       (20,487)    (24,559)    (34,398)
  Decrease (increase) in restricted cash                                             (15,095)    (14,156)      3,223
--------------------------------------------------------------------------------------------------------------------
  Net cash provided by (used in) investing activities                                 (8,366)    (82,091)     49,652

CASH FLOWS FROM FINANCING ACTIVITIES
  Dividends                                                                           (8,800)     (8,814)     (8,885)
  Net borrowings (repayment) on credit facilities                                    (45,800)     45,800           -
  Proceeds from debt obligations                                                           -           -       6,000
  Repayment of debt obligations                                                       (3,150)     (3,154)     (3,261)
  Increase (decrease) of cash in excess of bank balances                               4,847      (1,692)       (694)
  Issuance of stock for incentive plans and other                                      9,901       4,118       3,103
  Purchase of common stock                                                            (9,637)       (482)    (49,776)
--------------------------------------------------------------------------------------------------------------------
  Net cash provided by (used in) financing activities                                (52,639)     35,776     (53,513)
--------------------------------------------------------------------------------------------------------------------
  Net increase in cash and cash equivalents                                           35,966       3,851      41,232
  Cash and cash equivalents at beginning of year                                      47,763      43,912       2,680
--------------------------------------------------------------------------------------------------------------------
  Cash and cash equivalents at end of year                                           $83,729   $  47,763   $  43,912
--------------------------------------------------------------------------------------------------------------------
Supplemental disclosures for cash flow information
  Cash paid during the year for
    Interest                                                                         $ 9,379   $   6,267   $   6,781
    Income taxes                                                                    $ 60,421   $  76,723   $  97,903
--------------------------------------------------------------------------------------------------------------------
<FN>
The  accompanying  notes  are  an  integral  part  of  these  consolidated  financial  statements.
</TABLE>

                     Clayton Homes, Inc. and Subsidiaries

                                       15
<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 6,800 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  12, Business Segment Information, for further
details  of  intercompany  activity.

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  also  accrues  and
recognizes  revenue  for rental of homesites and homes based on the terms of the
resident's  lease  agreement  with  the  Company.
     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.

Installment  Contract  and  Mortgage  Receivables
     Installment contract and mortgage loan receivables (receivables) originated
or  purchased  by  VMF  are  generally sold into asset-backed security vehicles,
which,  in  turn, issue certificates to investors. VMF retains the servicing and
the  residual  interest  associated  with  these  instruments.
     Receivables held for sale are included in other receivables and are carried
at  the  lower  of  aggregate  cost  or  market.  Certain of the receivables are
purchased  in  bulk  at a discount. The purchase discounts are allocated between
discount  and  reserves  for  credit  losses and contingent liabilities based on
management's  assessment  of  risks  existing  in  the  portfolio. Discounts are
accreted  over the life of the related portfolio using the interest method after
giving  consideration  to anticipated prepayments. In the event such receivables
are  sold,  discounts  attributable  to  the  sold  receivables  are recognized.
Adjustments  between  the  reserves for credit losses and contingent liabilities
are periodically made to reflect changes in the estimated collectability of each
portfolio  purchased.
     Most of the receivables are with borrowers in the east, south and southwest
portions  of  the  United  States  and are collateralized by manufactured homes.
Interest  income  on  receivables  held, either for sale or as an investment, is
recognized in accordance with the terms of the underlying installment contracts.
For  receivables  sold  with  servicing  retained and receivables serviced under
servicing  agreements,  service  fee  income  is  recognized  as  the service is
performed.  Interest income on interest-only residual interests is recognized in
accordance with the consensus of the Emerging Issues Task Force in its Issue No.
99-20, Recognition  of  Interest Income and Impairment on Purchased and Retained
Beneficial  Interests  in Securitized Assets (EITF 99-20). Accordingly, interest
income  is recognized through an effective yield method, with the yield computed
prospectively  over  the life of the residual interests after adjustments in the
estimated  cash  flows  are  made  to  reflect  prepayments,  defaults and other
factors.
      The  Company  accrues  for obligations related to cash collections arising
from its own securitized receivables and receivables serviced under contract and
remits  these  collections to the paying agent or trustee in accordance with the
provisions  of  the  servicing  agreements.  See  Note  13,  Other  Assets  and
Liabilities.

Retained  Interests
     The  Company  follows  the provisions of SFAS 140, Accounting for Transfers
and  Servicing  of  Financial  Assets  and Extinguishments of Liabilities, which
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  estimated  fair  value  at  the  date  of sale.  The assets (liabilities)
created  are:  1)  an  interest-only security and a residual liability 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 excess of the contractual servicing fee over the cost of
servicing  the  contracts  plus a normal profit margin.  Gain (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.
     Servicing  assets  are  periodically  evaluated  on a transaction basis for
impairment  based on the fair value of those assets.  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  asset  or  liability is
amortized in proportion to and over the period of estimated net servicing income
or  net  servicing  loss.
     Interest-only  securities  represent the right to receive future cash flows
from  securitization  transactions.  Such  cash flows generally are equal to the
value  of  the  excess  of  the  principal  and  interest to be collected on the
underlying  receivables  collateralizing  each  transaction  over the sum of the
principal  and  interest to be paid to the holders of the securities sold net of
estimated  credit  losses  and  contractual  servicing fee.  The Company carries
interest-only  securities  at  estimated  fair  value.  As  market  quotes  are
generally  not  available, fair value is determined by discounting the projected
cash  flows over the expected remaining life of the securities outstanding, on a
transaction  basis,  using  current  prepayment, default, loss and interest rate
assumptions.  Estimates  for  prepayments,  defaults,  and losses are determined
based  on

                                       16
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

a  model  developed  by  the  Company  and  refined  to reflect Company-specific
experience  and  trends  as  well  as  current  market  conditions.  See Note 2,
Securitizations.
     The  residual  interests in the installment receivables sold are classified
as available-for-sale securities as defined by Statement of Financial Accounting
Standards  No.  115,  Accounting  for  Certain  Investments  in  Debt and Equity
Securities (SFAS 115). In accordance with EITF 99-20, declines in fair value are
to  be  considered  other  than  temporary  when:  (i) the carrying value of the
beneficial  interests  exceeds the fair value of such beneficial interests using
current assumptions, and (ii) the timing and/or extent of cash flows expected to
be  received  on  the  beneficial interests has adversely changed - as defined -
from  the  previous valuation date.  During the three year period ended June 30,
2002,  the Company did not determine any declines in fair value to be permanent.
     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  115.
Accordingly,  these  securities, aggregating at $20.1 million, are classified as
available-for-sale,  are stated at fair value, and can be reasonably expected to
mature  in  3-11  years.  The Company also has certain other securities that are
classified as available-for-sale and, accordingly, are 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,
determined  using  a  specific  identification  cost  basis,  are  reported as a
separate  component of accumulated other comprehensive income, net of tax, until
realized.  See  Note  4,  Securities  Available-For-Sale.

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.

Inventories
     New  homes  and  raw  materials are carried 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 recorded
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.  Those assets' estimated useful
lives  are  summarized  as  follows:  Land  and  improvements,  8  to  20 years;
Buildings,  7  to 20 years; and Furniture and all other equipment, 3 to 7 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.

Accounts  Payable
     Accounts  payable  includes  checks  written  in excess of bank balances of
$19,693,000  and  $14,846,000 at June 30, 2002, and June 30, 2001, respectively.

Reserves  for  Credit  Losses  and  Contingent  Liabilities
     Reserves  for  credit  losses  and  contingent  liabilities are established
related to receivables held, either for sale or investment. 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.
     The Company follows SFAS No. 133, Accounting for Derivative Instruments and
Hedging  Activities,  which was subsequently amended by SFAS No. 138, Accounting
for Certain Derivative Instruments and Certain Hedging Activities.  SFAS No. 133
establishes  accounting  and  reporting  standards  for  derivative  instruments
embedded  in  other  contracts  and  for  hedging  activities.  See Note 6, Debt
Obligations.

Restricted  Cash
     Restricted  cash  primarily  represents:  1)  trust  account  cash balances
required by certain VMF servicing agreements, and 2) insurance reserves required
by  ceding  companies.  The  majority  of the restricted cash balance represents
funds  held  in  accordance  with  certain  servicing  agreements  that  will be
disbursed  within  15  days  of  the  end  of  the  accounting  period.

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  temporary  losses  on  securities
available-for-sale,  as  described  under  Retained  Interests.

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.  Material  estimates may

                                       17
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

include,  but  are  not limited to, certain revenue and expense accruals, timing
and frequency of foreclosures, rates of recovery on foreclosures, the timing and
rate  of  voluntary prepayments and interest rates.  Actual results could differ
from  those  estimates.

 Other
     Certain reclassifications have been made to the 2000 and the 2001 financial
statements  to  conform  to  the  2002  presentation.

New  Accounting  Pronouncements
     In  June 2001, the FASB issued Statement No. 143 (SFAS 143), Accounting for
Asset Retirement Obligations. SFAS 143 requires that obligations associated with
the retirement of a tangible long-lived asset to be recorded as a liability when
those  obligations  are  incurred,  with  the  amount of the liability initially
measured  at fair value. SFAS 143 will be effective for financial statements for
fiscal years beginning after June 15, 2002. The Company evaluated the retirement
of long-lived assets and determined the adoption of this statement will not have
a  material  impact  on  the Company's reported results of operations, financial
position  or  cash  flows.
     In  August  2001,  the FASB issued Statement No. 144 (SFAS 144), Accounting
for  the  Impairment  or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS
121 and applies to all long-lived assets (including discontinued operations) and
consequently  amends  Accounting  Principles  Board  Opinion  No.  30  (APB 30),
Reporting  Results  of Operations Reporting the Effects of Disposal of a Segment
of  a  Business. SFAS 144 requires that long-lived assets to be sold be measured
at  the  lower  of  book  value  or  fair  value  less cost to sell. SFAS 144 is
effective  for  financial  statements  issued  for  fiscal years beginning after
December  15,  2001,  and  generally,  its  provisions  are  to  be  applied
prospectively.  The  Company  evaluated  the  disposal  of long-lived assets and
determined the adoption of this statement will not have a material impact on the
Company's  reported  results  of  operations,  financial position or cash flows.
     In April 2002, the FASB issued Statement No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and  Technical
Corrections.  This  Statement rescinds FASB Statement No. 4, Reporting Gains and
Losses  from  Extinguishment  of  Debt, and an amendment of that Statement, FASB
Statement  No.  64,  Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements.  This  Statement  amends  FASB  Statement  No.  13, Accounting for
Leases,  to  eliminate  an  inconsistency  between  the  required accounting for
sale-leaseback  transactions  and  the  required  accounting  for  certain lease
modifications  that  have  economic  effects  that are similar to sale-leaseback
transactions.  This  Statement  also  amends  other  existing  authoritative
pronouncements  to  make  various  technical  corrections,  clarify meanings, or
describe  their applicability under changed conditions. The Company did not have
any  transactions  applicable to the provisions of this statement in the current
fiscal  year,  and  the  adoption  of  this statement should not have a material
impact  on  the  Company's reported results of operations, financial position or
cash  flows.
     In  June 2002, the FASB issued Statement No. 146 (SFAS 146), Accounting for
Costs  Associated  with  Exit  or  Disposal Activities. This Statement addresses
financial  accounting  and  reporting for costs associated with exit or disposal
activities  and  nullifies  Emerging  Issues  Task  Force (EITF) Issue No. 94-3,
Liability  Recognition for Certain Employee Termination Benefits and Other Costs
to  Exit  an  Activity.  This  Statement  requires  that  a liability for a cost
associated  with  an  exit  or  disposal  activity  be  recognized  and measured
initially  at  fair  value  only  when  the  liability is incurred.  SFAS 146 is
effective  for exit or disposal activities that are initiated after December 31,
2002,  and the Company does not anticipate that the provisions of this statement
will  have  a  material  impact on the Company's reported results of operations,
financial  positions,  or  cash  flows.

NOTE  2  -  SECURITIZATIONS

     The Company engages in securitization activities in connection with certain
of its businesses.  Subsequent to the securitization of receivables, the Company
continues  to  maintain  account  relationships  and provide servicing for those
receivables  transferred.  As  Seller and Servicer, the Company retains residual
interests  that  are  created  as  a  result of its securitization activity. The
Company  estimates  the fair value of the retained interests by using discounted
expected future cash flows that incorporate key assumptions including prepayment
speed and credit losses.  The valuation of retained interests is affected by the
projected  level  and  timing of prepayments of principal and net credit losses.
Should  actual timing differ materially from the Company's projections, it could
have  a  material  effect  on the valuation of the Company's retained interests.
     There  were  four  securitization  transactions  completed during 2002, and
three  transactions  during  2001.  Each  transaction establishes a trust, which
issues  certificates  representing  ownership  in that trust. Although there are
some  differences,  structure  provisions are generally the same for each issue.
The  structures  call  for  time  tranched  senior  and  subordinated classes of
securities.  Additional credit support is provided by excess spread and, in some
cases,  over  collateralization.  The  Company  also  provides additional credit
support  by  placing  a  limited  guarantee  on  certain  of  the  subordinated
certificates.  See  Note  11,  Commitment  and  Contingencies.
     The Company accounts for the transactions as sales and records any gains or
losses  in  accordance with the provisions of SFAS 140.  Certain data pertaining
to  securitizations  completed  during 2002 and 2001, including the key economic
assumptions  used  to  measure  the  retained interests created, are as follows:

<TABLE>
<CAPTION>

($in millions)                                                     2002     2001
----------------------------------------------------------------------------------
<S>                                                               <C>      <C>
Number of transactions completed                                       4        3
Aggregate balance of certificates issued                          $1,825   $  886
Aggregate principal balance of contracts sold                     $1,875   $  896
Average balance of securitized contracts outstanding at June 30   $4,453   $3,702
Weighted average interest rate of contracts sold                   10.41%   11.31%
Aggregate amount of net gain (loss) recognized*                   $ 39.9   $ 25.6

ORIGINAL KEY ECONOMIC ASSUMPTIONS
Approximate assumed weighted average constant prepayment
  rate as a percentage of unpaid principal balance                 20.01%   18.25%
Weighted average life (in years)                                    4.52     4.66
Weighted average expected credit losses                             4.08%    2.48%
Weighted average residual cash flow discount rate**                11.44%   15.75%
----------------------------------------------------------------------------------
<FN>
*   Net  of  issuance  costs
**  Residual  liability  discounted  at  4.38%
----------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

     At  June 30, 2002, key economic assumptions used to determine the estimated
fair  value  of the retained interests in securitizations and the sensitivity of
the current fair value of residual cash flows to immediate 10 % and 20 % adverse
changes  in  those  assumptions  are  as  follows:


<TABLE>
<CAPTION>
                                                         2002             2001
-------------------------------------------------------------------------------------
<S>                                                 <C>              <C>
($in thousands)
Interest-Only (I/O) securities                            $ 93,673         $ 95,461
Servicing Assets                                            51,996           45,128
Residual liability                                         (52,161)               -
Retained corporate guarantee certificates                   20,136           25,217
                                                    ---------------  ---------------
Carrying value (fair value) of retained interests         $113,644         $165,806
                                                    ---------------  ---------------

($in millions)
Weighted average life (in years)                              4.27             4.49
Prepayment speed (constant prepayment rate)          10.7% - 24.10%   10.7% - 24.14%
  Impact of 10% adverse change                              ($11.7)           ($8.6)
  Impact of 20% adverse change                              ($22.6)          ($16.4)
Expected credit losses                                        2.43%            1.90%
  Impact of 10% adverse change                              ($21.6)          ($10.4)
  Impact of 20% adverse change                              ($43.5)          ($20.9)
Residual cash flow discount rate                             13.70%           15.75%
  Impact of 10% adverse change                               ($6.2)           ($6.7)
  Impact of 20% adverse change                              ($11.9)          ($12.8)
-------------------------------------------------------------------------------------
</TABLE>

     The  sensitivity  analysis is hypothetical and should be used with caution.
For  instance,  changes  in  fair value based on a 10 % variation in assumptions
generally  cannot  be  extrapolated  because  the  relationship of the change in
assumption  to  the  change  in  fair  value may not be linear. In addition, the
effect  of  a  variation  in  a  particular  assumption on the fair value of the
retained  interest  is calculated without changing any other assumption, when in
reality,  changes  in  any  one  factor may result in changes in another factor.
     The  following  table summarizes certain cash flow activity with respect to
securitizations  in  2002  and  2001:

<TABLE>
<CAPTION>

(in millions)                                 2002     2001
-------------------------------------------------------------
<S>                                          <C>       <C>
CASH FLOW ACTIVITY
Proceeds from new securitizations            $1,816    $ 887
Servicing fees received                      $   54    $  49
Cash flow received from retained interests   $   53    $  71
-------------------------------------------------------------
</TABLE>

     Total  contracts  serviced  at June 30, 2002, and 2001, including contracts
held  for  investment,  were  approximately  $5.0  billion  and  $4.2  billion,
respectively.  Managed  receivables  at  June  30, 2002, and related receivables
past  due  90  days  are  as  follows:

<TABLE>
<CAPTION>
                                     Principal Amount
                    Total Principal   90 Days or More
(in millions)           Amount         Past Due (a)
------------------------------------------------------
<S>                  <C>               <C>
Held in portfolio      $  783             $ 54
Securitized             4,193               60
------------------------------------------------------
                       $4,976             $114
------------------------------------------------------
<FN>
(a)  Includes bankruptcies and foreclosures.
</TABLE>

     Changes  related  to  the  servicing assets during the years ended June 30,
2002,  2001,  and  2000,  are  as  follows:

<TABLE>
<CAPTION>

(in thousands)                  2002       2001       2000
-------------------------------------------------------------
<S>                           <C>        <C>        <C>
Beginning balance             $ 45,128   $ 40,704   $ 27,024
Servicing assets recognized     19,605     15,994     23,781
Amortization                   (12,737)   (11,570)   (10,101)
-------------------------------------------------------------
                              $ 51,996   $ 45,128   $ 40,704
-------------------------------------------------------------
</TABLE>

NOTE  3  -  INVENTORIES
     Inventories  at  June  30,  2002,  and  2001,  are  as  follows:

<TABLE>
<CAPTION>
(in thousands)         2002      2001
---------------------------------------
<S>                  <C>       <C>
Manufactured homes
  New                $123,482  $114,874
  Previously-owned     49,644    54,171
Raw materials          16,850    16,650
---------------------------------------
                     $189,976  $185,695
---------------------------------------
</TABLE>

     If  the  first-in,  first-out (FIFO) method of inventory valuation had been
used,  inventories would have been higher by $20,500,000 and $20,282,000 at June
30,  2002,  and  2001,  respectively.

NOTE  4  -  SECURITIES  AVAILABLE-FOR-SALE
     Securities  available-for-sale  at June 30, 2002, and 2001, are as follows:

<TABLE>
<CAPTION>
                                                                         GROSS        GROSS     ESTIMATED
                                                                       UNREALIZED   UNREALIZED    FAIR
(in thousands)                                              COST         GAINS        LOSSES      VALUE
--------------------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>          <C>          <C>
Residual interests in installment contract receivables   $    85,012  $    13,850  $   (5,189)  $ 93,673
Retained securities held-for-sale                             20,691          147        (702)    20,136
Other securities held-for-sale                                 1,291        4,302           -      5,593
--------------------------------------------------------------------------------------------------------
  Total June 30, 2002                                    $   106,994  $    18,299  $   (5,891)  $119,402
--------------------------------------------------------------------------------------------------------
Residual interests in installment contract receivables   $    83,412  $    14,869  $   (2,820)  $ 95,461
Retained securities held-for-sale                             27,510            -      (2,293)    25,217
Other securities held-for-sale                                 1,291        4,448           -      5,739
--------------------------------------------------------------------------------------------------------
  Total June 30, 2001                                    $   112,213  $    19,317  $   (5,113)  $126,417
--------------------------------------------------------------------------------------------------------
</TABLE>

     The  unrealized gains and losses, net of tax, are recorded as an element of
accumulated  other  comprehensive  income. The residual interests of installment
contract  receivables  do  not include over collateralization of $35,675,000 and
$29,533,000  for the years ended June 30, 2002, and June 30, 2001, respectively.

NOTE  5  -  PROPERTY,  PLANT  AND  EQUIPMENT
     Property,  plant  and equipment at June 30, 2002, and 2001, are as follows:

<TABLE>
<CAPTION>

(in thousands)                         2002        2001
----------------------------------------------------------
<S>                                 <C>         <C>
Land and improvements               $ 226,953   $ 215,910
Buildings                             152,353     150,000
Furniture and all other equipment      53,008      50,422
----------------------------------------------------------
                                      432,314     416,332
Less: accumulated depreciation
   and amortization                  (121,550)   (106,894)
----------------------------------------------------------
                                    $ 310,764   $ 309,438
----------------------------------------------------------
</TABLE>


                                       19
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

     The  Company  entered  into  capital  lease arrangements in fiscal 2002 for
computer related equipment valued at $568,000.  The contractual obligation as of
June 30, 2002, was $532,000 with $291,000 due in fiscal 2003 and $241,000 due in
fiscal  2004.

NOTE  6  -  DEBT  OBLIGATIONS
     Debt  obligations  at  June  30, 2002, and 2001, are summarized as follows:

<TABLE>
<CAPTION>

(in thousands)                                   2002      2001
-----------------------------------------------------------------
<S>                                             <C>      <C>
Senior notes, 6.25%, due December 2003          $75,000  $ 75,000
Debt collateralized by installment contract
  receivables, average effective rate 10.12% at
  June 30, 2002, due through 2004                 2,176     5,229
Tax-exempt bonds, effective rate of 1.35% at
  June 30, 2002, due through 2030                15,230    15,230
Lines of credit                                       -    45,800
Other notes payable                                 506       603
-----------------------------------------------------------------
                                                $92,912  $141,862
-----------------------------------------------------------------
</TABLE>

     Annual maturities of debt as of June 30, 2002, are: 2003 - $2,097,000; 2004
-  $75,325,000;  2005  -  $134,000;  2006  -  $35,000;  $15,321,000  after 2007.
     In  December 1998, the Company issued $75 million of 6.25% Senior 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, are
guaranteed  by  all significant subsidiaries of the Company, and are governed by
various  financial  covenants  which  require  maintenance  of certain financial
ratios.
     On December 21, 2001, the Company acquired manufactured housing installment
contract  receivables  with  an  aggregate outstanding principal balance of $900
million.  In  conjunction  with  that  transaction, the Company sold receivables
through a committed one-year sales facility of $500 million, while retaining the
servicing rights and residual cash flows. This facility was not utilized at June
30,  2002, and was subsequently amended to $300 million of which $150 million is
committed. In addition, a committed one-year $150 million participation facility
is  also  available  to  facilitate  the  future  sale  of  manufactured housing
contracts.  This  participation  facility was not utilized at June 30, 2002. The
sales  facility's  pricing  is  based  on LIBOR rates; facility fees are payable
quarterly  on the committed portion of the facility. Utilization of any unfunded
commitment  is  permitted  as  long  as  criteria,  that  include credit rating,
financial  covenants,  and  performance  triggers, are met. This facility is not
collateralized.  The  Company's tax-exempt manufacturing facilities' bonds carry
no  sinking  fund  requirements  and  bear  interest at weekly adjustable rates.
     In  addition,  the  Company  has  committed and uncommitted lines of credit
amounting to $236 million with several banks, which bear interest based on LIBOR
rates.  These  lines  were  unused  at June 30, 2002. 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,  2002,  the  Company's interest rate swap agreements have an aggregate
notional  amount  of  $100  million.  The interest rates on the notional amounts
range  from  5.42%  to  5.62%.

NOTE  7  -  RESERVES  FOR  CREDIT  LOSSES  AND  CONTINGENT  LIABILITIES
     Analysis  of  the  reserves  for  credit  losses  on  installment  contract
receivables  and contingent liabilities for the years ended June 30, 2002, 2001,
and  2000,  is  as  follows:

<TABLE>
<CAPTION>

(in thousands)                                                                2002       2001       2000
--------------------------------------------------------------------------  ---------  ---------  ---------
<S>                                                                         <C>        <C>        <C>
Balance, beginning of year                                                  $ 30,536   $ 35,725   $ 44,275
  Additions to reserves                                                       25,100     42,500     20,800
  Charges, net of recoveries applicable to installment contract receivables
    Purchased                                                                (14,880)   (13,105)   (12,199)
    Other                                                                    (21,884)   (37,974)   (20,044)
  Reserves transferred  to unamortized discounts                                   -     (1,000)    (6,000)
  Reserves associated with receivables purchased                               5,668      4,390      8,893
--------------------------------------------------------------------------  ---------  ---------  ---------
Balance, end of year                                                        $ 24,540   $ 30,536   $ 35,725
--------------------------------------------------------------------------  ---------  ---------  ---------
</TABLE>

     The  reserves  for  credit  losses  are  netted against receivables and the
reserve  for  contingent  liabilities  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, 2002, and
2001,  the  outstanding  principal  balances  of  these  receivables  totaled
approximately  $68  million  and  $84  million,  respectively.  There  were  no
receivables  sold  with  recourse  in  2002,  2001  and  2000.

NOTE  8  -  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:

                                       20
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

<TABLE>
<CAPTION>
                                               Weighted              Weighted
                                                 Avg       Stock        Avg
                               Stock Option    Exercise   Options    Exercise
                  Shares        Price Range      Price   Exercisable   Price
--------------------------------------------------------------------------------
<S>            <C>            <C>               <C>     <C>        <C>
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
  Granted           875,825   $8.38 -  $ 9.31    $ 9.10
  Exercised        (278,401)  $2.16 -  $13.70    $ 5.88
  Canceled         (242,418)  $7.22 -  $15.75    $10.24
--------------------------------------------------------------------------------
Balance
June 30, 2001     5,460,462   $3.83 -  $15.75    $10.40  1,901,452    $ 9.84
  GRANTED         1,121,390   $8.19 -  $15.75    $13.82
  EXERCISED        (582,957)  $3.83 -  $13.70    $ 8.40
  CANCELED         (268,941)  $7.22 -  $15.75    $11.29
--------------------------------------------------------------------------------
BALANCE
JUNE 30, 2002     5,729,954   $7.22 -  $15.75    $11.23  1,835,540    $10.29
--------------------------------------------------------------------------------
</TABLE>

     Options  available  for  future  grant  at  June  30,  2002, and 2001, were
3,317,696  and  4,299,675,  respectively.  931  persons held options at June 30,
2002.
     The  following  table summarizes information about the plans' stock options
at  June 30, 2002, 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>
$ 7.22 - $10.32    2,421,085   4.9 years    $ 8.72       1,060,311    $ 8.49
$11.50 - $15.75    3,308,869   6.8 years    $13.06         775,229    $12.75
----------------------------------------------------------------------------
</TABLE>

     In  accordance  with  the  guidance  provided  by  SFAS 123, Accounting for
Stock-Based  Compensation  (SFAS  123),  the  Company  has  elected  to continue
following  the  intrinsic  value  based  method  as  prescribed  by  Accounting
Principles  Board  Opinion  No.  25  (APB  25),  Accounting  for Stock Issued to
Employees, and related interpretations in accounting for its stock option plans.
Under  the  intrinsic  value  based method, compensation cost is computed as the
excess,  if  any, of the quoted market price of the stock at grant date over the
amount  the  grantee  must pay to acquire the stock.  Because all options' plans
grant  at  market price, there is no intrinsic value in the stock options on the
grant  date,  therefore no compensation cost is recognized.   SFAS 123 describes
the  fair  value  method  of  measuring  and  recording  compensation cost as an
alternative  to  the intrinsic value based method.  Under the fair value method,
compensation cost is measured at the grant date based on the computed fair value
of the grant and is recognized over the vesting period of the options.  SFAS 123
also requires that companies using the intrinsic value based method must present
pro  forma  disclosure of net income and earnings per share as if the fair value
method  had  been applied.  The pro forma results do not purport to indicate the
effects  on  reported  net  income  for recognizing compensation expense that is
expected  to  occur  in  future  years.  If the options had been expensed in the
current  year,  the  pro  forma  results  would  have  been:

<TABLE>
<CAPTION>
                                                                June 30,
(in thousands except per share data)                   2002       2001      2000
----------------------------------------------------------------------------------
<S>                                                  <C>        <C>       <C>
Net income - as reported                             $ 124,146  $106,651  $144,025
Net income - pro forma                                 120,640   104,352   141,634
Net income per diluted common share - as reported        $0.89     $0.77     $1.03
Net income per diluted common share - pro forma           0.87      0.75      1.01
----------------------------------------------------------------------------------
</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 2000 to 2002: dividend yields ranging
from  0.39% to 0.76% with a weighted average yield of 0.62%; expected volatility
of  0.348;  risk-free interest rates ranging from 3.96% to 6.54% with a weighted
average  rate of 5.16%; and expected lives ranging from 6.47 to 10.00 years with
a  weighted  average  life  of 9.78 years.  The weighted average grant date fair
value  of  options granted in fiscal years 2002, 2001 and 2000 was $7.15, $4.53,
and  $4.66  per  share,  respectively.

NOTE  9  -  INCOME  TAXES
     The components of deferred tax assets and liabilities at June 30, 2002, and
2001,  are  as  follows:

<TABLE>
<CAPTION>

(in thousands)                                                 2002       2001
--------------------------------------------------------------------------------
<S>                                                          <C>        <C>
Reserves for credit losses and contingencies and discounts   $  6,981   $  8,388
Insurance reserves                                             12,086     10,850
Unearned insurance premiums                                    10,038      9,604
Residual interest in installment contract receivables          12,005     12,729
--------------------------------------------------------------------------------
  Total deferred tax assets                                    41,110     41,571
--------------------------------------------------------------------------------
Deferred costs                                                 (7,088)    (6,549)
Other comprehensive income                                     (4,591)    (5,256)
Other                                                          (9,638)    (7,056)
--------------------------------------------------------------------------------
  Total deferred tax liabilities                              (21,317)   (18,861)
--------------------------------------------------------------------------------
  Net deferred tax asset                                     $ 19,793   $ 22,710
--------------------------------------------------------------------------------
</TABLE>

     The provisions for income taxes for each of the years ending June 30, 2002,
2001,  and  2000  are  composed  of  the  following:

<TABLE>
<CAPTION>

(in thousands)                     2002      2001      2000
------------------------------------------------------------
<S>                               <C>      <C>       <C>
Current tax provisions
  Federal                         $65,232  $64,010   $82,654
  State                             4,086    2,772     5,807
------------------------------------------------------------
Total current                      69,318   66,782    88,461
Deferred tax provision (benefit)    3,582   (4,082)   (3,861)
------------------------------------------------------------
                                  $72,900  $62,700   $84,600
------------------------------------------------------------
</TABLE>

     At  June  30,  2002,  2001, and 2000, a deferred tax provision (benefit) of
($665,000),  $5,656,000,  and  $82,000,  respectively, was allocated directly to
shareholders'  equity  for  the unrealized gain (loss) on residual interests and
securities  available-for-sale.  The  provision  for income tax reflected in the
financial  statements  differs  from  income  taxes

                                       21
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

calculated  at  the  statutory  federal income tax rate of 35% in 2002, 2001 and
2000,  as  follows:

<TABLE>
<CAPTION>

(in thousands)                                2002     2001     2000
----------------------------------------------------------------------
<S>                                          <C>      <C>      <C>
Income taxes at the statutory rate           $68,966  $59,273  $80,019
State income taxes, net of federal benefit     2,656    1,802    3,775
Other, net                                     1,278    1,625      806
----------------------------------------------------------------------
                                             $72,900  $62,700  $84,600
----------------------------------------------------------------------
</TABLE>

NOTE  10  -  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. Company contributions accrued
and  paid  were  $4,708,000, $2,938,000, and $3,169,000 for the years ended June
30,  2002,  2001  and  2000,  respectively.

NOTE  11  -  COMMITMENTS  AND  CONTINGENCIES
     Certain  operating  properties  are  rented  under non-cancelable operating
leases  which  expire  at various dates through 2010. Total rental expense under
operating  leases  was $5,080,000 in 2002, $5,280,000 in 2001, and $5,340,000 in
2000.   Minimum  rental  commitments  under  non-cancelable  operating  leases
primarily  for  retail  centers,  in  effect  at  June  30,  2002,  were:

<TABLE>
<CAPTION>
<S>       <C>             <C>         <C>
2003       $3,620,000      2006          $1,199,000
2004       $2,648,000      2007          $  688,000
2005       $1,826,000      Thereafter    $  781,000
</TABLE>

     The following table summarizes the Company's other contingencies as of June
30,  2002:

<TABLE>
<CAPTION>

(in thousands)
Other Contingencies                       Amount of contingency expiration per period
-------------------------------------------------------------------------------------------------------
                              Total       FY03        FY04    FY05       FY06       FY07     Thereafter
-------------------------------------------------------------------------------------------------------
<S>                         <C>        <C>       <C>        <C>        <C>         <C>      <C>
Letters of credit           $127,203    $127,203    $    -    $    -    $     -    $     -    $     -
Guarantees                  $416,661    $    610    $2,154    $3,016    $26,539    $30,751    $353,591
Repurchase agreements       $ 59,600    $ 59,600    $    -    $    -    $     -    $     -    $     -
-------------------------------------------------------------------------------------------------------
</TABLE>

     At  June  30, 2002, the Company has letters of credit, primarily related to
insurance  reserves  and  performance  guarantees  related  to  asset-backed
securitizations  outstanding for which the Company provides a limited guarantee.
The  Company believes a significant loss from any such guarantee is remote.  See
Note  7  for  discussion  of  guarantees  on  installment  contract receivables.
     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.

NOTE  12  -  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.
     The  sales  of  units  shipped  to  the  Retail  sales  centers  from  the
Manufacturing  facilities  are  eliminated in the intersegment sales line of the
Revenues  section.  The  Eliminations/other  line  as represented below includes
other  intercompany  eliminations required in accordance with generally accepted
accounting  principles.  Information  concerning  operations by business segment
follows:

<TABLE>
<CAPTION>

(in thousands)                     2002         2001         2000
-----------------------------------------------------------------------
<S>                             <C>          <C>          <C>
Revenues
  Retail                          $  685,951   $  651,133   $  733,916
  Manufacturing                      536,006      496,154      624,586
  Financial Services                 206,061      184,253      188,365
  Communities                         92,170       89,699       92,492
  Intersegment sales                (321,340)    (270,283)    (346,014)
-----------------------------------------------------------------------
                                  $1,198,848   $1,150,956   $1,293,345
-----------------------------------------------------------------------
Operating income
  Retail                          $   32,177   $   28,712   $   53,623
  Manufacturing                       46,761       36,637       62,729
  Financial Services                 124,909       95,469      108,792
  Communities                         13,938       14,022       16,130
  Eliminations/other                 (16,418)      (3,985)     (14,257)
-----------------------------------------------------------------------
                                     201,367      170,855      227,017
Interest
  Interest expense                    (8,975)      (5,561)      (5,749)
  Interest revenue/other income        4,654        4,057        7,357
-----------------------------------------------------------------------
Income before taxes               $  197,046   $  169,351   $  228,625
-----------------------------------------------------------------------
Identifiable assets
  Retail                          $  271,421   $  255,793   $  287,705
  Manufacturing                       79,102       82,616      100,112
  Financial Services               1,210,460    1,080,416      902,913
  Communities                        191,147      191,802      185,784
  Eliminations/other                  76,273       43,543       29,864
-----------------------------------------------------------------------
                                  $1,828,403   $1,654,170   $1,506,378
-----------------------------------------------------------------------
Depreciation and amortization
  Retail                          $    4,753   $    6,161   $    5,639
  Manufacturing                        5,781        5,767        6,516
  Financial Services                     283          512          472
  Communities                          7,071        7,030        6,724
  Eliminations/other                   1,273        1,130        1,071
-----------------------------------------------------------------------
                                  $   19,161   $   20,600   $   20,422
-----------------------------------------------------------------------
Capital expenditures
  Retail                          $    5,797   $    5,211   $   11,535
  Manufacturing                        5,834        4,346        9,558
  Financial Services                      87           88          454
  Communities                          7,033       13,920       12,059
  Eliminations/other                   1,736          994          792
-----------------------------------------------------------------------
                                  $   20,487   $   24,559   $   34,398
-----------------------------------------------------------------------
</TABLE>

                                       22
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

NOTE  13  -  OTHER  ASSETS  AND  LIABILITIES
     At  June  30,  2002,  and  2001, other assets and liabilities consisted of:

<TABLE>
<CAPTION>

(in thousands)                                  2002      2001
----------------------------------------------------------------
<S>                                           <C>       <C>
Other assets
  Interest and other receivables              $ 48,233  $ 63,442
  Deferred insurance policy acquisition costs   20,529    19,716
  Prepaid expenses and other                    24,910    21,361
----------------------------------------------------------------
                                              $ 93,672  $104,519
----------------------------------------------------------------
Other liabilities
  Investors payable                           $131,720  $101,379
  Reserve for contingent liabilities             5,664     9,970
  Escrow deposits                               15,747    11,494
  Unearned insurance premiums                  100,712    96,555
  Residual liability                            52,161         -
  Other                                         28,222    27,375
----------------------------------------------------------------
                                              $334,226  $246,773
----------------------------------------------------------------
</TABLE>

NOTE  14  -  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.

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 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, 2002             June 30, 2001
                                                                  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           $200,028         $200,028     $158,823     $158,823
  Contracts held for sale and as collateral, including accrued
    interest receivable                                           718,265          716,400      634,451      632,569
  Residual interests in installment contract receivables          129,348          129,348      124,994      124,994
  Securities available-for-sale                                    25,729           25,729       30,956       30,956
Financial liabilities
  Senior notes, 6.25%                                              75,000           74,705       75,000       73,642
  Debt collateralized by installment contract receivables           2,176            2,462        5,229        5,645
  Tax exempt bonds                                                 15,230           15,230       15,230       15,230
  Residual liability                                               52,161           52,161            -            -
----------------------------------------------------------------------------------------------------------------------
</TABLE>


NOTE  15  -  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)       2002        2001        2000
--------------------------------------------------------------------------
<S>                                      <C>         <C>         <C>
Net income                               $124,146    $106,651    $144,025
Average shares outstanding
  Basic                                   137,726     137,702     139,474
  Add: common stock equivalents (1)         1,146         638         341
  Diluted                                 138,872     138,340     139,815
Earnings per share - Basic                  $0.90       $0.77       $1.03
                   - Diluted                $0.89       $0.77       $1.03
--------------------------------------------------------------------------
<FN>
(1)  Common  stock  equivalents are principally stock options.  Stock options to
purchase  69,000,  2,414,826  and 3,500,784 shares of common stock for the years
ended  June  30,  2002,  2001, and 2000, respectively,  were not included in the
computation  of  diluted  earnings  per share because their inclusion would have
been  antidilutive.
</TABLE>

                                       23
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS (continued)
----------------------------------------------

NOTE  16  -  RELATED  PARTY  TRANSACTIONS
     The Company maintains an agreement to purchase certain installment contract
receivables originated or acquired by a finance company (the affiliate) in which
the  Company  maintains  a  50%  ownership  interest.  Such  receivables  are
subsequently  securitized  along with receivables originated and acquired by the
Company.  The Company is servicer for such receivables and maintains a servicing
agreement  with  the  affiliate  to sub-service those receivables it sold to the
Company.  The  amount  paid to the affiliate in fiscal 2002 to sub-service those
receivables  was  $25,400,000.  The Company acquired approximately $190,000,000,
$110,000,000,  and  $92,000,000 in installment contract receivables and received
interest  and  other related fees totaling approximately $2,232,000, $1,880,000,
and  $1,618,000  during  fiscal  2002,  2001  and  2000,  respectively.
     On  December  21,  2001, the Company acquired approximately $900 million of
installment  contract  receivables.  The  affiliate  was  contracted  to service
approximately  $450  million  of these installment contract receivables. At June
30,  2002 and 2001, the affiliate was servicing installment contract receivables
totaling  approximately  $864,273,000  and  $444,495,000,  respectively.

                                       24
<PAGE>