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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
          For the fiscal year ended July 2, 2004 or
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
          For the transition period from ____ to _____

                         Commission file number 0-24210

                          AMERICAN HOMESTAR CORPORATION
             (Exact name of registrant as specified in its charter)

                   TEXAS                                  76-0070846
     (State or other jurisdiction of                    (IRS Employer
      incorporation or organization)                Identification Number)

         2450 SOUTH SHORE BOULEVARD, SUITE 300, LEAGUE CITY, TEXAS 77573
          (Address of principal executive offices, including zip code)

                                 (281) 334-9700
              (Registrant's telephone number, including area code)

        Securities Registered Pursuant to Section 12(b) of the Act: None

                Securities Registered Pursuant to Section 12(g):

                 Series C Common Stock, par value $.01 per share
                 Series M Common Stock, par value $.01 per share
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.   Yes  [X]   No  [_]

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K  [_].

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Exchange  Act  Rule  12b-2).
Yes  [_]   No  [X]

The estimated aggregate market value of voting and non-voting common equity held
by  non-affiliates  of  the registrant is not readily determinable as there have
been  no sales and no quoted bid and asked prices as of the last business day of
the  registrant's  most  recently  completed  second  fiscal  quarter.

Indicate  by  check  mark  whether  the  registrant  has filed all documents and
reports  required  to  be  filed  by  Section  12, 13 or 15(d) of the Securities
Exchange  Act  of 1934 subsequent to the distribution of securities under a plan
confirmed  by  a  court.  Yes  [X]  No  [_]

As  of  September  13,  2004 the registrant had 67,600 shares of Series M Common
Stock,  par value $.01 per share, and 9,978,834 shares of Series C Common Stock,
par  value  $.01  per  share,  outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions  of  the  Registrant's  definitive  proxy statement for the 2004 Annual
Meeting  of  Shareholders are incorporated into Part III of this Form 10-K which
will  be filed with the Securities and Exchange Commission on or about September
16,  2004.

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<PAGE>
<TABLE>
<CAPTION>
                                               TABLE OF CONTENTS

                                                    PART I


                                                                                                          PAGE
                                                                                                          ----
<S>       <C>                                                                                             <C>
Item 1..  Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1

Item 2..  Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    13

Item 3..  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     13

Item 4..  Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . .     13

                                                    PART II

Item 5..  Market for Registrant's Common Equity and Related Shareholder Matters . . . . . . . . . . . .     14

Item 6..  Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     15

Item 7..  Management's Discussion and Analysis of Financial Condition and
          Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     16

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . .    28

Item 8..  Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . .     28

Item 9..  Changes in and Disagreements with Accountants on Accounting and Financial
          Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    29

Item 9A.  Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     29

Item 9B.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     29

                                                    PART III

Item 10.  Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . .    30

Item 11.  Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    31

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related
          Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    31

Item 13.  Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . .    31

Item 14.  Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .    31

                                                    PART IV

Item 15.  Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . .    32
</TABLE>


<PAGE>
                                     PART I

     Unless otherwise indicated, "we," "us," "our," "American Homestar," "the
Company," "Management" and similar terms refer to American Homestar Corporation,
its subsidiaries and affiliates. Throughout this report, we use the term
"fiscal," as it applies to a year, to represent the fiscal year ending on the
Friday closest to June 30 of that year. There were 53 weeks in the fiscal year
ended July 2, 2004 and 52 weeks in the fiscal years ended June 27, 2003 and June
28, 2002.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This  Annual  Report  on  Form  10-K,  including  items discussed in "Risks
Relating to Our Business" in Item 1 and "Management's Discussion and Analysis of
Financial  Condition  and  Results of Operations" in Item 7, contains statements
that  relate to future plans, events, financial results or performance and which
are  defined  as  forward-looking  statements  as  defined  under  the  Private
Securities  Litigation  Reform  Act  of  1995. These statements are based on the
beliefs  of  the Company's management, as well as assumptions made by management
and  currently  available  information, that, if they never materialize or prove
incorrect,  could cause our results to differ materially from those expressed or
implied  by  such  forward-looking  statements.  In some cases, you can identify
forward-looking  statements  by  terminology  such  as  "may," "will," "should,"
"expects,"  intends,"  "plans,"  "anticipates,"  "believes,"  "estimates,"
"predicts,"  "potential"  or "continue," or the negative of these terms or other
comparable  terminology. All statements other than statements of historical fact
are  statements  that  could be deemed forward-looking statements, including any
projections  of earnings, revenue, synergies, accretion, margins, costs or other
financial  items;  any  statements  of  the  plans, strategies and objectives of
management  for  future  operations,  including the execution of integration and
restructuring  plans;  any statement concerning proposed new products, services,
developments  or  industry  rankings;  any  statements regarding future economic
conditions  or  performance;  any  statements  of  belief; and any statements of
assumptions  underlying  any  of the foregoing. These forward-looking statements
are only predictions, and may be inaccurate. Actual events or results may differ
materially.  In  evaluating  these  statements, you should specifically consider
various  risk  factors  included in this paragraph, as well as elsewhere in this
report and in other SEC filings. These risk factors include, without limitation,
ongoing  weakness  in  the  manufactured housing market, continued acceptance of
American Homestar's products, the availability of wholesale and retail financing
in  the  future  and  changes in overall retail inventory levels of manufactured
housing.  Although  management  believes  that the expectations reflected in the
forward-looking  statements  are reasonable, we cannot guarantee future results,
levels  of  activity, performance or achievements, and actual results, events or
performance  may differ materially. You should not place undue reliance on these
forward-looking  statements,  which  speak  only  as of the date of this report.
American  Homestar  undertakes  no obligation to publicly release the results of
any  revisions  to these forward-looking statements that may arise from changing
circumstances  or  unanticipated events.  ALL FORWARD-LOOKING STATEMENTS IN THIS
DOCUMENT  ARE  IDENTIFIED  BY AN ASTERISK (*) AT THE END OF EACH SUCH STATEMENT.

ITEM  1.  BUSINESS

GENERAL

     American  Homestar  Corporation  is  a  regional  vertically  integrated
manufactured  housing  company,  with  operations  in  manufacturing, retailing,
financing  and insurance. We were incorporated in Texas in July 1983. Currently,
we  operate  two  new  home  manufacturing  facilities  and  sell  homes through
dedicated  distribution  channels,  which  include  30  retail sales centers and
approximately  37  additional  manufactured housing communities where we display
homes  that  are  ready  for  sale and occupancy ("spec homes") and model homes,
although  we  do  not  have  an  on-site  sales office. We also distribute homes
through  approximately  77  independent retailers and developers located in five
states.  A  third  manufacturing  facility is currently used to refurbish lender
repossessions.

     Starting  in July 1994, we adopted a strategy of expanding into several new
regional markets (outside of our core Southwest base of operations) by acquiring
manufacturing  capacity  and growing our Company-operated store network (through
acquisition  and  new formation) to support our expanded regional presence. Many
of  our  competitors  were growing and expanding their own company store base in
the  same  regional  markets.  By  early  1999,  overall demand for manufactured
housing  had  peaked  after  several years of consistent and significant growth.


                                        1
<PAGE>
At  the  same  time,  total  manufacturing  and retail capacity had grown to the
extent  that it surpassed then current levels of end-user demand. The result was
lower  per-plant  and  per-store  volume  and  diminishing profitability for the
industry  and  the  Company.  Excess  finished  goods  inventory  and  excess
manufacturing  capacity  gave  rise  to  steadily  increasing  volume and margin
pressures.  With  mounting  losses  in  our  retail  operations  and diminishing
profitability  in our manufacturing operations, we adopted a plan to retract our
operations,  with  the  goal of discontinuing operations in all non-core markets
and  focusing  management and resources on what we defined as our core Southwest
market  (Texas  and  surrounding  states).

REORGANIZATION

     On  January  11, 2001, American Homestar Corporation and twenty-one (21) of
its  subsidiaries  filed  separate  voluntary petitions for reorganization under
Chapter  11 of the United States Bankruptcy Code in the United States Bankruptcy
Court  of the Southern District of Texas (the "Bankruptcy Court"). On August 14,
2001,  the  Bankruptcy  Court  confirmed  the  Third  Amended  Joint  Plan  of
Reorganization  of the Company and its subsidiaries (the "Plan"). All conditions
to  the  effectiveness  of  the  Plan  were met and the Plan became effective on
October  3,  2001 (the "Effective Date").  On June 22, 2004 the Bankruptcy Court
entered  an Order granting our Motion for Entry of Final Decrees, closing all 22
of  our  Chapter  11  cases.

     Under  the  terms  of  the  Plan,  all equity interests in the Company were
cancelled  as  of  the  Effective Date, and all holders of outstanding shares of
Company  stock,  which  had  previously traded under the symbols HSTR and HSTRQ,
lost  all  rights  to equity interests in and to the reorganized Company.  Under
the  Plan,  we  had  the authority to issue 15 million shares of Series C common
stock  and  were required to issue 10 million shares of Series C common stock to
our general unsecured creditors.  Pursuant to the exemption set forth in Section
1145  of  the  Bankruptcy  Code,  we  issued  shares of Series C common stock to
persons  holding  allowed  unsecured claims in the Company's bankruptcy case and
shares  of Series M common stock to management under an incentive program. As of
July  2,  2004,  we  had  issued  10  million shares of Series C common stock to
specific  shareholders  with  allowed  claims under the Plan.   We also have the
authority  to  issue  7.5 million shares of Series M common stock to management,
67,600  shares of which had been issued as of July 2, 2004, and 4,932,400 shares
underlie  options  authorized  under  the  Company's  2001  Management Incentive
Program.  As  of  July  2, 2004, the board of directors has approved and granted
options  to  purchase  4,874,900  shares of Series M common stock at an exercise
price  of $1.35 per share. These options vest seven years from the date of grant
and  may  vest  earlier  (up  to  20%  per  year)  if certain annual performance
criteria,  established  by the Board of Directors, are met.  As of July 2, 2004,
options  for  67,500  shares  of  Series  M  common stock had been exercised and
options  to  purchase  1,155,600 additional shares of Series M common stock were
vested.

     In  connection  with  its  reorganization, the Company adopted "Fresh-Start
Reporting"  under  American  Institute of Certified Public Accountants ("AICPA")
Statement  of  Position 90-7, "Financial Reporting by Entities in Reorganization
under  the  Bankruptcy Code," beginning September 29, 2001, which coincided with
the  end  of  the Company's first quarter of our 2002 fiscal year. We elected to
use  September  29,  2001,  our  quarter  end, as our Fresh-Start Reporting date
versus  the Effective Date of the Plan, October 3, 2001, as interim activity was
not  material  to  the  Consolidated Fresh-Start Balance Sheet. Accordingly, all
assets  and  liabilities  of  the  Company  were  restated  to  reflect  their
reorganization  value,  which  approximates  the  fair  value  of the assets and
liabilities  at  the  Effective  Date,  and  our capital structure was recast in
conformity  with  the  Plan. The adjustment to eliminate the accumulated deficit
totaled  $158  million,  of  which  $139 million was forgiveness of debt and $19
million  was  from  Fresh-Start  adjustments  and  is reported in the results of
operations  for  the  three  months  ended  September  29,  2001.

     The  results  of  operations  and  cash  flows  for  the three months ended
September  29,  2001  include  operations prior to our emergence from Chapter 11
proceedings,  which  do  not  take  into  account  the  effects  of  Fresh-Start
Reporting,  and  the  results  of  operations and cash flows for the nine months
ended  June 28, 2002 include operations subsequent to our emergence from Chapter
11  proceedings  and  reflect  the  on-going  effects  of  Fresh-Start Reporting
(American Homestar being referred to herein as "Predecessor Company" for periods
prior  to  September 29, 2001, and as "Successor Company" for periods subsequent
to  September  29,  2001). As a result, the results of operations and cash flows
for  the  twelve  months  ended June 27, 2003 and July 2, 2004 for the Successor
Company  are  not  necessarily  comparable to the results of operations and cash
flows  for the twelve months ended June 28, 2002, as the earlier period includes
three  months  of  Predecessor  Company  operations and cash flows, which do not


                                        2
<PAGE>
reflect  the  effects  of  Fresh-Start  Reporting,  and nine months of Successor
Company  operations  and cash flows, which do reflect the effects of Fresh-Start
Reporting.

     During  our reorganization, we did not prepare or file annual and quarterly
reports  with  the  Securities and Exchange Commission but instead filed Monthly
Operating Reports with the Bankruptcy Court, as required by the Bankruptcy Code.
We  also  filed  our  Monthly  Operating Reports and our confirmed Plan with the
Securities  and  Exchange  Commission. The reorganized Company has substantially
fewer  assets,  liabilities  and  operations  than  prior to our reorganization.
Additionally,  the  reorganized  Company has entirely new ownership, as the Plan
cancelled  all  classes  of equity securities issued by the Company prior to its
reorganization.

STRATEGY

     We  adopted  a vertical integration strategy in 1991 and used that business
model  as  we  grew  in  the  1990's.  In connection with our reorganization, we
significantly  downsized our operations and focused on our core Southwest market
where we are based and where we have historically had our most favorable overall
results.  We  currently  operate  30 retail sales centers along with a marketing
presence (displaying model homes and spec homes without an on-site sales office)
in  approximately  37  manufactured  housing  communities. We also operate three
manufacturing  plants,  two of which produce new homes and the third refurbishes
lender  repossessions. Additionally, we operate an insurance agency, which sells
homeowner's  insurance,  credit life insurance and extended warranty coverage to
our  customers.  We  also  have  a  50%  interest  in  a  finance company, which
specializes  in  providing  chattel and land/home financing to our customers. In
May  2002,  we  formed  a  mortgage  brokerage  venture,  of  which we own a 50%
interest,  to  allow  us  to  better  control  the  placement of our traditional
mortgage  business  and to realize a portion of the net profits relating to that
business.  In  fiscal year 2004, we ceased operations in this mortgage brokerage
venture  and  have  focused  on  relationships  with  a broader base of mortgage
lenders.  Most  recently, we have aligned with several subdivision developers to
meet  an  emerging  market segment in our core market region and to gain greater
market  share.  Management  believes  that  our  regional  vertical  integration
strategy,  which  derives  multiple  profit  sources  from  each retail sale and
provides  better  control  over critical functions, will allow the Company to be
more  successful,  over  time,  than  would  otherwise  be  the  case.*

INDUSTRY

     A  manufactured  home  is  a  detached  single-family  residence  that  is
constructed  in a controlled factory environment and transported to a home site.
Total  retail  sales  of  new  manufactured  homes  in  the  United  States were
approximately  $8.6  billion  in 2002.  From 1991 through 1998, the manufactured
housing industry experienced a significant increase in the number of homes sold.
Factory  shipments  increased  from  approximately  171,000  homes  in 1991 to a
cyclical  high  of approximately 373,000 homes in 1998. In 1999, 2000, 2001,2002
and  2003  factory  shipments  declined  to  approximately  349,000,  251,000,
193,000,168,000  and 131,000 respectively. In 2003, manufactured homes accounted
for  approximately  11%  of  all new single-family homes completed in the United
States,  compared  to approximately 23% in 1998 and 17% in 1991.  Because of the
lower  cost of construction for manufactured homes compared to site-built homes,
manufactured  housing  has  historically  served  as  one of the most affordable
alternatives  for the homebuyer.  The average retail price of a new manufactured
home  in  2003 was $33.99 per square foot, as compared to $79.21 per square foot
for  a  new  site-built home, excluding land costs.  In recent years, demand has
shifted  toward  larger,  multi-section  homes.

     Manufactured  homes  have  traditionally been an alternative for homebuyers
unable  or  unwilling  to  make larger down payments and higher monthly payments
associated  with  site-built  homes.  Changes  in the sub-prime lending markets,
beginning in late 1998, led to interest rate increases for home-only ("chattel")
financing  at  a  time  when traditional site-built mortgage interest rates were
generally  declining.  This  condition  (rising  chattel  financing  rates  and
declining  site-built  mortgage  rates)  has  negatively  affected  the relative
affordability  of  chattel-financed  manufactured  housing in the Company's core
market area where the costs of land and site-built construction are low compared
to  other  parts of the country.  There has also been a decline in the number of
industry  lenders who provide chattel financing for manufactured homes resulting
in higher credit standards being applied to prospective buyers and, therefore, a
decline  in the number of prospective customers who qualify for new manufactured
home  chattel  financing.


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<PAGE>
     In  addition  to  the  changes in the chattel-lending environment described
above,  in  January  2002  Texas  legislation  (the  77th Legislature's HB 1869)
required any land/home package to be closed and financed in the same manner as a
traditional  mortgage  financing for site-constructed housing. Chattel financing
could  be  used  only  in  cases where the home is sited on leased land. Chattel
financing  is  simpler  for  customers  to understand and faster to process than
traditional  mortgage  financing.  Effective  June  2003,  SB  521  amended  the
provisions  of  HB 1869 to allow, at the owner's election, for chattel financing
of a manufactured home that is sited on land owned by the home owner. We believe
that  the  recent  availability  of traditional mortgage financing (at generally
lower  interest  rates)  to  qualified  customers is also an important factor in
future  sales  levels  of  manufactured  homes.*

DISTRIBUTION  CHANNELS

     We  currently sell our products through various distribution channels. Most
of  our  homes  are  sold through company-operated retail sales centers, and, at
times,  through  on-site  subdivision  sales  teams.  We  also  sell  homes  to
independent  retailers  and,  most  recently,  to  community  developers. Retail
franchise  operations  were  discontinued  as  a  part  of  the  Company's
reorganization.  The  following  table  sets  forth,  for the periods indicated,
certain  data  for  (i)  shipments  of  homes  manufactured  by  the  Company to
Company-operated  retail  sales  centers  and subdivisions and (ii) shipments of
homes  manufactured  by  the  Company  to  independent  retail sales centers and
developers,  and  (iii)  the  current  number  of  Company-operated retail sales
centers:

<TABLE>
<CAPTION>
                                                THREE MONTHS    NINE MONTHS      YEAR        YEAR
                                                    ENDED          ENDED         ENDED       ENDED
                                                SEPTEMBER 29,    JUNE 28,      JUNE 27,     JULY 2,
                                                    2001           2002          2003        2004
                                               ---------------  -----------  -------------  -------
                                               PREDECESSOR CO.               SUCCESSOR CO.
                                               ---------------  -----------------------------------
<S>                                            <C>              <C>          <C>            <C>
Manufacturing shipments to Company-operated
  retail sales centers and subdivisions . . .              292        1,014            918      818
Manufacturing shipments to independent retail
  sales centers and community developers. . .               51          162            330      343
                                               ---------------  -----------  -------------  -------

    Total homes shipped . . . . . . . . . . .              343        1,176          1,248     1161
                                               ===============  ===========  =============  =======

Company-operated retail sales centers and
  community sales offices at end of period. .               41           41             34       30
</TABLE>

     We have a marketing presence (displaying model homes and spec homes without
an  on-site  sales office) in approximately 37 manufactured housing communities.
Each  Company-operated  retail  sales  center carries a broad selection of fully
furnished  and  professionally  decorated  model homes displayed in a landscaped
setting.  Our  professional  sales  staff receives continuous training on all of
our  products  and  services  and  is therefore able to provide customers with a
positive  buying  experience.  We  also  provide  merchandising  support and use
regional  print, radio and occasional television advertising to promote customer
awareness  and  enhance  the  Company's  quality  image.

     In  fiscal 2004, 79% of our new home retail sales were multi-section homes,
and  our  average  new  multi-section home retail sales price excluding land and
site  improvements  was  $65,071 compared to the industry average of $59,800. We
currently  operate  30  retail  centers,  of  which  27  are in Texas, one is in
Louisiana  and  two  are  in Oklahoma. In addition, we have a marketing presence
(displaying  model  homes  and spec homes without an on-site sales office) in 37
manufactured  housing  communities.


                                        4
<PAGE>
     The  following  table  sets  forth,  for  the  periods  indicated,  certain
information  relating  to  homes  sold by Company-operated retail sales centers:

<TABLE>
<CAPTION>
                                                  THREE MONTHS      NINE MONTHS     YEAR       YEAR
                                                      ENDED            ENDED        ENDED      ENDED
                                                  SEPTEMBER29,       JUNE 28,      JUNE 27    JULY 2,
                                                      2001             2002         2003       2004
                                                -----------------  -------------  ---------  ---------
                                                 PREDECESSOR CO.                SUCCESSOR CO.
                                                -----------------  -----------------------------------
<S>                                             <C>                <C>            <C>        <C>
Average new home sales price (excluding land).  $         51,403   $     53,584   $ 55,230   $ 57,850
Homes sold:
   New homes . . . . . . . . . . . . . . . . .               373          1,001      1,010        924
   Previously-owned homes. . . . . . . . . . .               149            555        564        375
Percentage of new homes sold:
   Single-section. . . . . . . . . . . . . . .                34%            28%        21%        23%
   Multi-section . . . . . . . . . . . . . . .                66%            72%        79%        77%
Percentage of new homes sold manufactured by:
   Company . . . . . . . . . . . . . . . . . .               100%            99%        99%       100%
   Independent manufacturers . . . . . . . . .                 0%             1%         1%         -%
</TABLE>

     Independent  Retailers. Independent retailers typically operate one or more
retail sales centers similar to those we may operate. They carry several display
models as well as some homes in inventory. We currently sell to approximately 27
independent  retailers  located in Colorado, Louisiana, New Mexico, Oklahoma and
Texas.  We  believe  our relations with existing independent retailers are good.
We  have no written agreements with our independent retailers, except for volume
purchase  discounts  agreements, and either party may terminate the relationship
at  any  time.  We generally do not provide inventory financing arrangements for
independent  retailer  purchases,  nor  do  we  consign  homes.  Consistent with
customary  business  practice  in  the  manufactured  housing  industry, we have
entered into repurchase agreements with various financial institutions and other
credit  sources  under  which  we  have  agreed, under certain circumstances, to
repurchase  manufactured  homes  sold  to  independent dealers in the event of a
default  by  such independent dealer on their obligation to such credit sources.
Under  the  terms  of  such  repurchase  agreements,  we  agree  to  repurchase
manufactured homes at declining prices over the periods of the agreements (which
generally  range  from  18  to  24  months).  While  repurchase activity is very
sporadic  and  cyclical, the Company provides for anticipated repurchase losses.
At  July  2,  2004,  the  Company  was  at risk to repurchase approximately $1.2
million  of  manufactured  homes  and  has provided for estimated net repurchase
losses  of  approximately  $0.1  million.

     Developers.  We  have  expanded our distribution base through relationships
with  several  builder-developers  that  are developing individual scattered lot
projects  as well as larger manufactured housing rental and owner communities in
our market areas. We currently sell to approximately 50 developers with projects
in  Texas,  Oklahoma,  Louisiana and New Mexico.  In most of these instances, we
have  written  agreements  with the developer that define the number of homes we
will  supply,  the  specifications and prices of the homes and the nature of our
relationship.  In  some  cases  we provide up to five model homes and assist, to
varying  degrees,  in  the  marketing  and  sale  of the homes and homesites. We
believe this will be a growing segment of our business in the future and believe
that  our  successful  track  record may provide us a competitive advantage over
others  in  our  industry.*

     In  March,  2003,  the  Company invested $50 for a 49.5% interest in Humble
Springs,  LTD,  a  land  development  joint  venture.  The other partners in the
venture  are  a  land development company and certain of its affiliates, none of
which  are  affiliated  with  the  Company.  This  venture  will  develop  a new
manufactured  housing  subdivision  for homes to be rented and sold.* We will be
the exclusive supplier of homes to the project and will share in the development
profits.*

     In  January  2004,  the  Company  invested  $50 for a 49.5% interest in 114
Starwood  Development,  LTD. ("Starwood"), a land development joint venture. The
other  partners in the venture are a land development company and certain of its
affiliates,  none  of  which are affiliated with the Company.  This venture will
develop a new manufactured housing subdivision for homes to be rented and sold.*
We  will be the exclusive supplier of homes to the project and will share in the
development  profits.*


                                        5
<PAGE>
MANUFACTURING

     We  manufacture  a  broad  selection  of  HUD-code  homes  ranging  from
traditional,  lower-priced  homes  to  distinctive, higher-priced homes. We also
produce  modular  (Industrialized Housing and Building or IHB-code) homes in our
core  market  area.  HUD-code  homes  conform to national construction standards
promulgated  and  regulated  by  HUD.  Modular  homes  conform  to  a  different
construction  standard  (IHB-code) and are generally less zoning restricted than
HUD-code  homes.  We  believe  that  the  addition of modular homes broadens our
potential  markets  and  will  allow  us  to sell more homes, over time, than by
limiting our production and marketing strictly to HUD-code homes.* Our new homes
retail  from  $14,700  to  $118,198,  excluding  land  costs.

     The  following  table  sets  forth  the  total HUD code homes and the total
modular  (IHB-code)  homes  manufactured  by  our  two Texas new-home facilities
currently  operating:

                       THREE MONTHS   NINE MONTHS    YEAR     YEAR
                           ENDED         ENDED      ENDED     ENDED
                       SEPTEMBER 29,   JUNE 28,    JUNE 27,  JULY 2,
                           2001          2002        2003     2004
                       -------------  -----------  --------  -------

 HUD Code . . . . . .            340        1,163     1,164      928
 IHB (Modular) - Code              3           13        84      233
                       -------------  -----------  --------  -------

    Total . . . . . .            343        1,176     1,248    1,161
                       =============  ===========  ========  =======

     By  providing  such  a broad selection of homes, we believe we can meet the
financial  and  aesthetic  requirements  of  the  full  range of retail buyers.*
Additionally,  we  believe  we  offer  high  quality homes that incorporate more
innovative  architectural designs and features than are typically offered by our
competitors.*  Over  the  past  several  years,  as the demand for multi-section
homes  has  increased,  we  have  significantly  increased  our  production  of
multi-section  homes  to 70% of total homes manufactured in fiscal 2004, up from
50%  in  fiscal  1994.  In  fiscal 2004, 20% of the total homes we produced were
modular  (IHB-code)  compared  to  7%  in  fiscal  2003.

     The Company's manufacturing facilities generally operate on a one shift per
day,  five-day  per  week  basis.  At  July  2, 2004, our two operating new-home
production  facilities  had  the capacity to produce approximately 20 floors per
day,  and  the  production rate was approximately eight floors per day (capacity
figures  are  estimates  of management). A floor is a single-section home or one
section of a multi-section home.  The following table sets forth the total homes
and  floors  manufactured  by  the  Company  for  the  periods  indicated:

                            THREE MONTHS    NINE  MONTHS    YEAR     YEAR
                                ENDED          ENDED       ENDED     ENDED
                            SEPTEMBER29,      JUNE 28,    JUNE 27,  JULY 2,
                                2001            2002        2003     2004
                           ---------------  ------------  --------  -------
                           PREDECESSOR CO.              SUCCESSOR CO.
                           ---------------  -------------------------------
Homes manufactured:
   Single-section . . . .              111           306       173      354
   Multi-section. . . . .              232           870     1,075      807
                           ---------------  ------------  --------  -------
Total homes manufactured.              343         1,176     1,248    1,161
                           ===============  ============  ========  =======

Total floors manufactured              575         2,046     2,323    1,970
                           ===============  ============  ========  =======

     The  principal  materials  used  in  the  construction of our homes include
lumber  and  lumber  products,  gypsum  wallboard,  steel, aluminum, fiberglass,
carpet,  vinyl,  fasteners,  appliances,  electrical  items,  windows and doors.
Generally,  the  materials  used  in  the  manufacture  of our homes are readily
available  at  competitive prices from a wide variety of suppliers. Accordingly,
we  do  not  believe  the  loss  of  any  single  supplier would have a material


                                        6
<PAGE>
adverse  effect  on  our  business.* Our direct or variable costs of operations,
however,  can  be  significantly  affected  by  the market-wide availability and
pricing  of  raw  materials.

     We  generally  build  a  home  only  after  an  order has been received and
acceptable  payment  arrangements  have  been  made. In accordance with industry
practice,  dealers  can  cancel  orders  prior to the commencement of production
without  penalty,  and accordingly, the Company does not consider its backlog of
orders  from  independent dealers to be firm orders.  Because of the seasonality
of  the  market  for manufactured homes, the level of backlog at any time is not
necessarily  indicative  of the expected level of future orders. Our backlog, as
well  as level of new orders from independent dealers, generally declines during
the  winter  months  (mid-November  through  February).

FINANCING

     In  June  2000, we invested $2.4 million to provide one-half of the initial
capitalization  of  Homestar  21,  LLC ("Homestar 21"), which is a joint venture
that  is  owned  50%  by the Company and 50% by 21st Mortgage Corporation ("21st
Mortgage"),  a company not affiliated with us. Homestar 21 is a finance company,
specializing  in providing chattel and non-conforming land/home financing to our
customers.  We  accounted  for  our  investment  in Homestar 21 using the equity
method.

     On March 23, 2004, the Company and Homestar 21 entered into an agreement to
dissolve  Homestar 21.  As a liquidating dividend, the Company and 21st Mortgage
each  received  approximately  $3.2  million,  which  was slightly more than the
carrying  value  of its investment.  Concurrent with the dissolution of Homestar
21,  the  Company  entered  into an Origination Fee Agreement with 21st Mortgage
which  provides  the Company the opportunity to earn origination fees on certain
new  loans  in the future as the Company meets quarterly sales targets as to the
sale  of  21st  Mortgage  repossessions.

     In  May  2002,  we  invested  $31,500  to  provide  one-half of the initial
capitalization of American Homestar Mortgage, L.P. ("Former Homestar Mortgage"),
which  was  a  joint  venture  that  was  owned  50%  by us and 50% by Home Loan
Corporation  ("Home  Loan"),  a  company not affiliated with us. Former Homestar
Mortgage  operated  as  a  mortgage  broker/loan  originator  for  ultimate loan
placement  with  Home  Loan  and  other mortgage banks. In July 2003 the Company
reached  agreement  with  Home Loan to cease operations effective July 31, 2003.
The  Former  Homestar  Mortgage has ceased operations and liquidated all assets.
The  Company  accounts  for its investment in Former Homestar Mortgage using the
equity  method.

     In  April  2004,  we  invested  $31,500  to provide one-half of the initial
capitalization  of  a  new  entity also named American Homestar Mortgage, L.L.P.
("Homestar  Mortgage"), which is a joint venture that is owned 50% by us and 50%
by  Community Home Loan LLC, a company not affiliated with us. Homestar Mortgage
is  currently  in  the  process  of obtaining licenses necessary to operate as a
mortgage  broker/loan  originator.  The  Company  accounts for its investment in
Homestar  Mortgage  using  the  equity  method.

     To  ensure  that  we remain fully competitive and have access to all retail
financing products available, we maintain relationships with several independent
mortgage  and  chattel  lenders.  These relationships are intended to spread the
business  more  evenly  among  various  lenders  and to ensure that financing is
available  from  several  sources. We believe that these relationships afford us
access  to  a broader range of competitive financing programs that, in turn, may
result  in  increased  retail  sales.*

INSURANCE

     Through  our  wholly  owned  subsidiary,  Western  Insurance  Agency,  Inc.
("Western"),  we  offer  our  retail  customers a variety of insurance products,
including  property  and  casualty insurance, credit life insurance and extended
service  contracts.  We act as the agent and earn commissions and profit-sharing
bonuses,  in  favorable loss years, from insurance written for the purchasers of
manufactured  homes  we  sell.

          Through  our  wholly  owned  subsidiary,  Lifestar  Reinsurance  Ltd.
("Lifestar")  we underwrote the risk on credit life policies we sold. We elected
to  cease  operations  in  Lifestar  in  May  2002  because  the  life insurance
underwriting  activity was producing steadily declining returns. Instead we will
share  in  favorable  loss  experience,  if  any,  as  to  the


                                        7
<PAGE>
life  insurance  as  well  as  the  property  and casualty insurance through new
agreements  between  the  insurers  and  Western.

TRANSPORTATION

     On  February  25,  2004,  the  Company sold its 51% interest in Roadmasters
Transport  Company,  Inc.  ("Roadmasters") to Roadmasters for approximately $1.4
million,  which  was  slightly  more  than  the  carrying value of the Company's
investment in Roadmasters.  Concurrent with the sale, the Company entered into a
three-year  transportation  agreement  with  Roadmasters under which Roadmasters
agreed  to  continue  to  provide  transportation  services  to  the  Company at
competitive  rates.  In  past  years  Roadmasters  financial  statements  were
consolidated with ours, however their balances are now reflected as discontinued
operations.

COMPETITION

     The  manufactured  housing industry is highly competitive. Competition with
other housing manufacturers on both the manufacturing and retail levels is based
primarily on price, product features, reputation for service and quality, retail
inventory, merchandising, and the terms and availability of wholesale and retail
customer  financing. Growth in manufacturing capacity during the 1990s increased
competition  at  both  the  manufacturing and retail levels and resulted in both
regional  and  national  competitors increasing their presence in the markets in
which  we  compete.  Over the past three years, the number of retail centers and
active  manufacturing facilities in Texas has declined significantly in response
to  continued  market  softness.  Management  believes  that  the  competitive
landscape has stabilized and will remain relatively constant for the foreseeable
future.*  Very  recent  announcements  indicated that some additional (currently
idle)  production  capacity  may  be  reactivated.*  While  capacity  growth  is
expected  to be very moderate over the next year, we believe that overproduction
of  manufactured  housing in these regions could lead to greater competition and
result  in  decreased margins, which could have a material adverse effect on our
results  of  operations.*

     In  addition,  manufactured  homes compete with new and existing site-built
homes,  apartments,  townhouses and condominiums. The supply of such housing has
increased  in  recent  years with the increased availability of construction and
low  cost  mortgage  financing,  which  continues  to  reduce  the  demand  for
manufactured  homes.  Manufactured homes also compete with resales of homes that
have  been  repossessed by financial institutions as a result of credit defaults
by  dealers  or  customers.  Repossession  rates  for  manufactured  homes  have
increased  in recent years and there can be no assurance that repossession rates
will  not continue to increase, thereby adversely affecting our sales volume and
profit  margins.  The  manufactured  housing industry, as well as the site-built
housing  development  industry,  has  experienced consolidation in recent years,
which  could  result  in  the  emergence of competitors, including developers of
site-built  homes that have greater financial resources than we have. We are not
able to estimate the total number of retail and manufacturing competitors in our
marketing  area.

GOVERNMENT  REGULATION

     The  Company's manufactured homes are subject to a number of federal, state
and  local laws and codes. Construction of manufactured homes is governed by the
National  Manufactured  Home  Construction  and Safety Standards Act of 1974, as
amended  (the  "MHCSS  Act"),  and  the  regulations issued by the Department of
Housing  and  Urban Development ("HUD") thereunder, that establish comprehensive
national  construction  standards.  These  regulations  cover  all  aspects  of
manufactured  home  construction,  including  structural integrity, fire safety,
wind loads, thermal protection and ventilation. Our manufacturing facilities and
the  plans  and specifications of our manufactured homes have been approved by a
HUD-designated  inspection  agency.  Our  homes  are  regularly  inspected by an
independent  HUD-approved  inspector for compliance during construction. Failure
to  comply  with applicable HUD regulations could expose us to a wide variety of
sanctions,  including  mandated  closings  of  our  manufacturing facilities. We
believe  our  manufactured  homes  meet or surpass all present HUD requirements.

     We  are  also subject to the Texas Industrialized Housing and Buildings Act
("IHB"), which regulates the construction of modular buildings, both residential
and  commercial,  and  modular  components in the State of Texas. We believe our
modular  homes  meet  or  surpass  all  IHB  requirements.


                                        8
<PAGE>
     Manufactured,  modular  and  site-built  homes are all typically built with
particleboard,  paneling  and  other  products that contain various formaldehyde
resins.  HUD  regulates  the  allowable concentration of formaldehyde in certain
products  used  in  manufactured  homes  and  requires  warnings  to  purchasers
concerning  formaldehyde-associated  risks.  Certain  components of manufactured
homes  are  subject  to  regulation  by  the Consumer Products Safety Commission
("CPSC"),  which  is empowered to ban the use of component materials believed to
be  hazardous  to  health  and  to require the manufacturer to repair defects in
components of its homes. The CPSC, the Environmental Protection Agency and other
governmental  agencies  currently  are re-evaluating the allowable standards for
formaldehyde emissions. We use materials in our manufactured homes that meet the
current  HUD  standards for formaldehyde emissions and believe that we otherwise
comply  with  HUD  and  other applicable government regulations in this regard.*

     The manufacturing operations of the Company are subject to the requirements
of  the  Occupational  Safety and Health Act ("OSHA") and comparable state laws.
Regulations  promulgated under OSHA by the Department of Labor require employers
of  persons  in  manufacturing industries, including independent contractors, to
implement work practices, medical surveillance systems, and personnel protection
programs  in  order  to protect employees from workplace hazards and exposure to
hazardous  chemicals. Regulations such as OSHA's Process Safety Management (PSM)
standard  require  facility  owners  and  their contractors to ensure that their
employees  are  adequately trained regarding safe work practices and informed of
known  potential  hazards.  We  have  established  comprehensive  programs  for
complying  with  health and safety regulations. While we believe that we operate
our  manufacturing  facilities  safely  and prudently, there can be no assurance
that  accidents will not occur or that we will not incur liability in connection
with  the  operation  of  our  business.*

     Our operations are also subject to the provisions of the Texas Manufactured
Housing  Act,  the  Consumer Credit Act and the Truth-in-Lending Act, as well as
local  zoning  and  housing regulations. A number of states require manufactured
home  producers  and  retailers  to  post  bonds  to  ensure the satisfaction of
consumer  warranty  claims. A number of states have adopted procedures governing
the installation of manufactured homes. Utility connections are subject to state
and  local  regulation  and  must be complied with by the dealer or other person
installing  the  home.  The operations of Roadmasters and Western are subject to
regulation  by  various  federal,  state  and  local  authorities.

     A  variety  of  laws  affect  the  financing  of  manufactured homes by the
Company.  The  Truth-in-Lending  Act  and  Regulation  Z  promulgated thereunder
require  written disclosure of information relating to such financing, including
the  amount  of the annual percentage rate and financing charge. The Fair Credit
Act  also  requires certain disclosures to potential customers concerning credit
information used as a basis to deny credit. The Federal Equal Credit Opportunity
Act  and Regulation B promulgated thereunder prohibit discrimination against any
credit  applicant  based  on  certain  specified  grounds.  The  Federal  Trade
Commission  has  adopted or proposed various trade regulation rules dealing with
unfair credit and collection practices and the preservation of consumers' claims
and  defenses.  The Federal Trade Commission regulations also require disclosure
of  a  manufactured home's insulation specification. Installment sales contracts
eligible  for  inclusion in the Government National Mortgage Association Program
are  subject  to  the  credit  underwriting  requirements of the Federal Housing
Administration.  The  Real  Estate  Settlement  Procedures  Act and Regulation X
promulgated thereunder require certain disclosures regarding the nature and cost
of  real  estate  settlements. A variety of state laws also regulate the form of
installment  sales  contracts  and the allowable charges pursuant to installment
sales  contracts.  The  sale  of insurance products by the Company is subject to
various state insurance laws and regulations, which govern allowable charges and
other  insurance  products.

     We are also subject to the provisions of the Fair Debt Collection Practices
Act, which regulates the manner in which we collect payments on installment sale
contracts,  and  the Magnuson-Moss Warranty-Federal Trade Commission Improvement
Act, which regulates the descriptions of warranties on products.  Our collection
activities  and  warranties  are  also  subject  to  state laws and regulations.

     The  transportation  of  manufactured  homes  on  highways  is  subject  to
regulation by various federal, state and local authorities. Such regulations may
prescribe  size  and  road  use  limitations  and impose lower than normal speed
limits  and  various  other  requirements.

     Our  operations  are  also  subject  to  federal,  state and local laws and
regulations  relating  to  the  generation,  storage,  handling,  emission,
transportation and discharge of materials into the environment. We are not aware
of  any  pending


                                        9
<PAGE>
litigation  to which we are a party or any claims that may result in significant
contingent  liabilities  related  to  environmental  pollution  or  asbestos. In
addition,  we  do  not  believe we will be required under existing environmental
laws  and  enforcement  policies  to  expend  amounts  that will have a material
adverse  effect  on  our  results  of  operations  or  financial  condition.*

     A  significant  portion of the Company's manufacturing labor force includes
persons  who are not U.S. citizens, and we are subject to the regulations of the
Immigration  and  Naturalization  Service  ("INS").  We adhere to the procedures
required  for  the prevention of the hiring of illegal aliens, but, nonetheless,
we have from time to time experienced losses of a portion of our labor force due
to  INS  investigative  operations  and  these losses have temporarily decreased
production  at  the  affected  manufacturing  facilities.

     In  general,  legislation  is  proposed from time to time that, if enacted,
would  significantly  affect the regulatory climate for manufactured and modular
homes.  At  present,  it  is  not  possible  to predict what, if any, changes or
legislation  may  be  adopted  or the effect any such changes or legislation may
have on the Company or the manufactured housing industry as a whole.

EMPLOYEES

     At  July 2, 2004, we employed 568 people, compared to 672 at June 27, 2003.
Of  our  568  employees, 182 were employed in retail, 347 in manufacturing, 9 in
insurance,  and 30 in executive and administrative positions. We do not have any
collective  bargaining agreements and have not experienced any work stoppages as
a  result  of  labor  disputes.  We consider our employee relations to be good.*

     A  significant  portion  of  the total potential compensation of senior and
middle  management of the Company is derived from incentive bonuses based on the
operating income of the operating unit for which such management is responsible,
as  well  as  the attainment of Company-wide performance objectives. Many of our
managers  are  participants  in the option grants of Series M common stock under
the Company's 2001 Management Incentive Program established by the Plan.

RISKS  RELATING  TO  OUR  BUSINESS

     If  any  of  the  following  risks  actually  occur  or  worsen, they could
materially  adversely  affect  our  business,  financial  condition or operating
results.*

EXCESS INVENTORIES AMONG RETAILERS COULD CONTINUE TO HAVE A NEGATIVE EFFECT ON
OUR SALES VOLUME AND PROFIT MARGINS.

     The level of manufactured housing inventories and the existence of
repossessed homes in the market can have a significant impact on manufacturing
shipments and operating results, as evidenced in the manufactured housing
industry during the past three years. There is currently an imbalance among the
number of retail dealers, industry retail inventories and consumer demand for
manufactured homes. Considering current retail demand, it is estimated that
there may be as much as a six-month supply of manufactured homes in retailer
inventories industry-wide. Competition from resales of repossessed homes has
further extended this inventory adjustment period as more liberal lending
standards in the past resulted in loans to less-creditworthy customers. Many of
these customers are defaulting on these loans and the lenders are repossessing
the customers' homes and reselling them at prices often significantly below the
retail price of a new home, thereby increasing competition for manufacturers of
new homes. If these trends were to continue, or if retail demand were to
significantly weaken further, the excess inventory supply could result in
intense price competition and pressure on profit margins within the industry and
could have an adverse impact on our operating results.*

THE CURRENT DOWNTURN IN THE MANUFACTURED HOUSING INDUSTRY HAS ADVERSELY AFFECTED
OUR OPERATING RESULTS. IF THE CURRENT DOWNTURN DOES NOT REVERSE, OUR SALES COULD
DECLINE  AND  WE  MAY  SUFFER  FURTHER  LOSSES.

     Since  mid-1999 the manufactured housing industry has experienced declining
manufacturing  shipments,  tightened  consumer  credit  standards, excess retail
locations  and  inventory,  reduced  availability  of  consumer


                                       10
<PAGE>
financing,  high  levels  of  homes  repossessed from consumers, higher interest
rates  on  manufactured  housing  loans relative to those generally available to
site-built  home buyers, a reduced number of consumer and floorplan lenders, and
reduced  floorplan  availability  in the industry. According to the Manufactured
Housing  Institute,  factory  shipments  declined  from  a  cyclical  high  of
approximately  373,000 homes in 1998 to 131,000 in 2003. If the current downturn
in  the industry continues, our sales could continue to decline and we may incur
further  losses  including  additional  closures  or  consolidations of existing
operations.*

OUR BUSINESS IS SEASONAL AND CYCLICAL AND THIS LEADS TO FLUCTUATIONS IN SALES,
PRODUCTION AND OPERATING RESULTS.

     We  have  experienced,  and  expect  to continue to experience, significant
variability  in  sales,  production and net income as a result of seasonality in
our  business.  Demand  in  the manufactured housing industry generally declines
during  the  winter season, while sales and profits are generally highest during
the  spring  and  summer  months.  The  industry  in  which we operate is highly
cyclical  and  there  can  be  substantial  fluctuations  in  our  manufacturing
shipments,  retail  sales  and  operating results, and the results for any prior
period  may  not be indicative of results for any future period. We are affected
by  interest  rates  for  manufactured  homes  and  for  sited  homes  and  the
availability  of financing for manufactured housing products, both of which have
had an adverse effect on our business in the past two fiscal years. Unemployment
trends,  consumer  confidence,  general  economic  conditions  and  effects  on
consumers  from  terrorist  actions  may  also  affect  our  business.*

TIGHTENED  CREDIT  STANDARDS,  CURTAILED  LENDING  ACTIVITY, TIGHTENED TERMS AND
INCREASED  INTEREST  RATES  AMONG  CONSUMER  LENDERS  HAVE REDUCED OUR SALES. IF
CONSUMER  FINANCING  WERE  TO  BECOME  FURTHER CURTAILED OR UNAVAILABLE WE COULD
EXPERIENCE  FURTHER  SALES  DECLINES.*

     The  consumers  who  buy  our  homes  have  historically  secured  consumer
financing  from  third  party  lenders.  The  availability,  terms  and costs of
consumer  financing  depend  on the lending practices of financial institutions,
governmental  regulations  and  economic  and other conditions, all of which are
beyond our control. A consumer seeking to finance the purchase of a manufactured
home  without  land will generally pay a higher interest rate and have a shorter
loan  term than a consumer seeking to finance the purchase of land and the home.
Manufactured  home  consumer financing is at times more difficult to obtain than
financing  for site-built homes. Since 1999, consumer lenders have tightened the
credit  underwriting  standards  and loan terms and increased interest rates for
loans  to  purchase  manufactured  homes, which have reduced lending volumes and
caused  our  sales  to  decline.  Conseco, Inc. has historically been one of the
largest  consumer lenders in the manufactured housing industry. In October 2002,
Conseco  discontinued  providing financing for the manufactured housing industry
and  filed  a  petition for bankruptcy in December 2002. The poor performance of
portfolios  of  manufactured  housing consumer loans in recent years has made it
more  difficult  for  industry  consumer  finance  companies to obtain long-term
capital in the asset-backed securitization market. As a result, consumer finance
companies  have  curtailed  their  industry  lending  and  some  have exited the
manufactured  housing  market. If consumer financing for manufactured homes were
to  become  further curtailed or unavailable, we would likely experience further
retail  and  manufacturing  sales  declines.*

REDUCED  NUMBER  OF  FLOORPLAN  LENDERS AND REDUCED AMOUNT OF CREDIT ALLOWED MAY
AFFECT  OUR  ABILITY  TO  INVENTORY  NEW  HOMES.*

     During  2002  the  industry's  two  largest  floorplan lenders, Conseco and
Deutsche  Financial  Services who recently provided as much as approximately 45%
of  the industry's wholesale financing, exited the business thereby reducing the
amount  of  credit  available  to  industry  retailers.  The remaining floorplan
lenders  or  new floorplan lenders entering the industry may change the terms of
their  loans  as  compared to the traditional terms of industry floorplan loans.
These  changes  could  include  higher  interest  rates,  smaller advance rates,
earlier  or more significant principal payments or longer repurchase periods for
the  manufacturers.  Although  our  floorplan  debt  levels  are very low today,
further reductions in the availability of floorplan lending may adversely affect
our  ability  to  carry  a  sufficient  inventory  level  of  new  homes.*

THE  MANUFACTURED  HOUSING  INDUSTRY  IS  HIGHLY  COMPETITIVE  AND  SOME  OF OUR
COMPETITORS  HAVE  STRONGER  BALANCE  SHEETS  AND  CASH FLOW, AS WELL AS GREATER
ACCESS  TO  CAPITAL,  THAN WE DO. THE RELATIVE STRENGTH OF OUR COMPETITORS COULD
RESULT  IN  DECREASED  SALES  VOLUME  AND  EARNINGS  FOR  US, WHICH COULD HAVE A
MATERIAL  ADVERSE  EFFECT  ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.


                                       11
<PAGE>
     The  manufactured  housing industry is highly competitive. Competition with
other housing manufacturers on both the manufacturing and retail levels is based
primarily on price, product features, reputation for service and quality, retail
inventory, merchandising, and the terms and availability of wholesale and retail
customer  financing. Growth in manufacturing capacity during the 1990s increased
competition  at  both  the  manufacturing and retail levels and resulted in both
regional  and  national  competitors increasing their presence in the markets in
which  we compete. Overproduction of manufactured housing in these regions could
lead  to greater competition and result in decreased margins, which could have a
material  adverse effect on our results of operations. In addition, manufactured
homes compete with new and existing site-built homes, apartments, townhouses and
condominiums.  The supply of such housing has increased in recent years with the
increased  availability  of  construction financing, and this reduces the demand
for  manufactured  homes.  Manufactured homes also compete with resales of homes
that  have  been  repossessed  by  financial  institutions as a result of credit
defaults by dealers or customers. Repossession rates for manufactured homes have
increased  in recent years and there can be no assurance that repossession rates
will  not continue to increase, thereby adversely affecting our sales volume and
profit  margins.  The  manufactured  housing industry, as well as the site-built
housing  development  industry,  has  experienced consolidation in recent years,
which  could  result  in  the  emergence of competitors, including developers of
site-built  homes that have greater financial resources than we have. This could
adversely  affect  our  business.*

OUR  MARKET  IS  THE  SOUTHWEST  REGION  WITH  OUR PRIMARY FOCUS IN TEXAS, AND A
DECLINE  IN  DEMAND IN THAT AREA COULD HAVE A MATERIAL NEGATIVE EFFECT ON SALES.

     A disproportionate decrease in general economic conditions in the Southwest
region  of  the  U.S.  versus  other  areas of the country would have a material
adverse  effect  on  our  results  of  operations.*

THE  LOSS  OF  OUR  EXECUTIVE  OFFICERS  COULD REDUCE OUR ABILITY TO ACHIEVE OUR
BUSINESS  PLAN  AND  COULD  HAVE  A  MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND
OPERATING  RESULTS.

     American  Homestar  is  dependent  on  the  services and performance of our
executive  officers,  including our President and Chief Executive Officer, Finis
F.  Teeter.  The  loss  of the services of one or more of our executive officers
could  have  a  material  adverse  effect upon the Company's business, financial
condition and results of operations, at least in the short term.*

FAILURE TO COMPLY WITH LAWS OR REGULATIONS OR THE PASSAGE IN THE FUTURE OF NEW
AND MORE STRINGENT LAWS MAY ADVERSELY AFFECT US.

     We  are  subject  to  a  variety  of  federal,  state  and  local  laws and
regulations  affecting  the  production,  sale,  financing  and  insuring  of
manufactured housing. Our failure to comply with such laws and regulations could
expose  us  to  a  wide  variety  of  sanctions,  including  closing one or more
manufacturing  or  sales facilities. Governmental bodies have regulatory matters
affecting  our  operations  under  continuous  review and we cannot predict what
effect  (if any) additional laws and regulations promulgated by HUD or the State
of  Texas  would  have  on  us  or the manufactured housing industry. Failure to
comply with laws or regulations applicable to or affecting us, or the passage in
the  future  of  new  and more stringent laws affecting us, may adversely affect
us.*

FAILURE  TO MEET THE REQUIREMENTS OF THE SARBANES-OXLEY ACT OF 2002 COULD AFFECT
THE  ABILITY  OF  OUR  AUDITORS  TO  ISSUE  AN  UNQUALIFIED  REPORT

     The  Sarbanes-Oxley  Act  of  2002  has  introduced  many  new requirements
applicable  to  the  Company  regarding  corporate  governance  and  financial
reporting. Among many other requirements is the requirement under Section 404 of
the  Act  for  management  to  report  on  our  internal controls over financial
reporting  and  for  our  registered public accountant to attest to this report.
Currently,  we do not meet the requirements for consideration as an "accelerated
filer,"  and  therefore  are  not  required to comply with Section 404 until the
fiscal year ending June 30, 2006. However, the "accelerated filer" determination
is  made  at  the  end  of the second quarter of each year, and the price of the
Company's  common  stock  is  the  primary factor in determining whether we will
become  an accelerated filer. We expect to devote substantial time and may incur
substantial  costs  during  fiscal  2005  to ensure compliance.* There can be no
assurance  that we will be successful in complying with Section 404.* Failure to
do  so  could  result  in  penalties  and  additional  expenditures  to meet the
requirements  and  could  affect  the  ability  of  our  auditors  to  issue  an
unqualified  report.*


                                       12
<PAGE>
OTHER  INFORMATION  ABOUT  THE  COMPANY

     The  Company  is  subject  to  the reporting requirements of the Securities
Exchange  Act  of  1934.  During  our reorganization, we did not prepare or file
annual  or quarterly reports with the Securities and Exchange Commission ("SEC")
but  instead  filed  Monthly  Operating  Reports  with  the Bankruptcy Court, as
required  by  the  Bankruptcy Code. We also filed our Monthly Operating Reports,
our confirmed Plan and our audited Fresh-Start balance sheet with the SEC. Since
completing  our  reorganization  we have filed all annual, quarterly and interim
reports  with  the  SEC.  The public may read and copy any materials the Company
files  with  the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington D.C. 20549, and may obtain information on the operation of the Public
Reference  Room  by  calling the SEC at 1-800-SEC-0330. The SEC also maintains a
website,  http://www/sec.gov,  that  contains  reports,  proxy  and  information
statements,  and  other  information  regarding issuers that file electronically
with  the  SEC.  Our  website  is  www.americanhomestar.com.

ITEM  2.  PROPERTIES

     At  July 2, 2004, we operated two new home manufacturing facilities and one
refurbishment  facility  in Texas, 30 retail sales centers and an administrative
office.  Twenty  of the retail sales centers, the refurbishment facility and the
administrative  office  are leased under various noncancellable operating leases
with  varying  monthly payments and varying expiration dates through March 2007.
We  own the remaining ten retail sales centers. Our retail sales centers consist
of  tracts  of  land,  ranging  generally  from  2.5  to  7.0  acres,  on  which
manufactured  homes  are  displayed,  each  with  a  sales  office  containing
approximately  2,000  square  feet of office space. Our retail sales centers are
located in three states as follows: Louisiana (1), Oklahoma (2), and Texas (27).
We  believe that all facilities are adequately maintained and suitable for their
present  use.*

     We  own  both  of  our  new  home  manufacturing  facilities and those idle
manufacturing  facilities  classified  as assets held for sale and substantially
all  of  our  manufacturing equipment, fixtures, furniture and office equipment.
The following table sets forth certain information with respect to the Company's
manufacturing  facilities:

<TABLE>
<CAPTION>
                                              DATE OPENED OR   BUILDING
              LOCATION                           ACQUIRED     SQUARE FEET
<S>                                           <C>             <C>
Active facilities:
  Owned:
  Fort Worth, Texas. . . . . . . . . . . . .  June 1985           137,000
  Lancaster, Texas . . . . . . . . . . . . .  December 1992        86,600

  Leased:
  Burleson, Texas(1) . . . . . . . . . . . .  May 1993             94,500

Idle facilities reported as assets held for
   sale:
  Brilliant, Alabama . . . . . . . . . . . .  June 1997           127,500
  Lynn, Alabama. . . . . . . . . . . . . . .  June 1997           150,000
  Pendleton, Oregon (2). . . . . . . . . . .  September 1996      146,000
</TABLE>

(1)  Facility sold during fiscal 2004 and currently leased
(2)  Leased to a third party for the year ended July 2, 2004. Sold to this party
     subsequent  to  July  2,  2004.

ITEM  3.  LEGAL  PROCEEDINGS

     On  the Effective Date of the Plan, most pending claims against the Company
were  discharged  and an injunction was issued barring any future claims arising
from  events  that occurred prior to October 3, 2001.  Since the Effective Date,
there  have  been  no  other pending legal proceedings except for normal routine
litigation  incidental to the business which management believes is not material
to  our  business  or  financial  condition.*

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


                                       13
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

     Under  the  terms  of  the  Plan,  all equity interests in the Company were
cancelled  as  of  October  3,  2001,  the  Effective  Date,  and all holders of
outstanding  shares of Company stock, which had previously traded, on the NASDAQ
National  Market,  under  the  symbols HSTR and HSTRQ, lost all rights to equity
interests  in  and  to the reorganized Company.  Under the Plan, the Company has
the  authority  to  issue 15 million shares of new Series C common stock and was
required  to  issue  10  million  shares of Series C common stock to its general
unsecured  creditors.  As  of  July 2, 2004, there were 10,000,000 shares of the
Company's  Series  C  common  stock issued and outstanding.  As of September 13,
2004,  there  were  245  holders of record and 9,978,634 shares of the Company's
Series C common stock outstanding.  Subsequent to year end, the Company acquired
20,233  shares of Series C common stock previously issued to a general unsecured
creditor as part of the resolution of a dispute. These shares are currently held
in  treasury.  In  addition,  another  Series C shareholder voluntarily returned
1,133  shares  to  the  Company.  These  shares  were  canceled.

     The  Company also has the authority to issue 7.5 million shares of Series M
common  stock to management, 67,600 shares of which were issued and outstanding,
to  three  holders  of  record  as  of  September  13,  2004.

     All  shares  of  the  Company's new common stock were restricted as to sale
until  April  2004.  Since  April  2004  the Company's new common stock has been
quoted  on  the  Over-the-Counter  "pink sheets" exchange under the symbol AHMS,
however  there  were no sales of Series C or Series M common stock during fiscal
year 2004. As of September 13, 2004, there have been very sporadic offers to buy
or  sell  and  only one trade of the Company's stock. On September 13, 2004, the
closing  bid  price  was  $0.50  and  there  was  no  ask  price.

DIVIDEND POLICY

     American Homestar has not paid any cash dividends on its common stock since
it  became a public reporting company.  The Board of Directors intends to retain
any  future  earnings generated by the Company to support and finance operations
and  does  not  intend  to  pay  cash  dividends  on  our  common  stock for the
foreseeable  future.* The payment of cash dividends in the future will be at the
discretion  of  the  Board  and will depend upon a number of factors such as the
Company's  earnings  levels,  capital  requirements, financial condition and any
other  factors  deemed relevant by the Board of Directors.* The terms of certain
indebtedness of the Company may or may not restrict the Company's ability to pay
dividends  or  make  additional  distributions.

SALES  OF  UNREGISTERED  SECURITIES

     We  have  had  no  sales  of  unregistered securities during the last three
years.


                                       14
<PAGE>
Item  6.  Selected  Financial  Data

     The  financial information set forth under Statement of Operations Data and
Balance  Sheet  Data  for  the  fiscal  year  ended June 30, 2000, and as of the
reporting  period  then  ended,  was  derived  from  the  Consolidated Financial
Statements  of  the  Company  (and its subsidiaries), which financial statements
have  been  audited  by  KPMG LLP, independent certified public accountants. The
financial  information  set forth under Statement of Operations Data and Balance
Sheet  Data  for  the  fiscal  period  ended  June  29, 2001, three months ended
September  29,  2001,  nine  months ended June 28, 2002 and fiscal periods ended
June  27,  2003 and July 2, 2004 have been audited by UHY Mann Frankfort Stein &
Lipp  CPAs,  L.L.P.,  (formerly  Mann  Frankfort  Stein  &  Lipp  CPAs,  L.L.P.)
independent  certified public accountants. The Consolidated Financial Statements
for  the three month period ended September 29, 2001 and nine month period ended
June  28,  2002  and  fiscal  periods  ended  June 27, 2003 and July 2, 2004 are
included  elsewhere  herein.  The  selected  financial  data  should  be read in
conjunction  with  "Management's  Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and related
notes  thereto  included  in  Item  8 of this Form 10-K (in thousands except per
share  data).

<TABLE>
<CAPTION>
                                                    YEARS       ENDED      THREE MONTHS     NINE MONTHS      YEAR       YEAR
                                                  ----------------------       ENDED           ENDED        ENDED       ENDED
                                                   JUNE 30,    JUNE 29,    SEPTEMBER 29,      JUNE 28      JUNE 27,    JULY 2,
                                                     2000        2001          2001            2002          2003       2004
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
                                                            PREDECESSOR CO.                              SUCCESSOR CO.
                                                  ---------------------------------------  ------------------------------------
<S>                                               <C>         <C>         <C>              <C>            <C>         <C>
                                                                       (in thousands, except per share amounts)
STATEMENT OF OPERATIONS DATA:
Revenues:
  Net sales. . . . . . . . . . . . . . . . . . .  $ 532,634   $ 217,375   $       21,107   $     64,234   $  70,810   $ 69,108
  Other revenues . . . . . . . . . . . . . . . .     31,132      16,580            2,745          6,441       3,212      3,301
                                                  ----------  ----------  ---------------  -------------  ----------  ---------

      Total revenues . . . . . . . . . . . . . .    563,766     233,955           23,852         70,675      74,022     72,409
                                                  ----------  ----------  ---------------  -------------  ----------  ---------

Costs and expenses:
  Cost of sales. . . . . . . . . . . . . . . . .    437,948     168,389           14,074         41,876      48,481     49,779
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
     Gross Profit. . . . . . . . . . . . . . . .    125,818      65,566            9,778         28,799      25,541     22,630

  Selling, general and administrative. . . . . .    152,668      76,493           10,013         27,606      27,623     26,488
  (Gain) Loss on sale of assets. . . . . . . . .         --          --               --             --          --     (1,327)
  Restructuring charges, goodwill and
    asset impairments(1). . . . . . . . . . . .      22,097     139,216               --             --          --         --
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
      Operating income (loss). . . . . . . . . .    (48,947)   (150,143)            (235)         1,193      (2,082)    (2,531)
Interest expense . . . . . . . . . . . . . . . .    (18,366)    (11,231)            (214)          (825)       (955)      (268)
Other income (expense) . . . . . . . . . . . . .       (616)        813               89            245         363      1,436
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
      Income (loss) before items shown
        below . . . . . . . . . . . . . . . . .     (67,929)   (160,561)            (360)           613      (2,674)    (1,363)
Reorganization items:
  Fresh-Start adjustments. . . . . . . . . . . .         --          --           18,863             --          --         --
  Reorganization costs . . . . . . . . . . . . .         --      (2,796)          (1,433)            --          --         --
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
      Income (loss) before items shown
        below. . . . . . . . . . . . . . . . . .    (67,929)   (163,357)          17,070            613      (2,674)    (1,363)
Income tax expense (benefit) . . . . . . . . . .    (20,434)     16,195               20             16          (2)      (220)
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
      Income (loss) before items shown
        below . . . . . . . . . . . . . . . . .     (47,495)   (179,552)          17,050            597      (2,672)    (1,143)
Earnings (losses) in affiliates. . . . . . . . .       (350)        492              145            409         606       (141)
                                                  ----------  ----------  ---------------  -------------  ----------  ---------
      Income (loss) before items shown
        below . . . . . . . . . . . . . . . . .     (47,845)   (179,060)          17,195          1,006      (2,066)    (1,284)
Extraordinary item, net of income tax benefit(2)         --          --          139,130             --          --         --
Discontinued Operation . . . . . . . . . . . . .        254        (148)              52            258         252        136
                                                  ----------  ----------  ---------------  -------------  ----------  ---------

      Net income (loss). . . . . . . . . . . . .  $ (47,591)  $(179,208)  $      156,377   $      1,264   $  (1,814)  $ (1,148)
                                                  ==========  ==========  ===============  =============  ==========  =========

Earnings (loss) per share before extraordinary
  item and discontinued operations - basic and
  diluted . . . . . . . . . . . . . . . . . . .   $   (2.60)  $     N/A   $          N/A   $       0.10   $   (0.21)     (0.13)
Earnings (loss) per share - basic and diluted. .  $   (2.60)  $     N/A   $          N/A   $       0.13   $   (0.18)  $  (0.12)
Weighted average shares outstanding - basic and
  diluted . . . . . . . . . . . . . . . . . . .      18,423   N/A         N/A                    10,000      10,000     10,018

BALANCE SHEET DATA (END OF FISCAL YEAR):

Working Capital. . . . . . . . . . . . . . . . .  $  39,993   $  27,094   $       11,797   $     32,134   $  33,370   $ 36,641
Total Assets . . . . . . . . . . . . . . . . . .    362,233      96,352           76,606         92,749      70,935     56,822
Total borrowings . . . . . . . . . . . . . . . .    208,176      24,462           21,102         21,703       7,398      1,635
Shareholders' equity . . . . . . . . . . . . . .  $  92,902   $ (91,327)  $       30,179   $     49,813   $  48,905     47,848
</TABLE>

________________________________
(1)  Restructuring  charges,  goodwill  and  asset  impairments  related  to the
     closing  or  idling  of  manufacturing  plants  and  restructuring  of  the
     Company's  retail  operations  in  fiscal  2000. Such changes increased the
     diluted  loss  per  share  by $0.81 for fiscal 2000. Restructuring charges,
     goodwill  and  asset  impairments  related  to  the  closing  or  idling of
     manufacturing  plants  and  non-core  retail  operations  in  fiscal  2001.
(2)  Extraordinary  gain  for  forgiveness  of  debt.


                                       15
<PAGE>
ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     This item contains statements that are forward-looking. These statements
are based on current expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially because of factors
discussed in this item and elsewhere in this report.

GENERAL

     American  Homestar is a regional vertically integrated manufactured housing
company  with  operations  in  manufacturing,  retailing,  home  financing  and
insurance.  Prior to our sale of our interest in Roadmasters in February 2004 we
also offered home transportation services.  Our principal operations are located
in  Texas,  although  we  also  sell  our  products  in  neighboring  states. We
manufacture  a  wide  variety  of  manufactured homes from our two manufacturing
facilities.  A  third  leased  manufacturing  facility  is  primarily engaged in
refurbishing  lender-repossessed  manufactured  homes.

     Our  products  are sold through 30 Company-operated retail sales centers in
Texas,  Louisiana  and  Oklahoma,  several  developer-operated  sales centers in
manufactured  housing communities, and several independent dealers. In addition,
we facilitate both chattel and land-home installment financing for purchasers of
manufactured homes from our retail sales centers. We also offer retail customers
a  variety  of insurance products, including property casualty insurance, credit
life  insurance  and  extended  warranty  coverage through both Company-operated
retail  sales  centers  and  certain  independent  retailers.

REORGANIZATION

     On  January  11,  2001,  American  Homestar  Corporation  and  21  of  our
subsidiaries filed separate voluntary petitions for reorganization under Chapter
11  of  the  United States Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of Texas (the "Bankruptcy Court"). On August 14, 2001,
the  Bankruptcy  Court  confirmed the Third Amended Joint Plan of Reorganization
(the  "Plan")  of  the  Company  and  its  subsidiaries. On October 3, 2001 (the
"Effective  Date"),  all  conditions  required for the effectiveness of the Plan
were  met,  and  the Plan became effective, and the Company and our subsidiaries
emerged from bankruptcy.  On June 22, 2004 the Bankruptcy Court entered an Order
granting our Motion For Entry Of Final Decrees, closing all 22 of our Chapter 11
cases.

BASIS  OF  REPORTING

     In  October  2001,  upon  our  emergence  from  bankruptcy,  we adopted the
provisions  of  Statement of Position No. 90-7, "Financial Reporting by Entities
in  Reorganization  Under  the  Bankruptcy  Code"  ("Fresh-Start  Reporting") as
promulgated  by  the  AICPA. Accordingly, all of our assets and liabilities have
been  restated  to  reflect their reorganization value, which approximates their
fair  value  at  the  Effective  Date.  In addition, our accumulated deficit was
eliminated  and  our  capital  structure was recast in conformity with the Plan,
and,  as  of  September  29,  2001, we have recorded the effects of the Plan and
Fresh-Start  Reporting.  Activity  between  September  29, 2001, the date of the
Consolidated  Fresh-Start Balance Sheet, and October 3, 2001, the Effective Date
of  the  Plan  was  not  material.  The  adjustment to eliminate our accumulated
deficit  totaled $158 million, of which $139 million was forgiveness of debt and
$19  million  was  from  Fresh-Start  adjustments.

     The reorganization value of our common equity of approximately $30 million,
as  of  the  Effective  Date,  was  determined  by  an independent valuation and
financial specialist after consideration of several factors and by using various
valuation  methods,  including  appraisals,  cash flow multiples, price/earnings
ratios  and  other  relevant  industry  information.  We  have  allocated  our
reorganization  value  to  various  asset  categories  pursuant  to  Fresh-Start
accounting  principles.


                                       16
<PAGE>
SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

PRINCIPLES  OF  CONSOLIDATION  AND  GENERAL

     The  consolidated  financial statements include the accounts of the Company
and  our  majority-owned subsidiaries. All significant intercompany balances and
transactions  have  been eliminated in consolidation. Certain amounts previously
reported  have  been  reclassified  to conform to the 2004 presentation. We also
owned  a  50%  interest  in two financing joint ventures (Homestar 21st, LLC and
American  Homestar  Mortgage,  L.P.)  and presently own a 49.5% interest in both
Humble  Springs  LTD  and  114  Starwood Development, LTD, both land development
joint  ventures,  all  of which are and have been accounted for under the equity
method  of  accounting.

     Our  fiscal year ends on the Friday closest to June 30.  Fiscal years ended
June 28, 2002 and June 27, 2003 had 52 weeks while the fiscal year ended July 2,
2004  had  53  weeks.

ACCOUNTING  ESTIMATES

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

     Significant  estimates  were  made  to  determine  the  following  amounts
reflected  on  our  Balance  Sheets:

     -    New  home  inventory  is  reflected  at  lower  of  cost  or  market.
          Management  must  estimate  the  market  value  of  such  inventory.

     -    Property  Plant  and  Equipment,  according  to  provisions  for
          "Fresh-Start" Reporting, were reflected at their estimated fair market
          value  at  September 29, 2001, and are reflected at cost for additions
          subsequent  to  September  29, 2001, less accumulated depreciation for
          the  period  subsequent  to  September  29, 2001. The determination of
          periodic  depreciation  expense  requires an estimate of the remaining
          useful  lives  of  each  asset.

     -    Assets  Held  For  Sale  are reflected at estimated fair market value.

     -    Warranty  Reserves  include an estimate of all future warranty-related
          service expenses that will be incurred as to all homes previously sold
          that  are still within their one-year warranty period. These estimates
          are  based on average historical warranty expense per home, applied to
          the  number  of  homes  that  are  still  under  warranty.

     -    Reserve for future repurchase losses reflects management's estimate of
          both  repurchase  frequency  and  severity  of  net  losses related to
          agreements  with  various  financial  institutions  and  other  credit
          sources  to repurchase manufacturing homes sold to independent dealers
          in  the event of a default by the independent dealer or its obligation
          to  such  credit  sources.  Such  estimates  are  based  on historical
          experience.

     -    Liquidation  and  Plan  Reserve  reflects management's estimate of all
          costs and expenses to be incurred in administering and satisfying plan
          obligations as well as the net cost to complete the liquidation of all
          non-core  operations.

     -    Claims  Reserve reflects management's estimate of the cash required to
          satisfy  all  remaining  priority, tax, administrative and convenience
          class  claims.  This  reserve  does  not include the remaining initial
          distribution  that is reflected in another liability account, has been
          escrowed,  and  is  not  subject  to  estimation.


                                       17
<PAGE>
REVENUE  RECOGNITION

     Retail sales are recognized once full cash payment is received and the home
has  been  delivered  to  the  customer.

     Manufacturing  sales  to independent dealers and subdivision developers are
recognized  as  revenue  when  the  following  criteria  are  met:
     -    there  is  a  financial  commitment acceptable to management (e.g., an
          approved  floorplan source, cash or cashiers check received in advance
          or,  a  firm  retail  commitment  from  the  dealer);
     -    the home is completely finished;
     -    the home is invoiced; and
     -    the home has been shipped.

     The  Company  also  maintains  used  manufactured  home  inventory owned by
outside parties and consigned to the Company, for which the Company recognizes a
sales  commission  when  received.

     Other revenue includes revenue from our insurance agency, commission income
from the sale of repossessed homes, income from the sale of wheels and axles and
nominal  other  corporate  income.

     Agency  insurance commissions are recognized when received and acknowledged
by  the  underwriter  as  due.

INVENTORIES

     Newly  manufactured  homes are valued at the lower of cost or market, using
the  specific  identification  method.  Used  manufactured  homes  are valued at
estimated wholesale prices, not in excess of net realizable value. Raw materials
are valued at the lower of cost or market, using the first-in, first-out method.

PROPERTY,  PLANT  AND  EQUIPMENT

     Property,  plant  and  equipment were reflected at management's estimate of
fair  market  value at September 29, 2001, as required by Fresh-Start Reporting.
Subsequent  to  September 29, 2001, additions are recorded at cost. Depreciation
on property, plant and equipment is recorded using the straight-line method over
the  estimated  useful  lives  of the related assets. Leasehold improvements are
amortized  using  the  straight-line  method  over  the  useful  lives  of  the
improvements or lease periods, whichever is shorter. We have three manufacturing
plants that are not in operation that are classified as assets held for sale and
are reflected at management's estimate of net realizable value.  In August 2004,
we  sold  one  of  the  three  non  operational  plants.

     We  evaluate  the  recoverability of long-lived assets not held for sale by
measuring  the  carrying  value of the assets against the estimated undiscounted
future  cash  flows  in  accordance with SFAS No. 144, which superceded SFAS No.
121.  At  the  time  such evaluations indicate that the undiscounted future cash
flows  of  certain  long-lived assets are not sufficient to recover the carrying
value  of  such  assets,  we  adjust the carrying values of such assets to their
estimated  fair  values.  Estimated fair values are determined using the present
value  of  estimated  future  cash  flows.  In conjunction with the SFAS No. 121
analysis  performed  in fiscal years 2000 and  2001, we recorded long-term asset
impairments of approximately $4.8 million in fiscal 2000 and approximately $38.8
million  in  fiscal  2001. No further impairment has been deemed necessary under
SFAS  No.  144.


                                       18
<PAGE>
GOODWILL

     Goodwill, which represents the excess of purchase price over the fair value
of  net  assets  acquired,  was  amortized on a straight-line basis over periods
ranging  from  10  to  40  years.  We assessed the recoverability of goodwill by
determining  whether the amortization of the goodwill balance over the remaining
useful  life could be recovered through undiscounted future operating cash flows
of the acquired operations. Goodwill was adjusted to zero in connection with the
restatement  of  assets  and  liabilities  during  our  reorganization.

INCOME TAXES

     Deferred  tax  assets  and  liabilities  are  recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the  years in which such temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets  and  liabilities of a change in tax rates is recognized in income in the
period  that  included  the  enactment  date. Because of our reorganization, all
deferred  tax assets (both short term and long term) have been fully reserved as
their  realization  is  contingent  upon  future  taxable  income.

RESERVES  FOR  FUTURE  LOSSES  ON  CREDIT  SALES

     The Company makes a current provision for estimated future losses on credit
retail  sales  where  we  retain  risk  in  the  event of customer nonpayment of
installment sales contracts.  Typically, our period of exposure to loss does not
exceed  the  first  two  installment  payments  on  an individual contract.  The
amounts  provided  for  estimated  future  losses on credit sales are determined
based  on  our  historical loss experience after giving consideration to current
economic  conditions.  In  assessing  current  loss  experience  and  economic
conditions, management may adjust the reserve for losses on credit sales related
to  prior  years'  installment  sales contracts.  All adjustments are recognized
currently.

ACCRUED  WARRANTY  AND  SERVICE  COSTS

     We  make a current provision for future service costs associated with homes
sold  and  for  manufacturing  defects for a period of one year from the date of
retail  sale  of  the  home. The estimated cost of these items is accrued at the
time of sale and is reflected in cost of sales in the consolidated statements of
operations.  For  the  three  months  ended  September 29, 2001, the nine months
ended  June  28,  2002,  and  the  years  ended  June 27, 2003 and July 2, 2004,
warranty  and  service costs were $ 0.7 million, $2.0 million, $2.0 million, and
$1.8  million  respectively.

ADVERTISING  COSTS

     Costs  incurred  in  connection  with  advertising  and  promotion  of  the
Company's  products  are  expensed  as  incurred.  For  the  three  months ended
September 29, 2001, the nine months ended June 28, 2002 and years ended June 27,
2003  and  July  2,  2004, advertising costs were $.2 million, $.7 million, $1.3
million  and  $1.3  million,  respectively.

EARNINGS PER SHARE

     Basic  earnings  per  share  is  based  on  the  weighted  average  shares
outstanding  without any dilutive effects considered. Diluted earnings per share
reflects  dilution  from  all  contingently  issuable  shares  from  outstanding
options.  Options  granted  under  the our 2001 Management Incentive Program are
not  reflected  in  diluted  earnings per share as there have been very sporadic
offers  to  buy  or  sell  and  only  one  trade  of  the Company's stock on the
Over-the-Counter "pink sheets" exchange. The Company does not consider this very
limited  activity  sufficient  to  set a value for the stock. Per share data for
periods  ended  June  29, 2001, and September 29, 2001, have been omitted as the
Company  was  in  bankruptcy during these periods and the amounts do not reflect
the  current  capital  structure.

FINANCIAL INSTRUMENTS

     Fair  value estimates are made at discrete points in time based on relevant
market  information.  These  estimates  may  be subjective in nature and involve
uncertainties  and  matters  of  significant  judgment  and  therefore cannot be


                                       19
<PAGE>
determined  with precision.  We believe that the carrying amounts of our current
assets,  current  liabilities  and  long-term debt approximate the fair value of
such  items.

CASH EQUIVALENTS

     Cash  equivalents  consist  of  short-term  investments  with  an  original
maturity of three months or less, money market accounts and cash in transit from
financial institutions.  Cash in transit from financial institutions presents no
risk  to  the  Company regarding collectibility and is typically received within
two  business  days  of  month  end.

CONCENTRATION OF CREDIT RISK

     We  maintain cash in several bank accounts, which at times exceed federally
insured  limits.  We  monitor  the  financial  condition  of  the banks where we
maintain  accounts  and  we  have  experienced  no  losses associated with these
accounts.

RECENT ACCOUNTING PRONOUNCEMENTS

     In  June  2002,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting Standards 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 Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including  Certain  Costs  Incurred in a Restructuring)." SFAS 146 is
effective for exit or disposal activities initiated after December 31, 2002. The
adoption  of  SFAS  146  had  no impact on our financial condition or results of
operations.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition  and Disclosure," which amends SFAS 123, "Accounting for
Stock-Based  Compensation"  to  provide  alternative methods of transition for a
voluntary  change  to  the fair value based method of accounting for stock-based
compensation.  In  addition, SFAS 148 amends the disclosure requirements of SFAS
123  to  require  prominent  disclosures  in  both  annual and interim financial
statements  about the method of accounting for stock-based employee compensation
and  the  effect  of  the  method  used on reported results. We will continue to
account  for stock-based compensation using the intrinsic method as permitted by
SFAS  123  and  prominently disclose the additional information required by SFAS
148  in  our  annual  and  interim  reports.

     In  January  2003,  the  FASB  issued  FASB  Interpretation  No.  FIN  46R,
Consolidation  of  Variable  Interest  Entities.  This  interpretation  provides
guidance  on  the  identification  of,  and  financial  reporting  for, variable
interest  entities.  Variable  interest  entities  are  entities  that  lack the
characteristics of a controlling financial interest or lack sufficient equity to
finance  its  activities  without additional subordinated financial support. FIN
46R requires a company to consolidate a variable interest entity if that company
is  obligated to absorb the majority of the entity's expected losses or entitled
to  receive the majority of the entity's residual returns, or both. FIN 46R also
requires  disclosures  about  variable  interest  entities that a company is not
required to consolidate but in which it has a significant variable interest. FIN
46R  is  applicable  immediately  to  variable  interest  entities created after
January  31,  2003. For all variable interest entities created prior to February
1, 2003, FIN 46R is applicable to periods beginning after June 15, 2003. We have
a minority interest in two joint ventures that, by virtue of the other partners'
guarantee  of  the  partnership indebtedness, are variable interest entities. We
are  not  the  primary  beneficiary  of  these  variable  interest entities and,
accordingly,  we use the equity method of accounting for our investment in these
ventures.  We  do  not  expect that the adoption of FIN 46R will have a material
effect  on  our  financial  position  or  results  of  operation.*

     In  April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities ("SFAS 149"). SFAS 149 amends and
clarifies  the  accounting  for  derivative  instruments,  including  certain
derivative  instruments  embedded in other contracts, and for hedging activities
under  SFAS  133,  Accounting for Derivative Instruments and Hedging Activities.
Statement  149  is  generally  effective  for contracts entered into or modified
after  June  30,  2003,  and for hedging relationships designated after June 30,
2003.  The adoption of this statement had no impact on our results of operations
or  financial  position.


                                       20
<PAGE>
     In  May  2003,  the  FASB  issued  SFAS  No.  150,  "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." This
statement  establishes  standards  for  how  an  issuer  classifies and measures
certain  financial  instruments  with  characteristics  of  both liabilities and
equity.  This  statement  requires  an issuer to classify a financial instrument
issued  in  the  form of shares that are mandatorily redeemable-that embodies an
unconditional obligation requiring the issuer to redeem them by transferring its
assets  at a specified or determinable date-as a liability. The adoption of SFAS
150 had no impact on our financial condition or results of operations.

     In  December  2003,  the  FASB  issued  SFAS  No.  132 Revised (SFAS 132R),
"Employers'  Disclosure  about  Pensions  and  Other Postretirement Benefits." A
revision  of  the  pronouncement  originally  issued  in 1998, SFAS 132R expands
employers'  disclosure  requirements  for pension and postretirement benefits to
enhance  information  about  plan  assets,  obligations,  benefit  payments,
contributions  and  net  benefit  cost. SFAS 132R does not change the accounting
requirements  for pensions and other postretirement benefits. This statement was
implemented  beginning  with  the fourth quarter of fiscal 2004. The adoption of
SFAS  132R  had  no  impact on our financial condition or results of operations.

RESULTS  OF  OPERATIONS

     The  results  of  operations  and  cash  flows  for  the three months ended
September  29,  2001,  include  operations prior to the Company's emergence from
Chapter  11  proceedings and do not take into account the effects of Fresh-Start
Reporting.  The  results  of operations and cash flows for the nine months ended
June  28,  2002,  include  operations subsequent to the Company's emergence from
Chapter 11 proceedings and reflect the on-going effects of Fresh-Start Reporting
(the Company being referred to herein as "Predecessor Company" for periods prior
to  September  29,  2001,  and  as "Successor Company" for periods subsequent to
September  29,  2001). As a result, the results of operations and cash flows for
the twelve months ended June 27, 2003 and July 2, 2004 for the Successor Company
are  not  necessarily comparable to the results of operations and cash flows for
the  twelve  months  ended  June  28, 2002, as the earlier period includes three
months  of  Predecessor  Company operations and cash flows, which do not reflect
the  effects  of  Fresh-Start  Reporting,  and  nine months of Successor Company
operations  and  cash  flows,  which  do  reflect  the  effects  of  Fresh-Start
Reporting.

     In  connection  with  and  subsequent  to  our  reorganization,  we  have
significantly  downsized  our  operations and have focused on our core Southwest
market,  where  the Company is based and where we have historically had our most
favorable  overall  results.  We currently operate 30 retail sales centers along
with  a  marketing  presence  (displaying  model homes and spec homes without an
on-site  sales  office) in approximately 37 manufactured housing communities. We
operate  two manufacturing plants, both of which produce new homes and operate a
third  facility  to  refurbish  lender  repossessions.  We  operate an insurance
agency,  which  sells  homeowner's insurance, credit life insurance and extended
warranty  coverage  to  our  customers.    During the year ended July 2, 2004 we
sold  our  51%  ownership interest in a transport company, our 50% interest in a
finance  company  and  liquidated  our  50%  interest  in  a  mortgage brokerage
business.  In April 2004, we invested $31,500 to provide one-half of the initial
capitalization  of  a  new  mortgage brokerage business that is currently in the
process  of  obtaining  licenses  necessary to operate as a mortgage broker/loan
originator.  Management  believes  that  its  vertical  integration  strategy,
intended to derive multiple profit sources from each retail sale, will allow the
Company  to  be  more  profitable, over time, than would otherwise be the case.*

     Two  significant events have, in our opinion, had a dampening effect on new
home  sales  and  revenues  since January 2002. The withdrawal of several retail
lenders  from  the  national  market  has  had  the  effect of tightening credit
standards  applied  to  potential  new  home  buyers  and, at least temporarily,
reduced  total  potential  demand  for  new homes. Some previously qualified new
homebuyers  are  currently  able  to  purchase  lender repossessions but are not
currently  eligible  for  new home financing. In addition, Texas legislation (HB
1869), which became effective in January 2002, required any land/home package to
be  closed  and  financed  in a fashion nearly identical to traditional mortgage
financing  for  site-constructed housing.  This legislation led to a much longer
and  more  complex credit approval and loan closing cycle than existed prior its
enactment.  While  this  change  did  not  necessarily result in a lower overall
demand  for  manufactured housing in Texas, it had the effect of lengthening the
sales  closing  and revenue recognition process from an average of 45-60 days to
an  average  of  more  than 100 days.  As a result, management believes that the
Company realized less revenue during the six months ended June 28, 2002, and for


                                       21
<PAGE>
the  years  ended June 27, 2003 and July 2, 2004, than would have otherwise been
the  case  without lender withdrawal from the industry and the Texas law change.
Effective  June  18, 2003, SB 521 amended the provisions of HB 1869 to allow for
chattel  financing,  at the owner's option, of a manufactured home that is sited
on  land  owned  by the home owner. We believe SB 521 has moderated the negative
impact on manufactured home sales in Texas caused by HB 1869. Assuming that  the
lending  environment remains stable, management believes that sales and revenues
will gradually improve over current levels as the sales-in-process mature toward
the  longer closing and completion cycle and as our retail sales team adjusts to
these new lender and industry dynamics.* We believe that most of our competition
in  our  core market region experienced similar market pressures and has reduced
both  retail  and  manufacturing  capacity.  We also believe that the Company is
postured to take advantage of these changes  following our reorganization and is
no  longer  distracted  by  the same relative leverage positions and operational
challenges as much of our competition.* While we believe that market share gains
will  be  gradual  but  steady,  there  is  no  assurance  that these gains will
materialize.*

     The following table summarizes certain key sales statistics for the Company
for  the  periods  indicated:

<TABLE>
<CAPTION>
                                                                THREE MONTHS      NINE MONTHS      YEAR       YEAR
                                                                    ENDED            ENDED        ENDED       ENDED
                                                                SEPTEMBER29,       JUNE 28,      JUNE 27,    JULY 2,
                                                                    2001             2002          2003       2004
                                                              -----------------  -------------  ----------  ---------
                                                               Predecessor Co.                 Successor Co.
                                                              -----------------  ------------------------------------
<S>                                                           <C>                <C>            <C>         <C>
Company-manufactured new homes sold at retail. . . . . . . .               373            994         999        924
Total new homes sold at retail through retail sales centers.               373          1,001       1,010        924
Internalization rate (1) . . . . . . . . . . . . . . . . . .               100%            99%         99%       100%
Previously-owned homes sold at retail. . . . . . . . . . . .               149            555         564        375
Average retail selling price - new homes . . . . . . . . . .  $         51,403   $     53,584   $  55,230   $ 57,850
Company-operated retail sales centers and community sales
    offices at end of period . . . . . . . . . . . . . . . .                41             41          34         30
Total manufacturing shipments. . . . . . . . . . . . . . . .               343           1176       1,248      1,161
Manufacturing shipments to independent retail sales centers
 and developers. . . . . . . . . . . . . . . . . . . . . . .                51            162         330        343
</TABLE>

(1)  The  proportion  of new homes sold by Company-operated retail sales centers
     that  are  manufactured  by  the  Company.

     The  following table summarizes our historical operating results, expressed
as  a  percentage  of  total  revenues,  for  the  periods  indicated:

<TABLE>
<CAPTION>
                                                THREE MONTHS    NINE MONTHS     YEAR       YEAR
                                                   ENDED           ENDED        ENDED     ENDED
                                                SEPTEMBER29,      JUNE 28,    JUNE 27,   JULY 2,
                                                    2001            2002        2003       2004
                                              ----------------  ------------  ---------  --------
                                              Predecessor Co.               Successor Co.
                                              ----------------  ---------------------------------
<S>                                           <C>               <C>           <C>        <C>
Total revenues . . . . . . . . . . . . . . .            100.0%        100.0%     100.0%      100%
Gross profit . . . . . . . . . . . . . . . .             41.0%         40.7%      34.5%     31.3%
Selling, general and administrative expenses
    before acquisition costs . . . . . . . .             42.0%         39.1%      37.3%     34.8%
Operating income . . . . . . . . . . . . . .            (1.0%)          1.7%     (2.8%)    (3.5%)
Income before income taxes and extraordinary
    item . . . . . . . . . . . . . . . . . .           (15.1%)          0.9%     (3.6%)    (1.9)%
Income before extraordinary item . . . . . .           (15.9%)          1.4%     (2.8%)    (1.8)%
Net income . . . . . . . . . . . . . . . . .            655.6%          1.8%     (2.5%)    (1.6)%
</TABLE>

     Although  the  adoption  of  Fresh-Start  Reporting  significantly affected
comparability,  certain  Pre-  and Post-reorganization period income and expense
items  remain  comparable and are addressed in the following analysis of results
of  operations  for  the  periods  indicated.


                                       22
<PAGE>
YEAR ENDED JULY 2, 2004 COMPARED TO YEAR ENDED JUNE 27, 2003

     Net  Sales. Net sales of manufactured homes were $69.1 million for the year
ended  July 2, 2004, compared to $70.8 million for the year ended June 27, 2003.
The  2%  decline  in net sales was principally the result of a decline in retail
sales, generally consistent with the overall decline in new home sales in Texas.
The decline in retail sales was partially offset by an increase in manufacturing
wholesale  shipments  to  independent  dealers  and  developers.

     Retail  sales  declined $3.4 million (or 6%).  New home same store sales in
our  core operations also declined 1.4% from an average of 28 new home sales per
store  for  the year ended June 27, 2003, to an average of 27 new home sales per
store  for  the  year  ended  July  2,  2004.

     Manufacturing  division  sales  to  independent dealers and developers were
$13.3 million for the year ended July 2, 2004, compared to $11.6 million for the
year  ended June 27, 2003. For the year ended July 2, 2004, approximately 61% of
manufacturing  division outside sales were to subdivision developers. We believe
such  sales to independent dealers and especially to subdivision developers will
increase  gradually over time, aided by reductions of competitor capacity in our
regional  market  area  and  our  continued  emphasis  on  subdivision developer
relationships  and  sales.*

     Other  Revenues.  Other  revenues, principally commissions from the sale of
insurance  and  consigned  lender  repossessions, were $3.3 million for the year
ended  July  2, 2004, compared to $3.2 million for the year ended June 27, 2003.

     Total  Revenues.  Total revenues, were $72.4 million in the year ended July
2,  2004,  which is a decline of $1.6 million (or 2%) when compared to the prior
fiscal  year.

     Cost of Sales. Cost of sales was $49.8 million (or 69% of revenues) for the
year  ended July 2, 2004, compared to $48.5 million (or 66% of revenues) for the
year  ended June 27, 2003. The 3% increase in cost of sales was the result of an
increase  in  retail  cost  of  sales.

     Cost of sales for homes sold at retail (expressed as a percentage of retail
revenues)  increased  3%  for  the year ended July 2, 2004, compared to the year
ended  June  27, 2003.  This increase resulted from several factors.  First, the
aging  profile of our retail inventory and slower turn rates for older inventory
caused  us  to  adjust  inventory carrying values for all new homes in inventory
more  than  24 months to net realizable value.  This adjustment was $1.1 million
or  1.9%  of  retail  revenues.   Second,  with  increased homesite construction
activity  in  the  current year, we experienced cost overruns of $0.5 million or
0.9%  of  retail  revenues.    Finally, cost of sales in the year ended June 27,
2003,  was  lower  as  a  result  of  a higher proportionate sales of discounted
inventory  (both new and used), that we were able to purchase on the open market
as well as from our secured lender as a part of our reorganization.

     Cost  of  sales  for  homes  sold  to  independent  dealers and subdivision
developers  (expressed  as  a  percentage  of  manufacturing  revenues)  were
approximately  the  same  for  the year ended July 2, 2004, compared to the year
ended  June  27,  2003.

     Selling,  General  and  Administrative  Expenses.  Selling,  general  and
administrative  expenses  were  $26.5  million (or 37% of revenues) for the year
ended  July 2, 2004, compared to $27.6 million (or 37% of revenues) for the year
ended  June  27,  2003. The decrease is primarily attributable to a reduction of
fixed costs related to the closing of underperforming retail sales centers,  and
to  a  lesser degree, lower variable selling expenses due to lower retail sales.

     Interest Expense. Interest expense was $0.3 million for the year ended July
2,  2004,  compared  to  $1.0  million  for  the year ended June 27, 2003.  This
decrease is due to lower average debt levels in the current year.

     Income  Taxes.  Income tax benefit was $0.2 million (on pretax loss of $1.4
million)  for  the  year  ended  July  2,  2004.

     Earnings in affiliates. Our 50% share in the after-tax earnings of Homestar
21,  LLC  was  a  loss  of  $0.1 million


                                       23
<PAGE>
for the year ended July 2, 2004, compared to income of $0.5 million for the year
ended  June  27,  2003.  In  prior  periods,  Homestar  21  reported income from
origination  and  rate buy-down points which were recorded as revenues when each
loan  was  sold.  Due  to  a  change  in the method in which these loans are now
financed, the points are now amortized over the life of the loan. As a result of
the  elimination of the origination and rate buy-down points income for the year
ended  July 2, 2004, Homestar 21 reported a loss. On March 23, 2004, the Company
and  its partner in the venture, 21st Mortgage dissolved and liquidated Homestar
21.

     Our 50% share in the after-tax earnings of American Homestar Mortgage, L.P.
were $0.01 million for the year ended July 2, 2004, compared to $0.1 million for
the  year  ended  June 27, 2003. In July 2003 the Company reached agreement with
its partner, Home Loan to cease operations effective July 31, 2003.

     Discontinued  Operations:.  We  sold our 51% interest in Roadmasters during
the  year ended July 2, 2004.  Operating results for the year ended July 2, 2004
and  the  year  ended June 27, 2003 are now reported as discontinued operations.
Our  51%  share  of  after-tax  earnings  of Roadmasters was $0.1 million (for 8
months)  in the year ended July 2, 2004 compared to $0.3 million (for 12 months)
in  the  year  ended  June  27,  2003.

NINE MONTHS ENDED JUNE 27, 2003 COMPARED TO NINE MONTHS ENDED JUNE 28, 2002

     Net  Sales. Net sales of manufactured homes were $52.3 million for the nine
months  ended June 27, 2003, compared to $64.2 million for the nine months ended
June  28,  2002.  The  19% decline in net sales was principally as a result of a
decline  in  retail  sales, generally consistent with the overall decline in new
home  sales  in  Texas  and was partially offset by an increase in manufacturing
wholesale  shipments  to  independent  dealers  and  developers.

     Retail  sales declined $15.3 million (or 26.3%). This decline was partially
attributable  to  the closing of 10 retail centers, however, new home same store
sales  in  the Company's core operations also declined 17% from an average of 24
new  home sales per store for the nine months ended June 28, 2002, to an average
of  20  new  home  sales  per  store for the nine months ended June 27, 2003. We
believe that Texas law (HB 1869) and the exit of major lenders from the industry
are major factors in the decline of new home same store and average sales in the
nine  months  ended  June  27,  2003.

     Manufacturing  division  sales  to  independent dealers and developers were
$9.6  million  in  the  nine months period ended June 27, 2003, compared to $6.4
million  in the nine month period ended June 28, 2002. For the nine months ended
June 28, 2002, substantially all sales were to independent dealers. For the nine
months  ended  June  27,  2003,  approximately  78%  of  manufacturing  division
shipments  were  to subdivision developers. We believe such sales to independent
dealers  and  especially  to subdivision developers will increase gradually over
time, aided by reductions of competitor capacity in our regional market area and
our  recent  emphasis  on  subdivision  developer  relationships  and  sales.

     Other  Revenues. Other revenues were $2.4 million for the nine months ended
June 27, 2003, compared to $6.4 million for the nine months ended June 28, 2002.
Insurance-related  revenues  in  the Company's agency and reinsurance operations
declined approximately $4.0 million (or 62%) as a result of Lifestar Reinsurance
Ltd.  ("Lifestar"), which had contributed approximately $3.8 million in revenues
for  the  nine  months  ended  June 28, 2002, but ceased operations in May 2002.

     Total  Revenues.  Total  revenues,  the  individual components of which are
discussed  above,  were  $54.7  million  in the nine months ended June 27, 2003,
which  is  a  decline  of  $16 million (or 23%) when compared to the nine months
ended  June  28,  2002.

     Cost of Sales. Cost of sales was $36.1 million (or 66% of revenues) for the
nine  months ended June 27, 2003, compared to $41.9 million (or 59% of revenues)
for  the  nine  months  ended  June  28,  2002.  The 7% increase as a percent of
revenues  in  cost  of  sales  was partially attributable to Lifestar, which had
operations  in the prior year period, but ceased activity in May 2002. Excluding
Lifestar  revenues  for the nine months ended June 28, 2002, would have resulted
in a cost of sales of 63% versus the 59% reported for said period. The remaining
3.%  increase  in  cost of sales was the result of an increase in retail cost of
sales  partially  offset  by  lower cost of sales in the Company's manufacturing
operation.


                                       24
<PAGE>
     Cost of sales for homes sold at retail, expressed as a percentage of retail
revenues,  increased  2.3%  for the nine months ended June 27, 2003, compared to
the nine months ended June 28, 2002. Cost of sales in the nine months ended June
28,  2002,  were lower as a result of a higher proportionate sales of discounted
inventory  (both  new  and used), which we were was able to purchase on the open
market  as  well  as  from  its  secured lender as a part of our reorganization.

     Cost  of  sales  for  homes  sold  to  independent  dealers and subdivision
developers,  expressed as a percentage of manufacturing revenues, decreased 0.5%
in  the  nine months ended June 27, 2003, compared to the nine months ended June
28,  2002,  primarily  as  a  result  of  lower  material  costs.

     Selling,  General  and  Administrative  Expenses.  Selling,  general  and
administrative  expenses  were  $20.1  million  (or 37% of revenues) in the nine
months  ended  June  27, 2003, compared to $27.6 million (or 39% of revenues) in
the nine months ended June 28, 2002. The decrease is related to costs associated
with  Lifestar,  which  ceased  activities  in May 2002, and to reduced variable
expenses as a result of lower retail sales and to reduced fixed expenses through
the  consolidation  and  reduction  of  under-performing  retail  sales centers.

     Interest  Expense.  Interest  expense  was $0.7 million for the nine months
ended June 27, 2003, and $0.8 for the nine months ended June 28, 2002.

     Income  Taxes.  Income tax benefit was approximately $2,000 (on pretax loss
of  $1.9 million) for the nine months ended June 27, 2003, compared to an income
tax  expense  of  approximately $20,000 (on a pretax income of  $.6 million) for
the  nine  months  ended  June  28,  2002.

     Earnings in affiliates. Our 50% share in the after-tax earnings of Homestar
21, LLC and American Homestar Mortgage, L.P. were $0.4 million and $0.1 million,
respectively,  for the nine months ended June 27, 2003, compared to $0.4 million
for  the  nine  months  ended  June  28,  2002, all generated by Homestar 21, as
American Homestar Mortgage did not begin operations until November 2002.

     Discontinued  Operations:.  We sold our interest in Roadmasters  during the
year  ended  July  2, 2004. Operating results for the nine months ended June 27,
2003  and  the  nine months ended June 28, 2002 are now reported as discontinued
operations.  Our 51% share of after-tax earnings of Roadmasters was $0.1 million
for  the  nine  months ended June 27, 2003 compared to $0.3 million for the nine
months  ended  June  27,  2003.

YEAR ENDED JUNE 27, 2003 COMPARED TO YEAR ENDED JUNE 28, 2002

     Net  Sales. Net sales of manufactured homes were $70.8 million for the year
ended June 27, 2003, compared to $85.3 million for the year ended June 28, 2002.
The  17%  decline in net sales was principally the result of a decline in retail
sales, generally consistent with the overall decline in new home sales in Texas.
The decline in retail sales was partially offset by an increase in manufacturing
wholesale  shipments  to  independent  dealers  and  developers.

     Retail  sales  declined  $17.8 million (or 23%). This decline was partially
attributable  to  the  closing  of  10 underperforming retail centers during the
year,  however,  new  home same store sales in our core operations also declined
22%  from  an average of 36 new home sales per store for the year ended June 28,
2002,  to  an average of 28 new home sales per store for the year ended June 27,
2003. We believe that Texas law (HB 1869) and the exit of major lenders from the
industry  are  major  factors  in the decline of new home same store and average
sales  in  the  year  ended  June  27,  2003.

     Manufacturing  division  sales  to  independent dealers and developers were
$11.6 million for the year ended June 27, 2003, compared to $8.4 million for the
year  ended  June  28, 2002. For the year June 28, 2002, substantially all sales
were to independent dealers. For the year ended June 27, 2003, approximately 77%
of  manufacturing division sales were to subdivision developers. We believe such
sales  to  independent  dealers  and  especially  to subdivision developers will
increase  gradually over time, aided by reductions of competitor capacity in our
regional  market  area  and  our  recent  emphasis  on  subdivision  developer
relationships  and  sales.


                                       25
<PAGE>
     Other  Revenues.  Other  revenues were $3.2 million for the year ended June
27,  2003,  compared  to  $9.2  million  for  the  year  ended  June  28,  2002.
Insurance-related  revenues  in  our  agency and reinsurance operations declined
approximately  $6  million  (or  65%)  as  a result of Lifestar Reinsurance Ltd.
("Lifestar"),  which  contributed approximately $5.8 million in revenues for the
year ended June 28, 2002, but which ceased operations in May 2002.

     Total  Revenues.  Total  revenues,  the  individual components of which are
discussed  above, were $74.0 million in the year ended June 27, 2003, which is a
decline of $20.5 million (or 22%) when compared to the prior year.

     Cost of Sales. Cost of sales was $48.5 million (or 66% of revenues) for the
year  ended  June 27, 2003, compared to $56 million (or 59% of revenues) for the
year  ended June 28, 2002. The 7% increase (as a percent of revenues) in cost of
sales  was partially attributable to Lifestar, which had operations in the prior
year  period, but which ceased activity in May 2002. Excluding Lifestar revenues
for  the  twelve  months  ended  June 28, 2002, would have resulted in a cost of
sales  of 63% versus the 59% reported for said period. The remaining 3% increase
in  cost  of  sales was the result of an increase in retail cost of sales, which
increase  was  partially  offset  by  lower  cost  of sales in our manufacturing
operation.

     Cost of sales for homes sold at retail (expressed as a percentage of retail
revenues)  increased  2%  for the year ended June 27, 2003, compared to the year
ended  June  28, 2002. Cost of sales in the year ended June 28, 2002, were lower
as  a  result  of a higher proportionate sales of discounted inventory (both new
and used), which we were able to purchase on the open market as well as from our
secured  lender  as  a  part  of  our  reorganization.

     Cost  of  sales  for  homes  sold  to  independent  dealers and subdivision
developers  (expressed as a percentage of manufacturing revenues) decreased 1.3%
in  the  year  ended  June  27,  2003, compared to the year ended June 28, 2002,
primarily as a result of lower material costs in the current period.

     Selling,  General  and  Administrative  Expenses.  Selling,  general  and
administrative  expenses  were  $27.6  million (or 37% of revenues) for the year
ended June 27, 2003, compared to $37.6 million (or 40% of revenues) for the year
ended  June 28, 2002. The decrease is related to costs associated with Lifestar,
which ceased activities in May 2002, and to reduced variable selling expenses as
a  result  of  lower  retail  sales  and  to  reduced fixed expenses through the
consolidation and reduction of under-performing retail sales centers.

     Interest Expense. Interest expense was $1.0 million for the year ended June
27, 2003, compared to $1.0 million for the year ended June 28, 2002.

     Reorganization  Costs.  In  connection  with  our  Chapter  11  filing,
reorganization costs of $1.4 million were incurred during the three months ended
September 29, 2001. These costs related primarily to professional fees and other
expenditures  directly  related  to  the  Chapter  11 proceedings. There were no
reorganization  costs  for  the nine month period ended June 28, 2002, or in the
year  ended  June  27,  2003.

     Income Taxes. Income tax benefit was $0.002 million (on pretax loss of $2.7
million)  for  the  year  ended June 27, 2003, compared to income tax expense of
$0.04 million (on a pretax income of  $17.8 million) for the year ended June 28,
2002.

     Earnings in affiliates. Our 50% share in the after-tax earnings of Homestar
21, LLC and American Homestar Mortgage, L.P. were $0.5 million and $0.1 million,
respectively, for the year ended June 27, 2003, compared to $0.6 million for the
year  ended  June  28,  2002, all generated by Homestar 21, as American Homestar
Mortgage  did  not  begin  operations  until  November  2002.

     Discontinued  Operations:.  We  sold our 51% interest in Roadmasters during
the year ended July 2, 2004.  Operating results for the year ended June 27, 2003
and  the  year  ended June 28, 2002 are now reported as discontinued operations.
Our 51% share of after-tax earnings of Roadmasters was $0.3 million for the year
ended  June  27, 2003 compared to $0.3 million for the year ended June 28, 2002.


                                       26
<PAGE>
LIQUIDITY  AND  CAPITAL  RESOURCES

     At July 2, 2004, we had unrestricted operating cash and cash equivalents of
$14.0  million,  virtually  unchanged  from  last  fiscal  year  end.

     During the year ended July 2, 2004, we generated $4.6 million from the sale
of  our  interests in Roadmasters and Homestar 21, $2.2 million from the sale of
two  manufacturing  facilities  and  two  retail sales centers, and $1.4 million
through  a  reduction  of retail inventory. Principal uses of cash were $5.4 for
reduction  of  floorplan debt, $1.0 million for working capital and $0.5 million
to  fund  operating losses.  In addition, we paid our remaining plan obligations
of  $5.6  million  from  restricted  cash.

     Of  the  manufacturing  facilities  and  sales centers sold during the year
ended July 2, 2004, one manufacturing facility was used principally to refurbish
lender  repossessions.  The  other  manufacturing  facility  and  the  two sales
centers  were idle.  The Company continues to operate the manufacturing facility
used  to  refurbish  repossessions  under  a short term operating lease and will
continue  to  do  so  for  the  foreseeable  future.

     During  fiscal  year 2003, we closed several retail sales centers resulting
in  an  excess inventory condition.  Some of that excess inventory was displayed
at  other  company  retail  centers  and some was moved to various subdivisions,
installed and made ready for sale.  Management plans to systematically liquidate
this  excess  inventory,  without  replacement  over  time.  As noted above, our
inventory reduction plan produced positive cash flow results in fiscal 2004.  We
anticipate  continued  liquidation  of  excess  inventory in the upcoming year.*

     During  fiscal 2004, we also used cash to make substantial debt reductions.
Our inventory-related (floorplan) debt declined $5.4 million during the year and
other debt (principally real estate-related) was reduced by $0.4 million. Of the
$5.4  million used to reduce our floorplan debt, $6.8 million was withdrawn from
a  restricted cash collateral account, otherwise unavailable to the Company, and
used to pay the balance of the credit facility with Associates Housing Financial
LLC.  On  March  15, 2004, we received a two-year commitment for a new inventory
financing  (floorplan)  credit  facility  through 21st Mortgage Corporation. The
total  credit  line is $15 million although maximum borrowings, at any time, are
subject  to  a borrowing base calculation based on the age of the inventory used
as  collateral   Advances under this credit line bear interest at the greater of
prime plus 1% per annum or 7% per annum.  This credit facility is secured by the
Company's  new  home  inventory  and  display  models.  Advances  under  the new
inventory  financing  facility  were $1.4 million at July 2, 2004 and additional
availability  under  this  line  was  approximately  $10.6  million

     Under  the  Plan,  the  Company  was  required  to  make  an  initial  cash
distribution  to  its  new  shareholders  of  approximately  $5.3  million.
Distributions  of  approximately  $2.6  million  were  made  in  fiscal 2003 and
distributions of approximately $2.7 were made in fiscal year 2004 to fulfill and
satisfy  this  obligation.  The  remaining $2.9 million in plan obligations paid
related  to  all  remaining  claims  and  net  liquidation  costs.

     In  accordance with customary business practice in the manufactured housing
industry,  we  have  entered  into  repurchase agreements with various financial
institutions  and  other  credit sources pursuant to which we have agreed, under
certain  circumstances,  to  repurchase  manufactured  homes sold to independent
dealers in the event of a default by such independent dealer on their obligation
to such credit sources.  Under the terms of such repurchase agreements, we agree
to  repurchase  manufactured  homes  at declining prices over the periods of the
agreements  (which  generally  range  from  18  to 24 months).  While repurchase
activity  is  very  sporadic  and cyclical, the Company provides for anticipated
repurchase  losses.  At  July  2,  2004,  the  Company was at risk to repurchase
approximately  $1.2 million of manufactured homes and has provided for estimated
net  repurchase  losses  of  approximately  $0.1  million.

     We  believe  that  our  current  cash  position and expected cash flow from
operations  and  the  liquidation  of excess inventory, along with our floorplan
facility,  will  be  sufficient  to  support  our  cash  and  working  capital
requirements  for  the  foreseeable  future.*


                                       27
<PAGE>
OFF-BALANCE  SHEET  ARRANGEMENTS

     We have not participated in any off-balance sheet arrangements.

INFLATION AND SEASONALITY

     Inflation  in  recent  years has been modest and has primarily affected our
manufacturing costs in the areas of labor, manufacturing overhead, raw materials
other  than  lumber  and certain petroleum-based materials.  The price of lumber
and  certain  petroleum-based  materials  are  affected  more  by the imbalances
between  supply  and  demand than by inflation.  The prices of these products as
well  as  steel  and  concrete have risen substantially during fiscal year 2004.
Historically,  we believe we have been able to minimize the effects of inflation
by  increasing  the  selling prices of our products, improving our manufacturing
efficiency  and  increasing our employee productivity.  There are no assurances,
however,  that  we  will  be able to respond to significant further increases in
costs in the future.  In addition, our business is seasonal, with weakest demand
typically  from mid-November through February and the strongest demand typically
from  March  through mid-November. Over the history of the Company's operations,
management  has  not observed any correlation between interest rate fluctuations
and increases or decreases in sales based solely on such fluctuations.  However,
management  believes  that substantially lower residential mortgage rates during
fiscal  2003 and fiscal 2004, coupled with a growing supply of lower priced site
built  homes,  has  impacted  sales  in certain of its markets over this period.

CONTRACTUAL  OBLIGATIONS

     The  following  table summarizes the Company's long-term debt and operating
leases  at  July  2,  2004:

<TABLE>
<CAPTION>
                                             Payment Due by Period
                               ----------------------------------------------------
                                       Less than                            After
Contractual Obligations        Total     1 Year    2-3 Years   4-5 Years   5 years
                               ------  ----------  ----------  ----------  --------
<S>                            <C>     <C>         <C>         <C>         <C>
  Long-term debt. . . . . . .  $  205  $       18  $       42  $       51  $     94
  Operating leases. . . . . .   1,635       1,196         439          --        --
                               ------  ----------  ----------  ----------  --------

Total contractual obligations  $1,840  $    1,214  $      481  $       51  $     94
                               ======  ==========  ==========  ==========  ========
</TABLE>

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK

     We are exposed to market risks related to fluctuations in interest rates on
our  variable  rate  debt,  which  consists  of  our  liability for floorplan of
manufactured  housing  retail  inventories.  We  do not use interest rate swaps,
futures  contracts or options on futures, or other types of derivative financial
instruments.

     For  fixed-rate  debt,  changes in interest rates generally affect the fair
market  value,  but  not  earnings  or cash flows. Conversely, for variable-rate
debt,  changes  in  interest rates generally do not influence fair market value,
but  do  affect  future earnings and cash flows. We do not have an obligation to
prepay  fixed-rate  debt  prior to maturity, and as a result, interest rate risk
and  changes  in  fair market value should not have a significant impact on such
debt  until  we would be required to refinance it. Based on the current level of
variable-rate debt, each one percentage point increase (or decrease) in interest
rates  occurring  on  the  first day of the year would result in an increase (or
decrease)  in  interest  expense  for  the coming year of approximately $14,300.

     Our  financial  instruments  are  not currently subject to foreign currency
risk or commodity price risk. We do not believe that future market interest rate
risks  related  to  our  marketable  investments or debt obligations will have a
material  impact  on  the  Company  or  the  results  of  our future operations.

     We do not hold any financial instruments for trading purposes.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is listed under Item 15 (a) and
begins at page F-1 hereof.


                                       28
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

ITEM  9A.  CONTROLS  AND  PROCEDURES

     Under  the  supervision  and  with  the  participation  of  our management,
including  our Chief Executive Officer and Chief Financial Officer, we conducted
an  evaluation of our disclosure controls and procedures as such term is defined
under  Rule  13a-15(e) promulgated under the Securities Act of 1934, as amended,
as of the end of our fiscal year. Based on their evaluation, our Chief Executive
Officer  and  Chief Financial Officer concluded that our disclosure controls and
procedures  are  effective.  There  have  been no significant changes (including
corrective  actions  with  regard  to  significant  deficiencies  or  material
weaknesses)  in  our  internal  controls  or  in  other  factors  that  could
significantly  affect  these  controls  subsequent to the date of the evaluation
referenced  above.

ITEM  9B.  OTHER  INFORMATION

     None.


                                       29
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The executive officers of the Company, their age and their position as of
September 13, 2004 are set forth below.


     NAME                    AGE   POSITION
     ---------------------   ---   --------------------------------

     Finis F. Teeter . . . .  60   President, Chief Executive
                                   Officer and Director

     Craig A. Reynolds . . .  55   Executive Vice-President, Chief
                                   Financial Officer and Secretary

     Charles N. Carney, Jr .  49   Vice President, Chief Operating
                                   Officer-Retail Operations

     Jackie H. Holland . . .  57   Vice President, Chief Operating
                                   Officer-Manufacturing Operations

     FINIS  F.  TEETER  founded  the  Company in 1971.  Mr. Teeter has served as
President,  Chief  Executive Officer and a Director since October 2000, and also
served  as  Chairman  of  the  Board and Chief Executive Officer from 1971 until
August 1993.  From August 1993 until January 2000, Mr. Teeter served as Chairman
of  the Board and Co-Chief Executive Officer.  From January to October 2000, Mr.
Teeter  served  as  a Director of the Company. Prior to forming the Company, Mr.
Teeter  served  in  various  sales  and  sales management capacities with Teeter
Mobile Homes from 1962 to 1969 and with Mobile Home Industries from 1969 to late
1970.

     CRAIG  A.  REYNOLDS has served as Executive Vice President, Chief Financial
Officer and Secretary of the Company since joining the Company in July 1982. Mr.
Reynolds  is  a  Certified  Public Accountant (inactive status) and holds an MBA
from  Florida  Tech  as  well  as a BBA (Accounting) from Kent State University.

     CHARLES  N.  CARNEY,  JR.  has  served  as  Vice President, Chief Operating
Officer-Retail  Operations of the Company since June 1987.  Mr. Carney served as
a  Director  of the Company from 1993 to 2000.  Mr. Carney has served in various
sales,  sales management and senior sales management capacities with the Company
since  joining  its predecessor in 1977. Mr. Carney holds a Bachelor of Business
Administration  degree  from  Eastern  Kentucky  University.

     JACKIE  H.  HOLLAND  has  served  as  Vice  President  Chief  Operating
Officer-Manufacturing  Operations  of the Company since August 2003. From August
1993  to  July  2003,  Mr.  Holland  served  as  Vice  President  of  Finance,
Manufacturing  Operations for the Company. Mr. Holland has more than 30 years of
industry  experience  in  various  manufacturing  and  financial  management
capacities, at both the plant and corporate levels, with Oak Creek Homes, Redman
Homes  and  Palm Harbor Homes. Mr. Holland holds a Bachelor of Science degree in
Accounting  from  the  University  of  North  Alabama.

     The  remaining  information  required  by Item 10 is incorporated herein by
reference  from  the Company's definitive Proxy Statement for the Company's 2004
annual  shareholders'  meeting filed with the Securities and Exchange Commission
on  or  about  September  16,  2004.


                                       30
<PAGE>
ITEM  11.  EXECUTIVE  COMPENSATION

     The  information  required  by  Item 11 is incorporated herein by reference
from  the  Company's  definitive  Proxy  Statement for the Company's 2004 annual
shareholders'  meeting  filed  with the Securities and Exchange Commission on or
about  September  16,  2004.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

BENEFICIAL OWNERSHIP TABLE

     The  information  required  by  Item 12 is incorporated herein by reference
from  the  Company's  definitive  Proxy  Statement for the Company's 2004 annual
shareholders'  meeting  filed  with the Securities and Exchange Commission on or
about  September  16,  2004.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The  information  required  by  Item 13 is incorporated herein by reference
from  the  Company's  definitive  Proxy  Statement for the Company's 2004 annual
shareholders'  meeting  filed  with the Securities and Exchange Commission on or
about  September  16,  2004.

ITEM  14:  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

     The  information  required  by  Item 14 is incorporated herein by reference
from  the  Company's  definitive  Proxy  Statement for the Company's 2004 annual
shareholders'  meeting  filed  with the Securities and Exchange Commission on or
about  September  16,  2004.


                                       31
<PAGE>
                                     PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  (1)  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                                                                                      PAGE
                                                                                      ----
<S>                                                                                   <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . .  F-2

Consolidated Balance Sheets as of June 27, 2003 and July 2, 2004 . . . . . . . . . .  F-3

Consolidated Statements of Operations for the three months ended September 29, 2001,
    nine months ended June 28, 2002 and years ended June 27, 2003 and July 2, 2004 .  F-4

Consolidated Statements of Shareholders' Equity (Deficit) for the three months ended
    September 29, 2001, September 29, 2001 (Fresh Start), nine months ended
    June 28, 2002 and years ended June 27, 2003 and July 2, 2004 . . . . . . . . . .  F-5

Consolidated Statements of Cash Flows for the three months ended September 29, 2001,
    nine months ended June 28, 2002 and years ended June 27, 2003 and July 2, 2004 .  F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . .  F-7

    (2)  SUPPLEMENTARY SCHEDULE TO FINANCIAL STATEMENTS

Financial Statement Schedule II - Valuation and Qualifying Accounts. . . . . . . . .  F-27
</TABLE>

    (3)  EXHIBITS

          The  exhibits filed as part of this report are listed under "Exhibits"
at  subsection  (c)  of  Item  14

     (B)  LIST  OF  EXHIBITS

<TABLE>
<CAPTION>
<C>     <S>
2.1     Debtors' Third Amended and Restated Plan of Reorganization (Incorporated by reference to Exhibit 99.2
        to the Company's Current Report on Form 8-K filed on January 8, 2002)

3.1     Amended and Restated Articles of Incorporation of the Company (Incorporated by reference to Exhibit 3.1
        to the Company's Quarterly Report on Form 10-Q filed on May 10, 2002)

3.2     Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.1 to the
        Company's Quarterly Report on Form 10-Q filed on May 10, 2002)

3.3     Charter for the Audit Committee of the Company, dated September 19, 2001 (Incorporated by reference to
        the Company's Annual Report on Form 10-K filed on September 24, 2002)

3.4     Charter for the Compensation Committee of the Company, dated September 18, 2001 (Incorporated by
        reference to the Company's Annual Report on Form 10-K filed on September 24, 2002)

3.5     Charter for the Audit Committee of the Company, Amended and Restated as of April 20, 2004
        (Incorporated by reference to the Company's Proxy Statement filed on September 16, 2004)

10.1    Employment Agreement, effective as of October 3, 2001, by and between the Company and Finis F. Teeter
        (Incorporated by reference to the Company's Annual Report on Form 10-K filed on September 24, 2002)


                                       32
<PAGE>
10.2    American Homestar Corporation 2001 Management Incentive Program, effective as of October 3, 2001
        (Incorporated by reference to the Company's Annual Report on Form 10-K filed on September 24, 2002)

10.3    Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Finis F. Teeter (Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 24, 2002)

10.4    Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Craig A. Reynolds (Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 24, 2002)

10.5    Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Charles N. Carney, Jr. (Incorporated by reference to the Company's Annual Report on Form 10-K filed
        on September 24, 2002)

10.6    Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and James J. Fallon (Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 24, 2002)

10.7    Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Jackie Holland(Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 23, 2003)

10.8*   Agreement of Limited Partnership of Humble Springs Ltd.

10.9*   Agreement of Limited Partnership of 114 Starwood Development Ltd.

14.1    American Homestar Corporation Code of Business Conduct and Ethics, adopted on December 17, 2002
        (Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on May 2, 2003)

16.1    Letter Regarding Change in Certifying Accountant (Incorporated by reference to Exhibit 16.1 to the
        Company's Current Report on Form 8-K filed on January 25, 2002)

21.1*   Subsidiaries of American Homestar Corporation

31.1*   Certification pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) for Finis F. Teeter, Chief Executive
        Officer of the Company.

31.2*   Certification pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) for Craig A. Reynolds, Chief Financial
        Officer

32.1**  Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
        Oxley Act of 2002 for Finis F. Teeter, Chief Executive Officer, and Craig A. Reynolds, Chief Financial
        Officer of the Company.
</TABLE>


_____________
*    Filed herewith
**   Furnished herewith


                                       33
<PAGE>
                                   SIGNATURES


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.

                                               AMERICAN  HOMESTAR  CORPORATION

     Date:  September 16, 2004            By:  /s/  FINIS F. TEETER
                                               ---------------------------------
                                               Finis F. Teeter, President

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
registrant  and  in  the  capacities  and  on  the  dates  indicated.


Signature                             Title                       Date
----------------------  ---------------------------------  ------------------

/s/ FINIS F. TEETER     President, CEO and                 September 16, 2004
----------------------  Director
Finis F. Teeter


/s/ CRAIG A. REYNOLDS.  Executive Vice President, Chief    September 16, 2004
----------------------  Financial Officer, and Secretary
Craig A. Reynolds       (Principal Financial and
                        Accounting Officer)


/s/  ELLIS L. MCKINLEY  Director                           September 16, 2004
----------------------
Ellis L. McKinley


/s/ RICHARD N. GRASSO   Director                           September 16, 2004
----------------------
Richard N. Grasso


/s/ RICHARD F. DAHLSON  Director                           September 16, 2004
----------------------
Richard F. Dahlson


/s/ NATHAN P. MORTON    Director                           September 16, 2004
----------------------
Nathan Morton


                                       34
<PAGE>
<TABLE>
<CAPTION>
                        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                                      PAGE
                                                                                      ----
<S>                                                                                   <C>

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . .   F-2

Consolidated Balance Sheets as of June 27, 2003 and July 2, 2004 . . . . . . . . . .   F-3

Consolidated Statements of Operations for the three months ended September 29, 2001,
    nine months ended June 28, 2002 and years ended June 27, 2003 and July 2, 2004 .   F-4

Consolidated Statements of Shareholders' Equity (Deficit) for the three months ended
    September 29, 2001, (Fresh Start), nine months ended
    June 28, 2002 and years ended June 27, 2003 and July 2, 2004 . . . . . . . . . .   F-5

Consolidated Statements of Cash Flows for the three months ended September 29, 2001,
    nine months ended June 28, 2002 and years ended June 27, 2003 and July 2, 2004 .   F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . .   F-7

Financial Statement Schedule II - Valuation and Qualifying Accounts. . . . . . . . .  F-27
</TABLE>


                                      F-1
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of American Homestar Corporation
League City, Texas

We have audited the accompanying consolidated balance sheets of American
Homestar Corporation and subsidiaries (the "Company") as of July 2, 2004 and
June 27, 2003, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the years ended July 2, 2004
and June 27, 2003, the nine months ended June 28, 2002 (Successor Company), and
the three months ended September 29, 2001 (Predecessor Company ). These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (of the United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Homestar Corporation and subsidiaries as of July 2, 2004 and June 27,
2003, and the results of their operations and their cash flows for the years
ended July 2, 2004 and June 27, 2003, the nine months ended June 28, 2002
(Successor Company), and the three months ended September 29, 2001 (Predecessor
Company), in conformity with accounting principles generally accepted in the
United States.


/s/ UHY MANN FRANKFORT STEIN & LIPP CPAs, LLP

Houston, Texas
August 27, 2004


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                          AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS
                           (IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)


                                                                              JUNE 27,    JULY 2,
                                                                                2003       2004
                                                                             ----------  ---------
<S>                                                                          <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .  $  14,473   $ 13,989
  Cash - reserved for claims. . . . . . . . . . . . . . . . . . . . . . . .      4,341         --
  Cash - restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . .        640         --
  Accounts receivable - trade, net of $675 and $70 respectively . . . . . .        696      1,944
  Accounts receivable - other . . . . . . . . . . . . . . . . . . . . . . .        101         66
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     29,919     28,470
  Prepaid expenses, notes receivable and other current assets . . . . . . .        804        959
  Current assets of discontinued operations . . . . . . . . . . . . . . . .      2,698         --
                                                                             ----------  ---------
        Total current assets. . . . . . . . . . . . . . . . . . . . . . . .     53,672     45,428
                                                                             ----------  ---------

  Notes receivable and other assets . . . . . . . . . . . . . . . . . . . .        418        160
  Investments in affiliates, at equity. . . . . . . . . . . . . . . . . . .      3,884        860
  Property, plant and equipment, net. . . . . . . . . . . . . . . . . . . .      9,394      7,437
  Assets held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . .      3,354      2,937
  Non-current assets of discontinued operations . . . . . . . . . . . . . .        213         --
                                                                             ----------  ---------
        Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  70,935   $ 56,822
                                                                             ==========  =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Floorplan payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   6,826   $  1,430
  Current installments of notes payable . . . . . . . . . . . . . . . . . .         70         18
  Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        957      1,173
  Warranty reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,687      1,653
  Accrued other liabilities . . . . . . . . . . . . . . . . . . . . . . . .      4,614      4,513
  Plan Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      5,610         --
  Current liabilities of discontinued operations. . . . . . . . . . . . . .        538         --
                                                                             ----------  ---------
        Total current liabilities . . . . . . . . . . . . . . . . . . . . .     20,302      8,787
                                                                             ----------  ---------

  Notes payable, less current installments. . . . . . . . . . . . . . . . .        502        187
  Non current liabilities and minority interest of discontinued operations.      1,226         --
  Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . .         --         --

SHAREHOLDERS' EQUITY
  Common stock series C, par value $0.01; 15,000,000 shares authorized,
    10,000,000 shares outstanding at June 27, 2003 and July 2, 2004 . . . .        100        100
  Common stock series M, par value $0.01; 7,500,000 shares authorized,
    100 shares outstanding at June 27, 2003 and 67,600 outstanding at
    July 2, 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         --          1
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . .     49,355     49,445
  Accumulated deficit since September 29, 2001 (accumulated deficit of
    $158 million eliminated at time of reorganization). . . . . . . . . . .       (550)    (1,698)
                                                                             ----------  ---------
        Total shareholders' equity. . . . . . . . . . . . . . . . . . . . .     48,905     47,848
                                                                             ----------  ---------
        Total liabilities and shareholders' equity. . . . . . . . . . . . .  $  70,935   $ 56,822
                                                                             ==========  =========
</TABLE>

See accompanying notes to consolidated financial statements


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                  AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)


                                                        THREE MONTHS      NINE MONTHS       YEAR          YEAR
                                                            ENDED            ENDED         ENDED         ENDED
                                                        SEPTEMBER 29,      JUNE 28,       JUNE 27,      JULY 2,
                                                            2001             2002           2003          2004
                                                      -----------------  -------------  ------------  ------------
                                                       PREDECESSOR CO.                  SUCCESSOR CO.
                                                      -----------------  -----------------------------------------
<S>                                                   <C>                <C>            <C>           <C>
Revenues:
  Net sales. . . . . . . . . . . . . . . . . . . . .  $         21,107   $     64,234   $    70,810   $    69,108
  Other revenues . . . . . . . . . . . . . . . . . .             2,745          6,441         3,212         3,301
                                                      -----------------  -------------  ------------  ------------

      Total revenues . . . . . . . . . . . . . . . .            23,852         70,675        74,022        72,409

  Cost of sales. . . . . . . . . . . . . . . . . . .            14,074         41,876        48,481        49,779
                                                      -----------------  -------------  ------------  ------------

      Gross Profit . . . . . . . . . . . . . . . . .             9,778         28,799        25,541        22,630

    Selling, general and administrative. . . . . . .            10,013         27,606        27,623        26,488
    (Gain) on sale of assetsairment. . . . . . . . .                --             --            --        (1,327)
                                                      -----------------  -------------  ------------  ------------

      Operating income (loss). . . . . . . . . . . .              (235)         1,193        (2,082)       (2,531)

Interest expense . . . . . . . . . . . . . . . . . .              (214)          (825)         (955)         (268)
Other income (expense) . . . . . . . . . . . . . . .                89            245           363         1,436
                                                      -----------------  -------------  ------------  ------------

      Income (loss) before items shown below . . . .              (360)           613        (2,674)       (1,363)

Reorganization items:
  Fresh-Start adjustments. . . . . . . . . . . . . .            18,863             --            --            --
  Reorganization costs . . . . . . . . . . . . . . .            (1,433)            --            --            --
                                                      -----------------  -------------  ------------  ------------

      Income (loss) before items shown below . . . .            17,070            613        (2,674)       (1,363)

  Income tax expense (benefit) . . . . . . . . . . .                20             16            (2)         (220)
                                                      -----------------  -------------  ------------  ------------

      Income (loss) before items shown below . . . .            17,050            597        (2,672)       (1,143)

Earnings (losses) in affiliates. . . . . . . . . . .               145            409           606          (141)
                                                      -----------------  -------------  ------------  ------------

      Income (loss) before items shown below . . . .            17,195          1,006        (2,066)       (1,284)

Extraordinary item:
  Gain on forgiveness of debt. . . . . . . . . . . .           139,130             --            --            --
  Discontinued operations. . . . . . . . . . . . . .                52            258           252           136
                                                      -----------------  -------------  ------------  ------------
      Net income (loss). . . . . . . . . . . . . . .  $        156,377   $      1,264   $    (1,814)  $    (1,148)
                                                      =================  =============  ============  ============

Earnings (loss) per share - basic and diluted from:
  Continuing operations. . . . . . . . . . . . . . .      N/A                    0.10   $     (0.21)  $     (0.13)
  Discontinued operations. . . . . . . . . . . . . .      N/A                     .03          0.03          0.01
                                                      -----------------  -------------  ------------  ------------
                                                          N/A            $       0.13   $     (0.18)  $     (0.12)
                                                      =================  =============  ============  ============

Weighted average shares
  Outstanding - basic and diluted. . . . . . . . . .      N/A              10,000,100    10,000,100    10,018,100
                                                      =================  =============  ============  ============
</TABLE>

See accompanying notes to consolidated financial statements


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                     AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                      (IN THOUSANDS EXCEPT FOR SHARE INFORMATION)

                                                                                                       RETAINED
                                                                                       ADDITIONAL      EARNINGS
                                       PREFERRED STOCK            COMMON STOCK          PAID-IN      (ACCUMULATED
                                     SHARES      VALUE        SHARES      PAR VALUE     CAPITAL        DEFICIT)
                                    ---------  ----------  ------------  -----------  ------------  --------------
<S>                                 <C>        <C>         <C>           <C>          <C>           <C>             <C>

BALANCES AT JUNE 29, 2001            134,167       1,610    18,423,707          921        62,519        (156,377)

Net loss                                  --          --            --           --            --          (1,616)  (1)
                                    ---------  ----------  ------------  -----------  ------------  --------------

PREDECESSOR COMPANY
  BALANCES AT SEPTEMBER 29,
  2001                               134,167       1,610    18,423,707          921        62,519        (157,993)

Cancellation of former equity
  under the Plan of
  Reorganization                    (134,167)     (1,610)  (18,423,707)        (921)      (62,519)        157,993
Issuance of new equity interest in
  connection with emergence
  from Chapter 11                         --          --            --           --        30,179              --
Issuance of new Series M
  common stock in connection
  with emergence from Chapter 11          --          --           100           --            --              --
                                    ---------  ----------  ------------  -----------  ------------  --------------

SUCCESSOR COMPANY
  BALANCES AT
  SEPTEMBER 29, 2001                      --          --           100           --        30,179              --

Issuance of new Series C
  common stock                            --          --     3,922,280           39           (39)             --
Series C common stock held in
  constructive trust                      --          --     6,077,720           61           (61)             --
Income tax refund recorded as
  paid-in capital                         --          --            --           --        18,370              --
Net income                                --          --            --           --            --           1,264
                                    ---------  ----------  ------------  -----------  ------------  --------------

SUCCESSOR COMPANY
  BALANCES AT JUNE 28, 2002               --          --    10,000,100          100        48,449           1,264

Issuance of new Series C common
  stock                                   --          --       946,970            9            (9)             --
Series C common stock held in
  constructive trust                      --          --      (946,970)          (9)            9               -
Liquidation and plan reserve
  adjustment recorded as paid-in
  capital                                 --          --            --           --           400              --
Claims reserve adjustment recorded
  as paid-in capital                      --          --            --           --           506              --
Net loss                                  --          --            --           --            --          (1,814)
                                    ---------  ----------  ------------  -----------  ------------  --------------

SUCCESSOR COMPANY
  BALANCES AT JUNE 27, 2003               --          --    10,000,100          100   $    49,355            (550)
                                    ---------  ----------  ------------  -----------  ------------  --------------

Exercise of stock options                                       67,500            1            90

Net loss                                                                                                   (1,148)
                                    ---------  ----------  ------------  -----------  ------------  --------------

SUCCESSOR COMPANY
  BALANCES AT JULY 2, 2004                --   $      --    10,067,600   $      101   $    49,445   $      (1,698)
                                    =========  ==========  ============  ===========  ============  ==============



                                         TOTAL
                                     SHAREHOLDERS'
                                        EQUITY
                                    ---------------
<S>                                 <C>

BALANCES AT JUNE 29, 2001. . . . .         (91,327)

Net loss . . . . . . . . . . . . .          (1,616)
                                    ---------------

PREDECESSOR COMPANY
  BALANCES AT SEPTEMBER 29,
  2001 . . . . . . . . . . . . . .         (92,943)

Cancellation of former equity
  under the Plan of
  Reorganization . . . . . . . . .          92,943
Issuance of new equity interest in
  connection with emergence
  from Chapter 11. . . . . . . . .          30,179
Issuance of new Series M
  common stock in connection
  with emergence from Chapter 11 .              --
                                    ---------------

SUCCESSOR COMPANY
  BALANCES AT
  SEPTEMBER 29, 2001 . . . . . . .          30,179

Issuance of new Series C
  common stock . . . . . . . . . .              --
Series C common stock held in
  constructive trust . . . . . . .              --
Income tax refund recorded as
  paid-in capital. . . . . . . . .          18,370
Net income . . . . . . . . . . . .           1,264
                                    ---------------

SUCCESSOR COMPANY
  BALANCES AT JUNE 28, 2002. . . .          49,813

Issuance of new Series C common
  stock. . . . . . . . . . . . . .              --
Series C common stock held in
  constructive trust . . . . . . .              --
Liquidation and plan reserve
  adjustment recorded as paid-in
  capital. . . . . . . . . . . . .             400
Claims reserve adjustment recorded
  as paid-in capital . . . . . . .             506
Net loss . . . . . . . . . . . . .          (1,814)
                                    ---------------

SUCCESSOR COMPANY
  BALANCES AT JUNE 27, 2003. . . .          48,905
                                    ---------------

Exercise of stock options. . . . .              91

Net loss . . . . . . . . . . . . .          (1,148)
                                    ---------------

SUCCESSOR COMPANY
  BALANCES AT JULY 2, 2004 . . . .  $       47,848
                                    ===============
</TABLE>

(1)  Net loss before fresh-start adjustments and extraordinary item relating to
gain on forgiveness of debt.

See accompanying notes to consolidated financial statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                        AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                        (in thousands)


                                                                        THREE MONTHS      NINE MONTHS      YEAR       YEAR
                                                                            ENDED            ENDED        ENDED       ENDED
                                                                        SEPTEMBER 29,      JUNE 28,      JUNE 27,    JULY 2,
                                                                            2001             2002          2003       2004
                                                                      -----------------  -------------  ----------  ---------
                                                                       PREDECESSOR CO.                 SUCCESSOR CO.
                                                                      -----------------  ------------------------------------
<S>                                                                   <C>                <C>            <C>         <C>
Cash flows from operating activities:
  Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . .  $        156,377   $      1,264   $  (1,814)  $ (1,148)

   Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
  Fresh-Start adjustments. . . . . . . . . . . . . . . . . . . . . .           (18,863)            --          --         --
  Extraordinary item - Gain on forgiveness of debt . . . . . . . . .          (139,130)            --          --         --
  Tax refund . . . . . . . . . . . . . . . . . . . . . . . . . . . .                --         18,370                     --
    Loss (Gain) on sale of assets. . . . . . . . . . . . . . . . . .                --             18         (77)    (1,327)
    Depreciation and amortization. . . . . . . . . . . . . . . . . .               748            448         642        525
    Losses (earnings) in affiliates. . . . . . . . . . . . . . . . .              (145)          (409)       (606)       141
    Changes in operating assets and liabilities:
      (Increase) decrease in receivables . . . . . . . . . . . . . .             1,705            518         147     (1,213)
      (Increase) decrease in inventories . . . . . . . . . . . . . .               584         (4,029)     (3,006)     1,449
      (Increase) decrease in prepaid expenses, notes
        receivable and other current assets. . . . . . . . . . . . .               949          1,782        (186)      (155)
      (Increase) decrease in notes receivable and other assets . . .               (71)           104          60        258
      Increase (decrease) in accounts payable. . . . . . . . . . . .            (2,293)        (1,245)       (104)       216
      Increase (decrease) in accrued expenses and other liabilities.             1,504         (4,955)     (2,432)      (136)
      Payment and other changes in Plan obligations. . . . . . . . .                --          1,041      (2,436)    (5,610)
      Change in net assets of discontinued operations. . . . . . . .               (52)          (259)       (252)     1,147
                                                                      -----------------  -------------  ----------  ---------

        Net cash provided by (used in) operating activities. . . . .             1,313         12,648     (10,064)    (5,853)
                                                                      -----------------  -------------  ----------  ---------

Cash flows from investing activities:
  Proceeds from sale of property, plant and equipment. . . . . . . .                --              3         522      3,152
  Proceeds from sale of assets held for sale . . . . . . . . . . . .                --            581       1,107        417
  Purchases of property, plant and equipment . . . . . . . . . . . .               (75)          (158)       (374)      (394)
  Dividends from unconsolidated affiliate. . . . . . . . . . . . . .                --            272         222         95
  Net return of investment in affiliate. . . . . . . . . . . . . . .                --             --          --      3,352
  Investment in affiliate. . . . . . . . . . . . . . . . . . . . . .                --            (31)       (296)      (564)
                                                                      -----------------  -------------  ----------  ---------
        Net cash provided by (used in) investing activities. . . . .               (75)           667       1,181      6,058
                                                                      -----------------  -------------  ----------  ---------

Cash flows from financing activities:
  Borrowings under floorplan payable . . . . . . . . . . . . . . . .             9,368         22,382      10,100      6,039
  Repayments of floorplan payable. . . . . . . . . . . . . . . . . .           (12,843)       (21,315)    (23,963)   (11,433)
  Proceeds from long-term debt borrowings. . . . . . . . . . . . . .               214             25          --         --
  Principal payments of long-term debt . . . . . . . . . . . . . . .               (99)          (299)       (193)      (367)
  Exercise of stock options. . . . . . . . . . . . . . . . . . . . .                --             --          --         91
  Change in restricted cash. . . . . . . . . . . . . . . . . . . . .            (4,563)         2,582       5,453      4,981
                                                                      -----------------  -------------  ----------  ---------
        Net cash provided by (used in) financing
          activities . . . . . . . . . . . . . . . . . . . . . . . .            (7,923)         3,375      (8,603)      (689)
                                                                      -----------------  -------------  ----------  ---------

Net increase (decrease) in cash and cash equivalents . . . . . . . .            (6,685)        16,690     (17,486)      (484)
Cash and cash equivalents at beginning of year . . . . . . . . . . .            21,954         15,269      31,959     14,473
                                                                      -----------------  -------------  ----------  ---------

Cash and cash equivalents at end of year . . . . . . . . . . . . . .  $         15,269   $     31,959   $  14,473   $ 13,989
                                                                      =================  =============  ==========  =========

Supplemental Cash Flow Information
  Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . .  $             25   $        296   $     360   $     80
  Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . .               233            850         926        263
                                                                      =================  =============  ==========  =========


                                                                      =================  =============  ==========  =========
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  REORGANIZATION (IN 2001) AND BASIS OF REPORTING

REORGANIZATION

     On  January  11,  2001 (the "Petition Date"), American Homestar Corporation
and  Subsidiaries  (the "Company") and twenty-one (21) of its subsidiaries filed
separate  voluntary  petitions for reorganization under Chapter 11 of the United
States  Bankruptcy Code ("Chapter 11") in the United States Bankruptcy Court for
the Southern District of Texas (the "Bankruptcy Court"). On August 14, 2001, the
Bankruptcy  Court confirmed the Third Amended Joint Plan of Reorganization, (the
"Plan"), of the Company and its subsidiaries. On October 3, 2001, all conditions
required  for  the  effectiveness  of  the  Plan  were  met, and the Plan became
effective  ("Effective Date"), and the Company and its subsidiaries emerged from
bankruptcy.  On June 22, 2004 the Bankruptcy Court entered an Order granting our
Motion  For  Entry  Of  Final  Decrees,  closing all 22 of our Chapter 11 cases.

SUMMARY  OF  PLAN

     Under  the  Plan,  the  Company  maintained  ongoing  business  operations
primarily  in  Texas, Louisiana and Oklahoma, and conducted sales to independent
dealers  in  New Mexico, Arkansas and Colorado. The Company continued use of the
manufacturing  facilities  in  North Texas and the operation of approximately 40
retail locations. Moreover, through affiliated entities that were not subject to
the  Plan,  the  Company  continued  its  insurance,  financial  services  and
transportation  lines  of  business.

     Treatment  of  Equity: Under the terms of the Plan, all equity interests in
the  Company  were  cancelled  as  of  the  Effective  Date,  and all holders of
outstanding  shares  of  Company  stock,  which  had previously traded under the
symbols  HSTR  and  HSTRQ,  lost  all  rights  to equity interests in and to the
reorganized  Company.  Under the Plan, the Company has the authority to issue 15
million  shares of new Series C common stock and is required to issue 10 million
shares of Series C common stock to its general unsecured creditors.  Pursuant to
the  exemption  set  forth  in  Section 1145 of the Bankruptcy Code, the Company
issued  new shares of Series C common stock to persons holding allowed unsecured
claims  in  the Company's bankruptcy case and shares of Series M common stock to
management  under  an  incentive  program.  As  of July 2, 2004, the Company has
issued  10 million shares of Series C common stock and 67,600 shares of Series M
common stock.  The Company also has the authority to issue 7.5 million shares of
Series  M  common stock to management, 67,500 shares of which had been issued as
of  July  2,  2004  and  4,999,900  shares underlie options authorized under the
Company's 2001 Management Incentive Program.   Options for 4,932,400 shares have
been approved and granted at an exercise price of $1.35 per share. These options
vest  seven  years  from  the  date of grant and may vest earlier (up to 20% per
year)  if  certain  annual  performance  criteria  established  by  the Board of
Directors  are  met.  As  of July 2, 2004, options for 67,500 shares of Series M
common  stock  had  been  exercised and options to purchase 1,155,600 additional
shares  of  Series  M  common  stock  were  vested.

BASIS  OF  REPORTING

     Upon  emergence  from  Chapter  11,  the  Company adopted the provisions of
Statement  of  Position  No.  90-7,  "Financial  Reporting  by  Entities  in
Reorganization  Under  the  Bankruptcy  Code"  ("Fresh-Start  Reporting")  as
promulgated  by  the  AICPA.  Accordingly,  all assets and liabilities have been
restated  to  reflect  their reorganization value, which approximates their fair
value at the Effective Date. In addition, the accumulated deficit of the Company
was eliminated and its capital structure was recast in conformity with the Plan,
and  the  Company has recorded the effects of the Plan and Fresh-Start Reporting
as  of  September 29, 2001. Activity between September 29, 2001, the date of the
Consolidated  Fresh-Start Balance Sheet, and October 3, 2001, the Effective Date
of  the  Plan,  was  not  material.  The adjustment to eliminate the accumulated
deficit  totaled  $158 million of which $139 million was forgiveness of debt and
$19 million was from Fresh-Start adjustments. The results of operations and cash
flows  for the three months ended September 29, 2001 include operations prior to
the  Company's  emergence  from  Chapter  11 proceedings, which do not take into
account  the  effects  of  Fresh-Start  Reporting (the Company being referred to
herein  as  "Predecessor  Company" for periods prior to September 29, 2001). The
results  of  operations  and  cash flows for the nine months ended June 28, 2002
include  operations  subsequent  to  the  Company's  emergence  from  Chapter 11
proceedings  and  reflect  the  on-going  effects  of Fresh-Start Reporting (the
Company  being  referred  to  herein  as


                                      F-7
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


"Successor  Company" for periods subsequent to September 29, 2001). As a result,
the  results  of  operations and cash flows for the twelve months ended June 27,
2003  and July 2, 2004  for the Successor Company are not necessarily comparable
to the results of operations and cash flows for the twelve months ended June 28,
2002,  as  the  earlier  period  includes  three  months  of Predecessor Company
operations  and  cash  flows,  which  do  not reflect the effects of Fresh-Start
Reporting, and nine months of Successor Company operations and cash flows, which
do  reflect  the  effects  of  Fresh-Start  Reporting.

     The  reorganization  value  of the Company's common equity of approximately
$30  million was determined by an independent valuation and financial specialist
after  consideration  of  several factors and by using various valuation methods
including  appraisals,  cash  flow  multiples,  price/earnings  ratios and other
relevant industry information.  The reorganization value of the Company has been
allocated  to  various  asset  categories  pursuant  to  Fresh-Start  accounting
principles.


                                      F-8
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DEBT  DISCHARGE  AND  FRESH  START  REPORTING
The  effects of the Plan on the Predecessor Company's unaudited balance sheet at
September 29, 2001 were as follows (in thousands, except per share information):

<TABLE>
<CAPTION>
                                                                  September 29,      Debt       Fresh-Start    Reorganized
                                                                      2001         Discharge      Entries     Balance Sheet
<S>                                                              <C>              <C>          <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents . . . . . . . . . . . . . . . . . .  $       19,767   $            $     (4,453)  $       15,314
  Cash - reserved for claims. . . . . . . . . . . . . . . . . .              --                       4,453            4,453
  Cash - restricted . . . . . . . . . . . . . . . . . . . . . .           8,563                                        8,563
  Accounts receivable - trade, net. . . . . . . . . . . . . . .           2,251                                        2,251
  Accounts receivable - other, net. . . . . . . . . . . . . . .             332                                          332
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . .          25,453                      (2,569)          22,884
  Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . .           1,201                                        1,201
  Notes receivable. . . . . . . . . . . . . . . . . . . . . . .             285                                          285
  Other current assets. . . . . . . . . . . . . . . . . . . . .           1,076                                        1,076
                                                                 -----------------------------------------------------------
        Total current assets. . . . . . . . . . . . . . . . . .          58,928           --         (2,569)          56,359
                                                                 ---------------  -----------  -------------  --------------

Other assets. . . . . . . . . . . . . . . . . . . . . . . . . .             383                                          383
Investments in affiliates, at equity. . . . . . . . . . . . . .           3,037                                        3,037
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . .             321                                          321
Property, plant and equipment . . . . . . . . . . . . . . . . .          22,025                     (11,562)          10,463
Assets held for sale. . . . . . . . . . . . . . . . . . . . . .           6,043                                        6,043
                                                                 -----------------------------------------------------------

                                                                 $       90,737           --   $    (14,131)  $       76,606
                                                                 ===========================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Floorplan payable . . . . . . . . . . . . . . . . . . . . . .  $       19,622                               $       19,622
  Current installments of notes payable . . . . . . . . . . . .             331                                          331
  Accounts payable. . . . . . . . . . . . . . . . . . . . . . .           2,412                                        2,412
  Accrued salaries and benefits . . . . . . . . . . . . . . . .             825                                          825
  Accrued federal and state taxes payable . . . . . . . . . . .              56                                           56
  Other reserves. . . . . . . . . . . . . . . . . . . . . . . .           2,069        3,073                           5,142
  Other taxes . . . . . . . . . . . . . . . . . . . . . . . . .             653                                          653
  Warranty reserve. . . . . . . . . . . . . . . . . . . . . . .           2,145                                        2,145
  Customer deposits . . . . . . . . . . . . . . . . . . . . . .             922                                          922
  Accrued other liabilities . . . . . . . . . . . . . . . . . .           3,687                                        3,687
  Deferred income . . . . . . . . . . . . . . . . . . . . . . .             337                                          337
  Liquidation and plan reserve. . . . . . . . . . . . . . . . .              --                       1,877            1,877
  Claims reserve. . . . . . . . . . . . . . . . . . . . . . . .              --        4,453                           4,453
  Initial distribution payable. . . . . . . . . . . . . . . . .              --        2,100                           2,100
                                                                 -----------------------------------------------------------
        Total current liabilities . . . . . . . . . . . . . . .          33,059        9,626          1,877           44,562
                                                                 ---------------  -----------  -------------  --------------

Notes payable, less current installments. . . . . . . . . . . .           1,149                                        1,149
Minority interest in consolidated subsidiary. . . . . . . . . .             716                                          716
Liabilities subject to compromise under reorganization
  proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .        148,756     (148,756)                             --

Shareholders' Equity (Deficit):
  Preferred stock, no par value; 5,000,000 shares authorized,
    509,167 shares issued and outstanding . . . . . . . . . . .           1,610                      (1,610)              --
  Common stock, $0.05 par value; 50,000,000 shares authorized,
    18,423,707 shares issued and outstanding. . . . . . . . . .             921                        (921)              --
  Common stock series C, par value  $0.01 (15,000,000 shares
    authorized, 10,000,000 shares issued). . . . . . . . . . .               --                                           --
  Common stock series M, par value $0.01 (7,500,000 shares
    authorized, 100 shares outstanding). . . . . . . . . . .  .              --                                           --
  Additional paid in capital. . . . . . . . . . . . . . . . . .          62,519                     (32,340)          30,179
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . .        (157,993)     139,130         18,863               --
                                                                 -----------------------------------------------------------
        Total Shareholders' Equity (Deficit). . . . . . . . . .         (92,943)                    (16,008)          30,179
                                                                 -----------------------------------------------------------
                                                                 $       90,737   $       --   $    (14,131)  $       76,606
                                                                 ===========================================================
</TABLE>


                                      F-9
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(2)  SIGNIFICANT  RISKS  AND  MANAGEMENT'S  PLANS

     Prior  to its emergence from Chapter 11 proceedings on October 3, 2001 (see
Note  1),  the  Company  had incurred significant losses from operations.  These
losses  stemmed  from  several factors as a direct or indirect result of growing
industry  over-capacity.  Steadily declining retail sales of new homes per store
and  declining  new  home  orders  at  the  Company's  manufacturing  facilities
ultimately  led to sales levels which were insufficient to cover the fixed costs
of  the Company's then national operations.  In addition, the Company was called
upon  to  repurchase  significant amounts of inventory from independent dealers,
which  gave rise to increased losses of a cyclical nature.  The Company was also
experiencing  increased  debt  servicing  costs relating to its senior unsecured
debt.

     Management  believes  that  the restructuring initiatives completed through
October  3, 2001 and new initiatives since that date have positioned the Company
for a return to profitability in the future.*  However, the Company's ability to
attain profitability in the future is dependent upon many factors including, but
not  limited  to,  general economic conditions in the Company's principal market
areas  as well as factors which drive housing demand. These include, but are not
limited to, consumer confidence and new job formation. The Company's performance
is  further  affected by such factors as the availability of alternative housing
(site-constructed  homes  and apartments), the availability of affordable retail
or  mortgage  financing  and  general  industry  conditions  and  competition.

(3)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

PRINCIPLES  OF  CONSOLIDATION  AND  GENERAL

     The  consolidated  financial  statements  include  the accounts of American
Homestar  Corporation  and  its  majority-owned  subsidiaries.  All  significant
intercompany  balances  and  transactions have been eliminated in consolidation.
Certain  amounts  previously reported have been reclassified to conform with the
2004  presentation. The Company also owned a 50% interest in two financing joint
ventures  (Homestar  21st,  LLC and American Homestar Mortgage, L.P.) and owns a
49.5%  interest  in  Humble Springs, LTD and 114 Starwood Development, LTD, both
land development joint ventures, which are accounted for under the equity method
of  accounting.

     The  Company's  fiscal  year  ends on the Friday closest to June 30.  There
were  53  weeks in the fiscal year ended July 2, 2004 and 52 weeks in the fiscal
years  ended  June  27,  2003  and  June  28,  2002.

ACCOUNTING ESTIMATES

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

     Significant  estimates  were  made  to  determine  the  following  amounts
reflected  on  the  Company's  consolidated  balance  sheets:

     -    New home inventory is reflected at lower of cost or market. Management
          must  estimate  the  market  value  of  such  inventory.

     -    Property  Plant  and  Equipment,  according  to  provisions  for
          "Fresh-Start" Reporting, were reflected at their estimated fair market
          value  at  September  29, 2001 and at cost for additions subsequent to
          September  29,  2001,  less  accumulated  depreciation  for the period
          subsequent  to  September  29,  2001.  The  determination  of periodic
          depreciation  expense  requires  an  estimate  of the remaining useful
          lives  of  each  asset.

     -    Assets  Held  For  Sale  are reflected at estimated fair market value.


                                      F-10
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     -    Warranty  Reserves  include an estimate of all future warranty-related
          service  expenses  that  will  be  incurred as to all homes previously
          sold,  which  are  still  within  the  one-year warranty period. These
          estimates  are  based on average historical warranty expense per home,
          applied  to  the  number  of  homes  that  are  still  under warranty.

     -    Reserve for future repurchase losses reflects management's estimate of
          both  repurchase  frequency  and  severity  of  net losses, related to
          agreements  with  various  financial  institutions  and  other  credit
          sources  to repurchase manufacturing homes sold to independent dealers
          in  the event of a default by the independent dealer or its obligation
          to  such  credit  sources.  Such  estimates  are  based  on historical
          experience.

     -    Liquidation  and  Plan  Reserve  reflects management's estimate of all
          costs and expenses to be incurred in administering and satisfying plan
          obligations as well as the net cost to complete the liquidation of all
          non-core  operations.

     -    Claims  Reserve reflects management's estimate of the cash required to
          satisfy  all  remaining  priority, tax, administrative and convenience
          class  claims.  This  reserve  does  not include the remaining initial
          distribution  that is reflected in another liability account, has been
          escrowed,  and  is  not  subject  to  estimation.

REVENUE  RECOGNITION

     Retail sales are recognized once full cash payment is received and the home
has  been  delivered  to  the  customer.

     Manufacturing  sales  to independent dealers and subdivision developers are
recognized  as  revenue  when  the  following  criteria  are  met:
     -    there  is  a  financial  commitment  acceptable to management (e.g. an
          approved  floorplan source, cash or cashiers check received in advance
          or,  a  firm  retail  commitment  from  the  dealer);
     -    the  home  is  completely  finished;
     -    the  home  is  invoiced;  and
     -    the  home  has  been  shipped.

     The  Company  also  maintains  used  manufactured  home  inventory owned by
outside parties and consigned to the Company, for which the Company recognizes a
sales  commission  when  received.

     Premiums  from  credit  life  insurance policies reinsured by the Company's
credit  life subsidiary, Lifestar Reinsurance, Ltd. ("Lifestar"), are recognized
as  revenue  over the life of the policy term. Premiums are ceded to Lifestar on
an  earned  basis.  Lifestar  ceased  operations  in  May  2002.

     Agency insurance commissions are recognized when received and acknowledged
by the underwriter as due.

     Transportation revenues are recognized after the service has been performed
and invoiced to the customer.

INVENTORIES

     Newly  manufactured  homes are valued at the lower of cost or market, using
the  specific  identification  method.  Used  manufactured  homes  are valued at
estimated wholesale prices, not in excess of net realizable value. Raw materials
are valued at the lower of cost or market, using the first-in, first-out method.

PROPERTY, PLANT AND EQUIPMENT

     Property,  plant  and equipment, were recorded at cost at June 29, 2001 or,
as required by Fresh-Start Reporting, were reflected at management's estimate of
fair  market  value  at  September  29,  2001, and since that date additions are
recorded  at cost.  Depreciation on property, plant and equipment is provided by
the  straight-line  method  over  the


                                      F-11
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


estimated  useful  lives  of  the  related  assets.  Leasehold  improvements are
amortized  using  the  straight-line  method  over  the  useful  lives  of  the
improvements  or  lease  periods,  whichever  is  shorter. The Company has three
manufacturing  plants  that  are not in operation which are classified as assets
held  for  sale  and  are  reflected  at management's estimate of net realizable
value.  In  August  2004,  one  of  the  three  non operational plants was sold.

     The  Company evaluates the recoverability of long-lived assets not held for
sale  by  measuring  the  carrying  value  of  the  assets against the estimated
undiscounted future cash flows in accordance with SFAS No. 144, which superceded
SFAS No. 121. At the time such evaluations indicate that the undiscounted future
cash  flows  of  certain  long-lived  assets  are  not sufficient to recover the
carrying  value  of such assets, the assets are adjusted to their estimated fair
values.  Estimated  fair  values  are  determined  using  the  present  value of
estimated  future  cash  flows.

INCOME TAXES

     Deferred  tax  assets  and  liabilities  are  recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the  years in which such temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets  and  liabilities of a change in tax rates is recognized in income in the
period  that  included  the enactment date. 'All deferred tax assets (both short
term  and long term) have been fully reserved as their realization is contingent
upon  future  taxable  income.

RESERVES  FOR  FUTURE  LOSSES  ON  CREDIT  SALES

     The Company makes a current provision for estimated future losses on credit
retail  sales where the Company retains risk in the event of customer nonpayment
of  installment sales contracts.  Typically, the Company's period of exposure to
loss  does  not  exceed  the  first  two  installment  payments on an individual
contract.  The  amounts provided for estimated future losses on credit sales are
determined  based  on  the  Company's  historical  loss  experience after giving
consideration  to  current  economic  conditions.  In  assessing  current  loss
experience and economic conditions, management may adjust the reserve for losses
on  credit  sales  related  to  prior  years'  installment sales contracts.  All
adjustments  are  recognized  currently.

ACCRUED WARRANTY AND SERVICE COSTS

     The  Company  makes a current provision for future service costs associated
with  homes sold and for manufacturing defects for a period of one year from the
date  of  retail sale of the home.  The estimated cost of these items is accrued
at  the  time  of  sale  and  is  reflected in cost of sales in the consolidated
statements  of  operations.  For  the three months ended September 29, 2001, the
nine  months ended June 28, 2002 and years ended June 27, 2003 and July 2, 2004,
warranty  and  service costs were $ 0.7 million, $2.0 million, $2.0 million  and
$1.8  million  respectively.

ADVERTISING  COSTS

     Costs  incurred  in  connection  with  advertising  and  promotion  of  the
Company's  products  are  expensed  as  incurred.  For  the  three  months ended
September 29, 2001, the nine months ended June 28, 2002 and years ended June 27,
2003  and  July  2,  2004, advertising costs were $.2 million, $.7 million, $1.3
million  and  $1.3  million,  respectively.

EARNINGS PER SHARE

     Basic  earnings  per  share  is  based  on  the  weighted  average  shares
outstanding without any dilutive effects considered.  Diluted earnings per share
reflects  dilution  from  all  contingently  issuable  shares  from  outstanding
options.  Options  granted under the Company's 2001 Management Incentive Program
are  not reflected in diluted earnings per share as there have been no sales and
no  quoted  and  asked  prices  for  the  stock.  Per  share data for the period
September  29,  2001  has  been  omitted as the Company was in bankruptcy during
these  periods  and  the


                                      F-12
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


amount does not reflect the current capital structure.

FINANCIAL INSTRUMENTS

     Fair  value estimates are made at discrete points in time based on relevant
market  information.  These  estimates  may  be subjective in nature and involve
uncertainties  and  matters  of  significant  judgment  and  therefore cannot be
determined  with  precision.  The  Company believes that the carrying amounts of
its  current assets, current liabilities and long-term debt approximate the fair
value  of  such  items.

CASH EQUIVALENTS

     Cash  equivalents  consist  of  short-term  investments  with  an  original
maturity of three months or less, money market accounts and cash in transit from
financial institutions.  Cash in transit from financial institutions presents no
risk  to  the  Company regarding collectibility and is typically received within
two  business  days  of  month  end.

CONCENTRATION OF CREDIT RISK

     The  Company  maintains cash in several bank accounts which at times exceed
federally  insured  limits.  The Company monitors the financial condition of the
banks  where it maintains accounts and has experienced no losses associated with
these  accounts.

RECENT ACCOUNTING PRONOUNCEMENTS

     In  June  2002,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting Standards 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 Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including  Certain  Costs  Incurred in a Restructuring)." SFAS 146 is
effective for exit or disposal activities initiated after December 31, 2002. The
adoption  of  SFAS  146  had  no impact on our financial condition or results of
operations.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition  and Disclosure," which amends SFAS 123, "Accounting for
Stock-Based  Compensation"  to  provide  alternative methods of transition for a
voluntary  change  to  the fair value based method of accounting for stock-based
compensation.  In  addition, SFAS 148 amends the disclosure requirements of SFAS
123  to  require  prominent  disclosures  in  both  annual and interim financial
statements  about the method of accounting for stock-based employee compensation
and  the  effect  of  the  method  used on reported results. We will continue to
account  for stock-based compensation using the intrinsic method as permitted by
SFAS  123  and  prominently disclose the additional information required by SFAS
148  in  our  annual  and  interim  reports.

     In  January  2003,  the  FASB  issued  FASB  Interpretation  No.  FIN  46R,
Consolidation  of  Variable  Interest  Entities.  This  interpretation  provides
guidance  on  the  identification  of,  and  financial  reporting  for, variable
interest  entities.  Variable  interest  entities  are  entities  that  lack the
characteristics of a controlling financial interest or lack sufficient equity to
finance  its  activities  without additional subordinated financial support. FIN
46R requires a company to consolidate a variable interest entity if that company
is  obligated to absorb the majority of the entity's expected losses or entitled
to  receive the majority of the entity's residual returns, or both. FIN 46R also
requires  disclosures  about  variable  interest  entities that a company is not
required to consolidate but in which it has a significant variable interest. FIN
46R  is  applicable  immediately  to  variable  interest  entities created after
January  31,  2003. For all variable interest entities created prior to February
1, 2003, FIN 46R is applicable to periods beginning after June 15, 2003. We have
a minority interest in two joint ventures that, by virtue of the other partners'
guarantee  of  the  partnership indebtedness, are variable interest entities. We
are  not  the  primary  beneficiary  of  these  variable  interest entities and,
accordingly,  we use the equity method of accounting for our investment in these
ventures.  We  do  not  expect that the adoption of FIN 46R will have a material
effect  on  our  financial  position  or  results  of  operations.*


                                      F-13
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     In  April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities ("SFAS 149"). SFAS 149 amends and
clarifies  the  accounting  for  derivative  instruments,  including  certain
derivative  instruments  embedded in other contracts, and for hedging activities
under  SFAS  133,  Accounting for Derivative Instruments and Hedging Activities.
Statement  149  is  generally  effective  for contracts entered into or modified
after  June  30,  2003,  and for hedging relationships designated after June 30,
2003.  The adoption of this statement had no impact on our results of operations
or  financial  position.

     In  May  2003,  the  FASB  issued  SFAS  No.  150,  "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." This
statement  establishes  standards  for  how  an  issuer  classifies and measures
certain  financial  instruments  with  characteristics  of  both liabilities and
equity.  This  statement  requires  an issuer to classify a financial instrument
issued  in  the  form of shares that are mandatorily redeemable-that embodies an
unconditional obligation requiring the issuer to redeem them by transferring its
assets  at a specified or determinable date-as a liability. The adoption of SFAS
150 had no impact on our financial condition or results of operations.

     In  December  2003,  the  FASB  issued  SFAS  No.  132 Revised (SFAS 132R),
"Employers'  Disclosure  about  Pensions  and  Other Postretirement Benefits." A
revision  of  the  pronouncement  originally  issued  in 1998, SFAS 132R expands
employers'  disclosure  requirements  for pension and postretirement benefits to
enhance  information  about  plan  assets,  obligations,  benefit  payments,
contributions  and  net  benefit  cost. SFAS 132R does not change the accounting
requirements  for pensions and other postretirement benefits. This statement was
implemented  beginning  with  the fourth quarter of fiscal 2004. The adoption of
SFAS  132R  had  no  impact on our financial condition or results of operations.

(4)  REORGANIZATION  COSTS

     Prior  to  the  Company's  emergence from bankruptcy, professional fees and
similar  type  expenditures directly relating to the Chapter 11 proceedings were
classified as reorganization costs and were expensed as incurred. Reorganization
costs,  primarily professional fees,  for the three-month period ended September
29,  2001  were  $1.4  million.  Reorganization  costs  after  emergence  from
bankruptcy  have been charged against the liquidation and plan reserve liability
established as a result of Fresh-Start Reporting at September 29, 2001.

(5)  INVENTORIES

     A summary of inventories, net of valuation reserves follows (in thousands):

                                   JUNE 27,   JULY 2,
                                     2003       2004
                                   ---------  --------
Manufactured homes:
  New . . . . . . . . . . . . . .  $  22,620  $ 19,872
  Used. . . . . . . . . . . . . .      1,888     1,445
Homesites:
  Land. . . . . . . . . . . . . .        891     1,405
  Improvements. . . . . . . . . .      2,345     2,488
Furniture and supplies. . . . . .        423       618
Raw materials and work-in-process      1,752     2,642
                                   ---------  --------

        Total . . . . . . . . . .  $  29,919  $ 28,470
                                   =========  ========

     Some  of  the  Company's  new manufactured homes were pledged as collateral
against  its  floorplan  credit  facility  (see  note  12).


                                      F-14
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(6)  PROPERTY,  PLANT  AND  EQUIPMENT

     A summary of property, plant and equipment follows (in thousands):

<TABLE>
<CAPTION>
                                                  USEFUL    JUNE 27,   JULY 2,
                                                  LIVES       2003       2004
                                                ----------  ---------  --------
<S>                                             <C>         <C>        <C>
Land . . . . . . . . . . . . . . . . . . . . .           -  $   6,821  $  5,463
Buildings. . . . . . . . . . . . . . . . . . .  5-30 years      2,455     2,036
Machinery and equipment. . . . . . . . . . . .  5-10 years        461       415
Furniture and equipment. . . . . . . . . . . .     5 years        469       577
Vehicles . . . . . . . . . . . . . . . . . . .     3 years         13        13
Leasehold improvements . . . . . . . . . . . .  5-13 years        205       290
                                                            ---------  --------

        Total                                                  10,424     8,794

Less accumulated depreciation and amortization                  1,030     1,357
                                                            ---------  --------
        Property, plant and equipment, net                  $   9,394  $  7,437
                                                            =========  ========
</TABLE>

(7)  ASSETS  HELD  FOR  SALE

     Under the Plan, the Company identified certain non-core assets (principally
idle  factories  in  non-core markets) where there were no current intentions to
reactivate these facilities for future core operations. Management estimates the
fair  market  value  of  these  assets  at  June 27, 2003 and July 2, 2004 to be
approximately  $3.4  million  and  $2.9  million,  respectively. The Company has
reported these assets as Assets held for sale and is actively seeking to sell or
lease  these  properties.  The Company sold two non-core retail sales centers in
fiscal  2002,  two non-core manufacturing plants in fiscal 2003 and one non-core
manufacturing  plant in fiscal 2004. Subsequent to the fiscal year ended July 2,
2004,  the  Company  sold  a  non-core  manufacturing  facility.

(8)  PREPAID EXPENSES, NOTES RECEIVABLE AND OTHER ASSETS

     A summary of other assets follows (in thousands):

<TABLE>
<CAPTION>
                                                                JUNE 27,   JULY 2,
                                                                  2003       2004
                                                                ---------  --------
<S>                                                             <C>        <C>
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . .  $     304  $    517
Notes receivable . . . . . . . . . . . . . . . . . . . . . . .        513       274
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .        405       328
                                                                ---------  --------

        Total. . . . . . . . . . . . . . . . . . . . . . . . .      1,222     1,119

Less current portion . . . . . . . . . . . . . . . . . . . . .        804       959
                                                                ---------  --------
      Prepaid expenses, notes receivable and other assets less
        current portion. . . . . . . . . . . . . . . . . . . .  $     418  $    160
                                                                =========  ========
</TABLE>


                                      F-15
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(9)  INCOME  TAXES

     The  provision  (benefit)  for  income  taxes  related to operations in the
consolidated statements of operations is summarized below (in thousands):

<TABLE>
<CAPTION>
                                      THREE MONTHS     NINE MONTHS      YEAR       YEAR
                                         ENDED            ENDED        ENDED       ENDED
                                     SEPTEMBER 29,      JUNE 28,      JUNE 27,    JULY 2,
                                          2001            2002          2003       2004
                                    ----------------  -------------  ----------  ---------
                                    PREDECESSOR CO.                 SUCCESSOR CO.
                                    ----------------  ------------------------------------
<S>                                 <C>               <C>            <C>         <C>
Federal-current expense (benefit).  $             --  $         --   $      --   $   (147)
Federal-deferred expense (benefit)                20           249         282


                                    ----------------  -------------  ----------  ---------
                                                  20           249         282       (147)
Income tax (provision) benefit
  from discontinued operations . .                --          (233)       (284)      (73 )
                                    ----------------  -------------  ----------  ---------
Provision (benefit) for income
  taxes. . . . . . . . . . . . . .  $             20  $         16   $      (2)  $   (220)
                                    ================  =============  ==========  =========
</TABLE>

     The  Company  files  a  consolidated  return  for  federal  tax  purposes;
accordingly,  taxes  at  statutory  rates  are computed based on earnings before
earnings  in  affiliates  and minority interests. The provision for income taxes
related  to  operations  varied  from  the  amount computed by applying the U.S.
federal  statutory  rate  as  a  result  of  the  following:

<TABLE>
<CAPTION>
                                    THREE MONTHS     NINE MONTHS      YEAR       YEAR
                                        ENDED           ENDED        ENDED       ENDED
                                    SEPTEMBER 29,     JUNE 28,      JUNE 27,    JULY 2,
                                        2001            2002          2003       2004
                                   ---------------  -------------  ----------  ---------
                                            PREDECESSOR CO.            SUCCESSOR CO.
                                   -----------------------------------------------------
<S>                                <C>              <C>            <C>         <C>
Computed "expected" tax expense
  (benefit) . . . . . . . . . . .  $        6,667   $        473   $    (663)  $   (463)
Nondeductible restructuring cost.           7,779            489          --         --
Federal income tax refund                                                          (220)
Other, net. . . . . . . . . . . .           1,443            245         (21)      1197
Increase (decrease) in valuation
  allowance . . . . . . . . . . .         (15,869)          (958)        966       (661)
                                   ---------------  -------------  ----------  ---------
                                               20            249         282       (147)
Income tax (provision) benefit
  from discontinued operations. .              --           (233)       (284)       (73)
                                   ---------------  -------------  ----------  ---------
Provision (benefit) for income
  taxes . . . . . . . . . . . . .  $           20   $         16   $      (2)  $   (220)
                                   ===============  =============  ==========  =========
</TABLE>

     The  Job Creation and Worker Assistance Act of 2002 extended the loss carry
back  period  for  losses  generated  in fiscal 2001 and 2002.  Accordingly, the
Company  was  eligible for a refund of federal income taxes paid in fiscal years
1997  and  1998.  During the year ended June 28, 2002, the Company received such
refund  of approximately $18.4 million. The tax refund has been reflected in the
equity  section of the Consolidated Balance Sheet in accordance with Fresh-Start
accounting as an addition to Additional paid-in capital. The Company's remaining
net operating loss carry forward from the year June 28, 2002 was offset entirely
by  income  from  discharge  of  indebtedness  as  a  result  of  the  Company's
reorganization.

     During  the  year  ended  July  2, 2004, the Company received an income tax
refund  of  $0.2  million.


                                      F-16
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  tax  effects  of  temporary  differences that give rise to significant
portions  of  the deferred tax assets and deferred tax liabilities are presented
below  (in  thousands):

<TABLE>
<CAPTION>
                                                           JUNE 27,    JULY 2,
                                                             2003       2004
                                                          ----------  ---------
<S>                                                       <C>         <C>
Current deferred tax assets:
  Uniform capitalization of interest . . . . . . . . . .  $      62   $     57
  Inventory reserve. . . . . . . . . . . . . . . . . . .        160        505
  Allowance for doubtful accounts. . . . . . . . . . . .        235         86
  Liabilities not deductible until paid. . . . . . . . .      2,034       1065
                                                          ----------  ---------
  Total before valuation allowance . . . . . . . . . . .      2,491      1,713
  Valuation allowance. . . . . . . . . . . . . . . . . .     (2,491)     (1713)
                                                          ----------  ---------
        Current deferred tax assets. . . . . . . . . . .  $      --   $     --
                                                          ==========  =========

Noncurrent deferred tax assets (liabilities):
  Goodwill amortization and write-offs . . . . . . . . .  $  12,940   $ 11,367
  Plant and equipment, principally due to differences in
    depreciation and estimated costs to dispose of
    manufacturing facilities . . . . . . . . . . . . . .      9,066      5,452
  Impairment of assets . . . . . . . . . . . . . . . . .         --         --
  Net operating loss carry forward . . . . . . . . . . .      5,468     10,772
                                                          ----------  ---------
  Total before valuation allowance . . . . . . . . . . .     27,474     27,591
  Valuation allowance. . . . . . . . . . . . . . . . . .    (27,474)   (27,591)
                                                          ----------  ---------
        Noncurrent deferred tax assets, net. . . . . . .  $      --   $     --
                                                          ==========  =========
</TABLE>

     At July 2, 2004, the Company had a net operating loss carryforward of $30.8
million  to  offset  future  taxable income. The net operating loss carryforward
will  expire  through  June  2024.

     In  assessing  the realizability of deferred income tax assets, the Company
considers  whether  that  it is more likely than not that some portion or all of
the  deferred  income tax assets will not be realized.  The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable
income  during  the  periods  in  which  those temporary differences and the net
operating  loss  become  deductible.  Due  to  the  recent  historical operating
results  of  the Company, management is unable to conclude on a more likely than
not basis that all deferred income tax assets generated through operating losses
through July 2, 2004 will be realized.   Accordingly, the Company has recognized
a  full  valuation  allowance  to reduce the net deferred tax asset to an amount
that  management  believes  will  more  likely  than  not  be  realized.


                                      F-17
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(10)  DISCONTINUED  OPERATIONS

     On  February  25,  2004,  the  Company sold its 51% interest in Roadmasters
Transport  Company,  Inc.  ("Roadmasters") to Roadmasters for approximately $1.4
million,  which  was  slightly  more  than  the  carrying value of the Company's
investment  in Roadmasters. Concurrent with the sale, the Company entered into a
three-year  transportation  agreement  with  Roadmasters under which Roadmasters
will  continue  to provide transportation services to the Company at competitive
rates.  Summary unaudited information for Roadmasters, as of and for the periods
indicated,  is  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                      YEAR ENDED   YEAR ENDED
                       JUNE 27,      JULY 2,
                         2003         2004
                      ----------- ------------
<S>                   <C>          <C>
Total assets . . . .  $     2,911  $        --
                      ===========  ===========

Total liabilities. .  $     1,764  $        --
Shareholders' equity  $     1,147  $        --
                      ===========  ===========

Total revenues . . .  $    18,117  $    12,436
Net Income . . . . .  $       495  $       136
                      ===========  ===========
</TABLE>


(11) INVESTMENT IN AFFILIATED COMPANIES

     Homestar  21, LLC ("Homestar 21") is 50% owned by the Company and 50% owned
by  21st  Mortgage, a company not affiliated with the Company.  Homestar 21 is a
finance company that specializes in providing chattel and land/home financing to
the  Company's customers. The Company accounts for its investment in Homestar 21
using  the  equity  method.  The  Company  invested  $2.4 million in Homestar 21
during  fiscal  2000.

     On March 23, 2004, the Company and Homestar 21 entered into an agreement to
dissolve  Homestar 21.  As a liquidating dividend, the Company and 21st Mortgage
each  received  approximately  $3.2  million,  which  was slightly more than the
carrying  value  of its investment.  Concurrent with the dissolution of Homestar
21,  the  Company  entered  into an Origination Fee Agreement with 21st Mortgage
which  provides  the Company the opportunity to earn origination fees on certain
new  loans  in the future as the Company meets quarterly sales targets as to the
sale  of 21st Mortgage repossessions. Summary financial information for Homestar
21,  derived  from  the audited financial statements of 21st Mortgage, as of the
periods  indicated  follows  (in  thousands):

<TABLE>
<CAPTION>
                      JUNE 27,    JULY 2,
                        2003       2004
                      ---------  ---------
<S>                   <C>        <C>
Total assets . . . .  $   7,110  $     --
                      =========  =========

Total liabilities. .  $     191  $     --
Shareholders' equity  $   6,919  $     --
                      =========  =========

Total revenues . . .  $   3,119  $  1,584
Net income . . . . .  $   1,016  $   (298)
                      =========  =========
</TABLE>

     In  May  2002,  the  Company  invested  $31,500  to provide one-half of the
initial  capitalization  of  American  Homestar Mortgage, L.P. ("Former Homestar
Mortgage"),  a  joint  venture  owned  50%  by  the Company and 50% by Home Loan
Corporation ("Home Loan"), a Company not affiliated with the Company. The Former
Homestar  Mortgage  operated  as  a mortgage broker/loan originator for ultimate
placement  with  Home  Loan  and other mortgage banks.  In July 2003 the Company
reached  agreement  with  Home Loan to cease operations effective July 31, 2003.


                                      F-18
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The  Former  Homestar  Mortgage has ceased operations and liquidated all assets.
The  Company  accounts  for its investment in the Former Homestar Mortgage using
the  equity  method.  Summary  of unaudited financial information for the Former
Homestar  Mortgage  as  of  and  for  the  period  indicated,  is as follows (in
thousands):

<TABLE>
<CAPTION>
                   JUNE 27,   JULY 2,
                     2003       2004
                   ---------  --------
<S>                <C>        <C>
Total assets. . .  $     263  $     --
                   =========  ========

Total liabilities  $       5  $     --
Owners' equity. .  $     258  $     --
                   =========  ========

Total revenues. .  $     544  $    137
Net income. . . .  $     195  $     17
                   =========  ========
</TABLE>

     In March 2003, we invested $50 for a 49.5% interest in Humble Springs, LTD,
a  land  development joint venture. The other partners in the venture are a land
development  company and certain of its affiliates, none of which are affiliated
with  American Homestar.  Under the terms of the partnership agreement, the land
developer  agreed  to  guarantee  all  debt  of the partnership and we agreed to
provide for the cash needs of the venture (to a maximum of $547,000) in the form
of additional capital contributions for which we will receive a preferred return
upon  completion  of  the  development  project.  As  of  July  2, 2004 American
Homestar  has  made  additional capital contributions of approximately $329,000.
In  the  event  of  a  net cash loss to the partnership, the other partners have
agreed  to  reimburse  American  Homestar  for  their proportionate share of the
additional  capital  contributions and the accrued preferred return.  Also under
the  terms  of  our  partnership  agreement  we  have  the  right,  but  not the
obligation,  to  cure  any  loan  defaults of the partnership.  In such case, we
would  assume  the  other  partners'  ownership  interests.

     By virtue of the other partners' guarantee of the partnership indebtedness,
Humble  Springs  LTD  is  a  variable  interest  entity.  Given the proportional
sharing  of  net cash losses, if any, based on ownership percentages, we are not
the  primary  beneficiary of this variable interest entity.  Accordingly, we use
the  equity method of accounting for  our investment in Humble Springs.  Summary
unaudited  financial  information  for  Humble  Springs,  LTD, as of and for the
periods  indicated  is  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                   JUNE 27,   JULY 2,
                     2003       2004
                   ---------  --------
<S>                <C>        <C>
Total assets. . .  $     783  $    817
                   =========  ========

Total liabilities  $     487  $    488
Owners' equity. .  $     296  $    329
                   =========  ========

Total revenues. .  $      --  $     --
Net income. . . .  $      --  $     --
                   =========  ========
</TABLE>

     In  January  2004,  we  invested  $50  for a 49.5% interest in 114 Starwood
Development,  LTD,  a  land development joint venture. The other partners in the
venture  are  a  land development company and certain of its affiliates, none of
which  are affiliated with American Homestar. Under the terms of the partnership
agreement,  the  land  developer agreed to guarantee all debt of the partnership
and  we  agreed  to  provide  for the cash needs ot the venture (to a maximum of
$500,000)  in  the  form  of  additional capital contributions for which we will
receive  a  preferred  return  upon completion of the development project. As of
July  2,  2004  American  Homestar  has made additional capital contributions of
approximately  $499,000. In the event of a net cash loss to the partnership, the
other  partners  have  agreed  to  reimburse  American  Homestar  for  their
proportionate  share  of  the  additional  capital contributions and the accrued
preferred  return. Also under the terms of our partnership agreement we have the
right,  but not the obligation, to cure any loan defaults of the partnership. In
such  case,  we  would  assume  the  other  partners'


                                      F-19
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ownership  interests.

     By virtue of the other partners' guarantee of the partnership indebtedness,
114  Starwood  Development,  LTD  is  a  variable  interest  entity.  Given  the
proportional sharing of net cash losses, if any, based on ownership percentages,
we  are  not  the  primary  beneficiary  of  this  variable  interest  entity.
Accordingly,  we  use  the  equity  method  of  accounting for our investment in
Starwood.  Summary unaudited financial information for 114 Starwood Development,
LTD,  as  of  and  for  the  periods  indicated  is  as  follows (in thousands):

<TABLE>
<CAPTION>
                    JUNE 27,    JULY 2,
                     2003        2004
                   ---------  ---------
<S>                <C>        <C>
Total assets. . .  $      --  $  3,142
                   =========  =========

Total liabilities  $      --  $  2,644
Owners' equity. .  $      --  $    498
                   =========  =========

Total revenues. .  $      --  $     82
Net income. . . .  $      --  $     (1)
                   =========  =========
</TABLE>

     In  April  2004,  we  invested  $31,500  to provide one-half of the initial
capitalization  of  a  new  entity also named American Homestar Mortgage, L.L.P.
("Homestar  Mortgage")  which is a joint venture that is owned 50% by us and 50%
by  Community Home Loan LLC, a company not affiliated with us. Homestar Mortgage
is  currently  in  the  process  of obtaining licenses necessary to operate as a
mortgage  broker/loan  originator.  The  Company  accounts for its investment in
Homestar  Mortgage  using  the  equity  method.  Summary  unaudited  financial
information  for  Homestar  Mortgage,  as of and for the periods indicated is as
follows  (in  thousands):

<TABLE>
<CAPTION>
                   JUNE 27,   JULY 2,
                     2003       2004
                   ---------  --------
<S>                <C>        <C>
Total assets. . .  $      --  $     63
                   =========  ========

Total liabilities  $      --  $     --
Owners' equity. .  $      --  $     63
                   =========  ========

Total revenues. .  $      --  $     --
Net income. . . .  $      --  $     --
                   =========  ========
</TABLE>


(12) NOTES AND FLOORPLAN PAYABLE

     On  October  3,  2001, the Company entered into a floorplan credit facility
with  Associates Housing Financial LLC ("Associates") to finance the purchase of
its display models and inventory homes. The balance outstanding at June 27, 2003
was  $6.8  million and the credit facility was paid in full and retired on March
30,  2004.

     On  March  15,  2004  the Company received a commitment for a new inventory
financing  (floorplan)  credit  facility through 21st Mortgage Corporation.  The
total  credit  line is $15 million although maximum borrowings, at any time, are
subject  to  a borrowing base calculation based on the age of the inventory used
as  collateral.  Advances  under this line bear interest at the greater of prime
plus  1%  per  annum or 7% per annum. This credit facility is secured by some of
the  Company's  new  home  inventory.


                                      F-20
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Amounts  due  under  the  floorplan  credit  facilities  are as  follow (in
thousands):

<TABLE>
<CAPTION>
                   JUNE 27,   JULY 2,
                     2003       2004
                   ---------  --------
<S>                <C>        <C>
Floorplan payable  $   6,826  $  1,430
                   =========  ========
</TABLE>

     A  summary  of  notes  payable,  all  to  non-financial institutions unless
otherwise  noted,  with  no  covenants  is  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                                                                            JUNE 27,   JULY 2,
                                                                              2003       2004
                                                                            ---------  --------
<S>                                                                         <C>        <C>
Notes payable in monthly installment, including interest of 10.0% due
  through August 2008; secured by real property. . . . . . . . . . . . . .        276         0
Note payable in monthly installments, including interest of 10.0% due
  through November 2010; secured by real property. . . . . . . . . . . . .        121       109
Note payable in monthly installments, including interest of 10.0%, due
  through September 2007; secured by real property . . . . . . . . . . . .         90         0
Note payable to an individual and a financial institution in monthly
  installments, including interest of 9.5%, due through July 2012; secured
  by real property . . . . . . . . . . . . . . . . . . . . . . . . . . . .         85        96
                                                                            ---------  --------
        Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     572  $    205
Less current installments. . . . . . . . . . . . . . . . . . . . . . . . .         70        18
                                                                            ---------  --------
        Notes payable, less current installments . . . . . . . . . . . . .  $     502  $    187
                                                                            =========  ========
</TABLE>

     The  aggregate  maturities  of notes payable for each of the five years and
thereafter as of to July 2, 2004 are as follows (in thousands):


2005 . . . . . . . .  $ 18
2006 . . . . . . . .    20
2007 . . . . . . . .    22
2008 . . . . . . . .    24
2009 . . . . . . . .    27
Thereafter . . . . .    94
                      ----
                      $205
                      ====


                                      F-21
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(13)  Other  Current  Liabilities

     A summary of other current liabilities follows (in thousands):

<TABLE>
<CAPTION>
                                                            JUNE 27,   JULY 2,
                                                              2003       2004
                                                            ---------  --------
<S>                                                         <C>        <C>
Accrued salaries and benefits. . . . . . . . . . . . . . .  $     461  $    525
Other taxes. . . . . . . . . . . . . . . . . . . . . . . .        895       794
Accrued transport, installation and site improvement costs        671       895
Customer deposits. . . . . . . . . . . . . . . . . . . . .      1,083       633
Deferred income. . . . . . . . . . . . . . . . . . . . . .        598       440
Other current liabilities. . . . . . . . . . . . . . . . .        906     1,226
                                                            ---------  --------

        Total. . . . . . . . . . . . . . . . . . . . . . .  $   4,614  $  4,513
                                                            =========  ========
</TABLE>

(14) STOCKHOLDERS' EQUITY

     Under  the  terms  of  the  Plan,  all equity interests in the Company were
cancelled  as  of  the  Effective Date, and all holders of outstanding shares of
Company  stock,  which  had  previously traded under the symbols HSTR and HSTRQ,
lost  all  rights  to equity interests in and to the reorganized Company.  Under
the Plan, the Company has the authority to issue 15 million shares of new Series
C  common  stock  and  is required to issue 10 million shares of Series C common
stock  to  its general unsecured creditors.  Pursuant to the exemption set forth
in  Section 1145 of the Bankruptcy Code, the Company issued new shares of Series
C  common  stock  to  persons  holding allowed unsecured claims in the Company's
bankruptcy  case  and  shares  of  Series  M common stock to management under an
incentive  program.  The Company has issued 10 million shares of Series C common
stock  and  67,600  shares  of  Series  M common stock. The Company also has the
authority  to  issue  7.5 million shares of Series M common stock to management,
100 shares of which had been issued as of June 28, 2002 and June 27, 2003; as of
July 2, 2004 67,600 shares had been issued and 4,932,400 shares underlie options
authorized  under  the  Company's  2001 Management Incentive Program. At July 2,
2004,  options  for  4,874,900  shares  were approved and granted at an exercise
price  of $1.35 per share. These options vest seven years from the date of grant
and may vest earlier (up to 20% per year) if certain annual performance criteria
established  by  the Board of Directors are met. As of July 2, 2004, options for
67,500  shares  had  been exercised and options to purchase 1,155,600 additional
shares  were  vested.

     Activity under the Stock Option Plan was as follows:

<TABLE>
<CAPTION>
                                        WEIGHTED
                                         AVERAGE
                          OUTSTANDING   EXERCISE
                            OPTIONS       PRICE
<S>                       <C>           <C>
Balance, June 30, 2001 .            0          --
  Granted under the plan    4,949,900   $    1.35
                          ------------  ---------
Balance, June 28, 2002 .    4,949,900        1.35
  Granted under the plan       50,000        1.35
  Canceled . . . . . . .     (100,000)       1.35
                          ------------  ---------
Balance, June 27, 2003 .    4,899,900        1.35
  Granted under the plan      327,500        1.35
  Canceled . . . . . . .     (285,000)       1.35
  Exercised. . . . . . .      (67,500)       1.35
                          ------------  ---------

Balance, July 2, 2004. .    4,874,900        1.35
                          ============  =========
</TABLE>


                                      F-22
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  Company  accounts  for  grants  to  employees  and directors under the
provisions  of  APB Opinion No. 25 and related interpretations. Had compensation
expense  for  the  Plan  been  determined  based  upon  the fair value method as
prescribed  in  SFAS  No.  123,  the net income (loss) would have changed to the
following pro Forma amounts for the years ended June 28, 2002, June 27, 2003 and
July  2,  2004,  respectively.

<TABLE>
<CAPTION>
                                                YEAR ENDED    YEAR ENDED    YEAR ENDED
                                                 JUNE 28,      JUNE 27,      JULY 2,
                                                   2002          2003          2004
                                               ------------  ------------  ------------
<S>                                            <C>           <C>           <C>
Net income (loss), as reported. . . . . . . .  $     1,264   $    (1,814)  $    (1,148)
Deduct: total stock-based employee
  Compensation expense determined under
  fair value based method for all awards, net
  of related tax effects. . . . . . . . . . .         (255)         (174)         (272)
                                               ------------  ------------  ------------

Net income (loss), pro forma. . . . . . . . .  $     1,009   $    (1,988)  $    (1,420)
                                               ============  ============  ============

Earnings per share
  As reported . . . . . . . . . . . . . . . .  $      0.13   $     (0.18)  $     (0.12)
  Pro forma . . . . . . . . . . . . . . . . .         0.10         (0.20)        (0.14)
</TABLE>

     At  July 2, 2004, the Company had 4,874,900 stock options outstanding at an
exercise  price  of  $1.35  per  share with a weighted average of  6.4 remaining
years  contractual  life.

     The  fair  value  of  stock  options  granted  in  2002, 2003 and 2004 were
estimated on the date of grant using the "minimum value" method as the stock was
not  trading  during  the  years  ended  June  28,  2002  and June 27, 2003. The
Company's  common  equity  stock  was  restricted from trading through April 11,
2004.  Since April 11, 2004, there have been very sporadic offers to buy or sell
and  only one trade of the Company's stock on the Over-the-Counter "pink sheets"
exchange. The Company does not consider this very limited activity sufficient to
set  a  value  for  the  stock.  The  weighted  average  fair values and related
assumptions  were:

     Weighted average fair value . . . . . .   $  1.35
     Market interest rate. . . . . . . . . . .    4.35%

(15) RELATED PARTY BALANCES AND TRANSACTIONS

     MOAMCO  Properties,  Inc.  (MOAMCO), an entity owned by the Company's Chief
Executive Officer, owns and leases to the Company, under operating leases, land,
improvements  and  buildings  related to one sales centers at September 29, 2001
and  two sales centers at June 28, 2002, June 27, 2003 and July 2, 2004.  During
the  three  months ended September 29, 2001, nine months ended June 28, 2002 and
the  years  ended  June  27,  2003  and  July  2,  2004, the Company paid MOAMCO
approximately  $22,000,  $67,000,  $79,000  and $78,000, respectively, for these
operating  leases  (see  note  16).

(16)  COMMITMENTS  AND  CONTINGENCIES

REPURCHASE AGREEMENTS

     The  Company  has entered into repurchase agreements with various financial
institutions  and other credit sources pursuant to which the Company has agreed,
under  certain  circumstances,  to  repurchase  manufactured  homes  sold  to
independent  dealers in the event of a default by such independent dealer on its
obligation  to  such  credit  sources.  Under  the  terms  of  such  repurchase
agreements,  the  Company  agrees  to repurchase manufactured homes at declining
prices  over  the periods of the agreements (which generally range from 18 to 24
months).


                                      F-23
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     While  repurchase  activity  is  very  sporadic  and  cyclical, the Company
provides  for  anticipated  repurchase loses. At June 27, 2003 and July 2, 2004,
the  Company  was  at  risk  to  repurchase  approximately $1.2 million and $1.2
million  of  manufactured homes respectively, and has provided for estimated net
repurchase  losses  at  approximately  $0.2  million  at  June  27,  2003  and
approximately  $0.1  million  at  July  2,  2004.

LEGAL MATTERS

     On  the Effective Date of the Plan, most pending claims were discharged and
an  injunction  was  issued  barring  any future claims arising from events that
occurred  prior  to  October  3,  2001.  In  a  few  cases,  litigation has been
reinstated  solely  for  the  purpose  of  determining  the  amount of a general
unsecured  claim  against  the  Company  or  a claim to be paid by the Company's
insurers.  Since  the  Effective  Date,  there  are  no  other  pending  legal
proceedings,  except  for  routine  litigation incidental to the business, which
management  believes  is  not  material to its business or financial condition.*

SAVINGS PLAN

     The Company has adopted the American Homestar Corporation 401(k) Retirement
Plan  (the  "Savings  Plan")  whereby  all  employees  of  the  Company who have
completed  six months of service and have reached the age of twenty and one-half
are eligible to participate in the Savings Plan.  A Plan Administrator appointed
by  the Company administers the Savings Plan.  Eligible employees may contribute
a  portion  of  their annual compensation up to the legal maximum established by
the  Internal Revenue Service for each plan year.  No employee contributions are
invested  in  securities  issued by the Company or its subsidiary companies. The
Company has made no contributions to the Savings Plan in fiscal years 2002, 2003
or  2004.

WORKERS COMPENSATION LIABILITY

     The  Company  has  rejected  the  insurance  coverage provided by the Texas
Workers'  Compensation  Act.  While  the  Company  maintains  excess  indemnity
insurance,  the  Company's  portion  of  self-insured  retention is $250,000 per
occurrence.  Management,  in  assessing loss experience, adjusts its reserve for
losses  through periodic provisions.  In states other than Texas, the Company is
insured  for  workers  compensation.

LEASES

     The  Company  is  obligated  under  various  noncancelable  operating lease
agreements  with  varying  monthly payments and varying expiration dates through
March,  2007.  Rental  expense under operating leases for the three months ended
September 29, 2001, the nine months ended June 28, 2002 and the years ended June
27,  2003  and  July 2, 2004 were approximately $410,000, $1,472,000, $1,817,000
and  $2,074,000,  respectively.

     Aggregate annual rental payments due to independent and related parties, on
future lease commitments at July 2, 2004 were as follows (in thousands):

<TABLE>
<CAPTION>
                AMOUNTS DUE         AMOUNTS DUE     TOTAL LEASE
            INDEPENDENT PARTIES   RELATED PARTIES   COMMITMENTS
            --------------------  ----------------  ------------
<S>         <C>                   <C>               <C>
2005 . . .  $              1,122  $             74  $      1,196
2006 . . .                   340                --           340
2007 . . .                    99                --            99
2008 . . .                    --                --            --
2009 . . .                    --                --            --
Thereafter                    --                --            --
            --------------------  ----------------  ------------
            $              1,561  $             74  $      1,635
            ====================  ================  ============
</TABLE>


                                      F-24
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(17) BUSINESS SEGMENTS

     The  Company  operates  primarily  in  three business segments - (i) retail
sales;  (ii)  manufacturing;  (iii) insurance; and (iv) corporate. The following
table  summarizes,  for  the periods indicated, information about these segments
(in  thousands):

<TABLE>
<CAPTION>
                                                                                               ADJUSTMENTS/
                                            RETAIL   MANUFACTURING   INSURANCE    CORPORATE    ELIMINATIONS    TOTAL
                                           --------  --------------  ----------  -----------  --------------  --------
<S>                                        <C>       <C>             <C>         <C>          <C>             <C>
THREE MONTHS ENDED SEPTEMBER 29, 2001

Revenues from external customers. . . . .  $18,969   $        2,138  $    2,308  $      437   $          --   $23,852
Intersegment revenues . . . . . . . . . .       --            9,616          --          --          (9,616)       --
Interest expense. . . . . . . . . . . . .      214               --          --          --              --       214
Depreciation and amortization . . . . . .      445              274           1          28              --       748
Segment profit (loss) before income taxes
  and earnings inaffiliates . . . . . . .     (712)             356         196        (544)            344      (360)
Segment assets. . . . . . . . . . . . . .   32,810           26,676       2,568      40,146         (25,594)   76,606
Expenditures for segment assets . . . . .       --               42          --          34              --        76

NINE MONTHS ENDED JUNE 28, 2002

Revenues from external customers. . . . .  $58,022   $        6,212  $    5,040  $    1,401   $          --   $70,675
Intersegment revenues . . . . . . . . . .       --           33,059          --          --         (33,059)       --
Interest expense. . . . . . . . . . . . .      824                1          --          --              --       825
Depreciation and amortization . . . . . .      208              181           4          55              --       448
Segment profit (loss) before income taxes
  and earnings in a affiliates. . . . . .       48            3,368         753      (2,660)           (896)      613
Segment assets. . . . . . . . . . . . . .   35,749           27,020         832      60,359         (31,211)   92,749
Expenditures for segment assets . . . . .      113                6          --          36              --       155


YEAR  ENDED JUNE 27, 2003

Revenues from external customers. . . . .  $59,188   $       11,621  $    1,316  $    1,897   $          --   $74,022
Intersegment revenues . . . . . . . . . .        0           30,613          --          --         (30,613)       --
Interest expense. . . . . . . . . . . . .      955               --          --          --              --       955
Depreciation and amortization . . . . . .      292              245           8          97              --       642
Segment profit (loss) before income taxes
  and earnings in a affiliates. . . . . .   (2,834)           3,664         507      (3,772)           (238)   (2,674)
Segment assets. . . . . . . . . . . . . .   25,753           23,971       1,291      58,218         (38,297)   70,935
Expenditures for segment assets . . . . .      219               38          --         150              --       407


YEAR  ENDED  JULY 2, 2004

Revenues from external customers. . . . .  $55,815   $       13,292  $    1,516  $    1,786   $          --   $72,409
Intersegment revenues . . . . . . . . . .       --           28,065          --          --         (28,065)       --
Interest expense. . . . . . . . . . . . .      268               --          --          --              --       268
Depreciation and amortization . . . . . .      266              218           4          37              --       525
Segment profit (loss) before income taxes
  and earnings in a affiliates. . . . . .   (4,408)           4,801         647      (2,560)            157    (1,363)
Segment assets. . . . . . . . . . . . . .   18,983           23,466         874      49,520         (36,021)   56,822
Expenditures for segment assets . . . . .      323               49           6          16              --       394
</TABLE>

     Intersegment  revenues  are primarily sales by the manufacturing segment to
the  retail  segment and are transferred at market price. Earnings in affiliates
in  the  consolidated statements of operations relates to the financial services
segment.  The  adjustment  to  intersegment  revenue  is  made  to  eliminate
intercompany  sales  between  the manufacturing and retail segments. The segment
assets  adjustment  is  primarily  made  up  of  an  adjustment  to  eliminate
subsidiary's  equity  at the corporate level and the elimination of intercompany
receivables.


                                      F-25
<PAGE>
                 AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(18)  SELECTED  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

     The  following  presents  a  summary  of  the unaudited quarterly financial
information  for  the  years ended June 28, 2002, June 27, 2003 and July 2, 2004
(in  thousands):

<TABLE>
<CAPTION>
                                    FIRST         SECOND       THIRD        FOURTH
                                   QUARTER        QUARTER     QUARTER       QUARTER       TOTAL
                              -----------------  ---------  -----------  -------------  ---------
                                              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2002                           PREDECESSOR CO.                 SUCCESSOR CO.
----------------------------  -----------------  ------------------------------------------------
<S>                           <C>                <C>        <C>          <C>            <C>
  Revenues . . . . . . . . .  $      23,852      $ 26,132   $   21,668   $     22,875   $ 94,527
  Operating income (loss). .           (235)        1,026         (127)           294        958
  Net income (loss). . . . .        156,377 (1)       981         (104)           387    157,641
    Earnings (loss)  per
    share-basic and diluted             N/A      $   0.10   $    (0.01)  $       0.04   $   0.13 (2)


2003                                                      SUCCESSOR CO.
                              -------------------------------------------------------------------

  Revenues . . . . . . . . .  $      19,370      $ 17,104   $   21,066   $     16,482   $ 74,022
  Operating income (loss). .           (620)         (991)        (585)           114     (2,082)
  Net income (loss). . . . .           (455)       (1,169)        (455)           265     (1,814)
  Loss  per share-basic
    and diluted. . . . . . .  $       (0.05)     $  (0.12)  $    (0.05)  $       0.03   $  (0.18)

2004
  Revenues . . . . . . . . .  $      19,613      $ 15,513   $   17,107   $     20,176   $ 72,409
  Operating income (loss). .           (628)       (1,534)         355           (724)    (2,531)
  Net income (loss). . . . .           (627)         (910)         218            170     (1,148)
  Loss  per share-basic
    and diluted. . . . . . .  $       (0.06)     $  (0.09)  $     0.02   $       0.01   $  (0.12)
</TABLE>

______________________
(1)  Includes  Fresh-Start adjustment gain of $19 million and extraordinary gain
     of  $139  million  related  to  debt  forgiveness

(2)  Based  on  net  income of $1.3 million for nine month period ended June 28,
     2002

(19)  SUBSEQUENT  EVENTS

     In July 2004 the Company acquired 20,233 shares of Series C common stock
previously issued to a general unsecured creditor as part of the resolution of a
dispute.  These shares are currently held in treasury.  In addition, another
Series C shareholder voluntarily returned 1,133 shares to the Company.  Those
shares were canceled.

     In July 2004 we sold our former manufacturing facility in Pendleton, Oregon
(classified as assets held for sale) for $2.5 million.  A gain of approximately
$0.4 million was recognized on the sale of the facility.


                                      F-26
<PAGE>
<TABLE>
<CAPTION>
            AMERICAN HOMESTAR CORPORATION AND SUBSIDIARIES                              SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)


                                            ADDITIONS
                                           --------------------------------
                              BALANCE AT   CHARGED TO   CHARGED TO                         BALANCE AT
                               BEGINNING    COSTS AND      OTHER                             END OF
DESCRIPTION                      YEAR       EXPENSES     ACCOUNTS    OTHER    DEDUCTIONS      YEAR
-----------------------------------------  -----------  -----------  ------  ------------  -----------
<S>                           <C>          <C>          <C>          <C>     <C>           <C>
Three months ended
  September 29, 2001
  Warranty and service costs  $     2,635  $       678  $        --  $   --  $     1,168   $     2,145
  Reorganization costs . . .  $     3,404  $        --  $        --  $   --  $     1,527   $     1,877

Nine months ended June 28,
  2002
  Warranty and service costs  $     2,145  $     2,016  $        --  $   --  $     2,343   $     1,818
  Reorganization costs . . .  $     1,877  $        --  $        --  $   --  $    (1,749)  $     3,626

Year ended June 27, 2003
  Warranty and service costs  $     1,818  $     2,024  $        --  $   --  $     1,893   $     1,687
  Reorganization costs . . .  $     3,626  $        --  $        --  $   --  $     2,357   $     1,269

Year ended July 2, 2004
  Warranty and service costs  $     1,687  $     1,820  $        --  $   --  $     1,786   $     1,653
  Reorganization costs . . .  $     1,269  $        --  $        --  $   --  $      (994)  $       275
</TABLE>


                                      F-27
<PAGE>
<TABLE>
<CAPTION>
                                  EXHIBIT INDEX

<C>     <S>
   2.1  Debtors' Third Amended and Restated Plan of Reorganization (Incorporated by reference to Exhibit
        99.2 to the Company's Current Report on Form 8-K filed on January 8, 2002)

   3.1  Amended and Restated Articles of Incorporation of the Company (Incorporated by reference to Exhibit
        3.1 to the Company's Quarterly Report on Form 10-Q filed on May 10, 2002)

   3.2  Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.1 to the
        Company's Quarterly Report on Form 10-Q filed on May 10, 2002)

   3.3  Charter for the Audit Committee of the Company, dated September 19, 2001 (Incorporated by reference
        to the Company's Annual Report on Form 10-K filed on September 24, 2002)

   3.4  Charter for the Compensation Committee of the Company, dated September 18, 2001 (Incorporated by
        reference to the Company's Annual Report on Form 10-K filed on September 24, 2002)

   3.5  Charter for the Audit Committee of the Company, Amended and Restated as of April 20, 2004
        (Incorporated by reference to the Company's Proxy Statement filed on September 16, 2004)

  10.1  Employment Agreement, effective as of October 3, 2001, by and between the Company and Finis F.
        Teeter (Incorporated by reference to the Company's Annual Report on Form 10-K filed on September
        24, 2002)

  10.2  American Homestar Corporation 2001 Management Incentive Program, effective as of October 3, 2001
        (Incorporated by reference to the Company's Annual Report on Form 10-K filed on September 24,
        2002)

  10.3  Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Finis F. Teeter (Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 24, 2002)

  10.4  Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Craig A. Reynolds (Incorporated by reference to the Company's Annual Report on Form 10-K filed
        on September 24, 2002)

  10.5  Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Charles N. Carney, Jr. (Incorporated by reference to the Company's Annual Report on Form 10-K
        filed on September 24, 2002)

  10.6  Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and James J. Fallon (Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 24, 2002)

  10.7  Non-Qualified Stock Option Agreement, effective as of October 3, 2002, by and between the Company
        and Jackie Holland(Incorporated by reference to the Company's Annual Report on Form 10-K filed on
        September 24, 2003)

 10.8*  Agreement of Limited Partnership of Humble Springs Ltd.

 10.9*  Agreement of Limited Partnership of 114 Starwood Development Ltd.


  14.1  American Homestar Corporation Code of Business Conduct and Ethics, adopted on December 17, 2002
        (Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on May 2, 2003)

  16.1  Letter Regarding Change in Certifying Accountant (Incorporated by reference to Exhibit 16.1 to the
        Company's Current Report on Form 8-K filed on January 25, 2002)

 21.1*  Subsidiaries of American Homestar Corporation


<PAGE>
 31.1*  Certification pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) for Finis F. Teeter, Chief Executive
        Officer of the Company.

 31.2*  Certification pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) for Craig A. Reynolds, Chief
        Financial Officer

32.1**  Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
        Oxley Act of 2002 for Finis F. Teeter, Chief Executive Officer, and Craig A. Reynolds, Chief Financial
        Officer of the Company.
</TABLE>


_____________
*    Filed herewith
**   Furnished herewith


<PAGE>