“A careful review of the total retail demand for manufactured housing in 2003 shows that approximately 235,000 homes were sold to retail customers. Of that amount, factory shipments represented only 131,000 homes, or about 55% of retail sales. The additional demand was satisfied by approximately 90,000 homes from repossessed inventories and the reduction of 14,000 homes from dealer inventories.

“While it is difficult to predict when the industry turnaround will gain significant momentum, we can point to some encouraging vital signs that indicate a more favorable environment is imminent. Overall, the national economy has stabilized, inventories of repossessed homes have now dramatically declined and lenders are gradually starting to re-enter the market. Together, these factors should lead to more stable conditions and renewed growth in industry sales,” Posey concluded.

Larry Keener, president and chief executive officer of Palm Harbor Homes, added, “While we are in no way satisfied with our financial performance for the year, we remain confident that we are continuing to position Palm Harbor strategically for the future. We think that investors should view today’s factory-built housing industry as having two components — manufactured and modular. Together, shipments for these two categories totaled 169,000 homes in 2003. Looking ahead, management estimates that the combined shipments for calendar years 2004, 2005, 2006, 2007 and 2008 will be approximately 174,000, 183,000, 196,000, 209,000 and 220,000 homes, respectively.

“As such, we are expanding our Nationwide Custom Homes series and are focusing on the introduction of our Discovery Home series of modular homes, as we believe modular housing will be a key driver of our future growth and profitability. The market response has already been very favorable, as we have continued to aggressively market this innovative product line in new markets. With a broad product offering that includes both manufactured and modular housing, Palm Harbor is uniquely positioned to address the growing need for affordable housing now and as market conditions improve.

“Additionally, our ability to provide both chattel and mortgage bank financing for our customers is another strategic advantage for Palm Harbor. During fiscal 2004, Country Place, our full-service chattel lender, originated over $77 million of loans, compared with $32 million the prior year. And, as previously announced, during the fourth quarter we entered into a new $200 million warehouse facility agreement on very favorable terms to increase our borrowing capacity. We believe our proven ability to execute our strategy and adapt to a changing marketplace, combined with Palm Harbor’s unsurpassed reputation for providing exceptional value for our customers, will further enhance our competitive position and, more importantly, shape our performance for the future,” added Keener.

Kelly Tacke, chief financial officer of Palm Harbor Homes, Inc., commented, “We believe our financial position is sound as our balance sheet reflects $50.9 million in cash and cash equivalents at March 26, 2004. We will continue to carefully control our expenses and efficiently manage our operations. More importantly, we believe we have the financial flexibility to execute our business plan and reward our shareholders.”

A conference call regarding this release is scheduled for Wednesday, May 5, 2004, at 8:00 a.m. (Central Time) 9:00 a.m. (Eastern Time). Interested parties can access a live simulcast on the Internet at www.PalmHarbor.com or www.FullDisclosure.com. A 30-day replay will be available on both websites.

Palm Harbor Homes is one of the nation’s leading manufacturers and marketers of multi-section manufactured homes. The Company markets nationwide through vertically integrated operations, encompassing manufacturing, marketing, financing and insurance.

PALM HARBOR HOMES, INC.

Condensed Consolidated Financial Results

This press release contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company’s current views with respect to future events and financial performance. No assurance can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in the Company’s periodic reports filed with the Securities and Exchange Commission.