10-Q

UNITED STATES SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2005

OR

o	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 000-08822

Cavco Industries, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	56-2405642
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

1001 North Central Avenue, Suite 800, Phoenix, Arizona 85004
(Address of principal executive offices)
(Zip Code)

(602) 256-6263
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last year)

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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes þ No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the latest practicable date.

Class	Outstanding at November 3, 2005
Common Stock, $.01 Par Value	6,335,730 Shares

CAVCO INDUSTRIES, INC. AND SUBSIDIARY
Form 10-Q Table of Contents
September 30, 2005

			Page
Part I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets as of September 30, 2005 (unaudited) and March 31, 2005	1
		Consolidated Income Statements (unaudited) for the three and six months ended September 30, 2005 and 2004	2
		Consolidated Statements of Cash Flows (unaudited) for the six months ended September 30, 2005 and 2004	3
		Notes to Consolidated Financial Statements	4 - 8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9 - 11
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
	Item 4.	Controls and Procedures	12
Part II.	OTHER INFORMATION
	Item 6.	Exhibits	13
SIGNATURES			14
Exhibit 10.1
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

CAVCO INDUSTRIES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30,			March 31,
	2005			2005
	(Unaudited)
ASSETS
Current assets
Cash	$	10,839		$	46,457
Short-term investments		39,900			—
Restricted cash		1,168			1,028
Accounts receivable		9,329			7,545
Inventories		11,897			9,703
Prepaid expenses and other current assets		1,404			1,202
Deferred income taxes		3,590			3,610
Retail assets held for sale		334			1,114
Total current assets		78,461			70,659
Property, plant and equipment, at cost:
Land		6,050			2,330
Buildings and improvements		6,192			5,045
Machinery and equipment		6,656			6,446
		18,898			13,821
Accumulated depreciation		(6,810	)		(6,349	)
		12,088			7,472
Goodwill		67,346			67,346
Total assets	$	157,895		$	145,477
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,450		$	5,978
Accrued liabilities		25,815			22,099
Total current liabilities		31,265			28,077
Deferred income taxes		10,150			9,090
Commitments and contingencies
Stockholders’ equity
Preferred Stock, $.01 par value, 1,000,000 shares authorized;
No shares issued or outstanding		—			—
Common Stock, $.01 par value; 10,000,000 shares authorized;
Outstanding 6,334,776 and 6,288,730 shares, respectively		63			63
Additional paid-in capital		120,984			119,998
Unamortized value of restricted stock		(188	)		(313	)
Accumulated deficit		(4,379	)		(11,438	)
Total stockholders’ equity		116,480			108,310
Total liabilities and stockholders’ equity	$	157,895		$	145,477

See Notes to Consolidated Financial Statements

1

CAVCO INDUSTRIES, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Net sales	$	47,091	$	38,635	$	92,967	$	74,572
Cost of sales		37,482		31,366		73,721		61,210
Gross profit		9,609		7,269		19,246		13,362
Selling, general and administrative expenses		4,207		4,068		8,319		7,418
Income from operations		5,402		3,201		10,927		5,944
Interest income		364		100		646		201
Income from continuing operations before income taxes		5,766		3,301		11,573		6,145
Income tax expense		2,249		1,320		4,514		2,457
Income from continuing operations		3,517		1,981		7,059		3,688
Income from discontinued retail operations less income taxes of $100 in 2004		—		150		—		150
Net Income	$	3,517	$	2,131	$	7,059	$	3,838
Net income per share (basic):
Continuing operations	$	0.56	$	0.32	$	1.12	$	0.59
Discontinued retail operations		—		0.02		—		0.02
Net Income	$	0.56	$	0.34	$	1.12	$	0.61
Net income per share (diluted):
Continuing operations	$	0.52	$	0.30	$	1.06	$	0.57
Discontinued retail operations		—		0.03		—		0.02
Net Income	$	0.52	$	0.33	$	1.06	$	0.59
Weighted average shares outstanding:
Basic		6,302,386		6,288,730		6,295,558		6,288,730
Diluted		6,720,397		6,520,528		6,685,694		6,522,178

On January 6, 2005, Cavco Industries, Inc. announced that its Board of Directors had authorized a 2-for-1 split of its common stock in the form of a 100% stock dividend. The dividend was paid on January 31, 2005 to stockholders of record as of January 18, 2005. The information for the three and six months ended September 30, 2004 is presented as if this stock split had been completed as of the beginning of these periods.

See Notes to Consolidated Financial Statements

2

CAVCO INDUSTRIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six Months Ended September 30,
	2005			2004
OPERATING ACTIVITIES
Net income	$	7,059		$	3,838
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		461			547
Amortization of restricted stock		125			125
Deferred income taxes provision		1,080			970
Tax benefit of option exercises		441			—
Impairment charges		—			270
Changes in operating assets and liabilities:
Restricted cash		(140	)		(454	)
Accounts receivable		(1,784	)		(722	)
Inventories		(1,414	)		(153	)
Prepaid expenses and other current assets		(202	)		670
Accounts payable and accrued liabilities		3,188			133
Net cash provided by operating activities		8,814			5,224
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(5,077	)		(216	)
Purchases of short-term investments		(53,900	)		—
Proceeds from sale of short-term investments		14,000			—
Net cash used in investing activities		(44,977	)		(216	)
FINANCING ACTIVITIES
Common stock issued		545			—
Net cash provided by financing activities		545			—
Net (decrease) increase in cash		(35,618	)		5,008
Cash at beginning of period		46,457			30,775
Cash at end of period	$	10,839		$	35,783
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes	$	3,682		$	1,392

See Notes to Consolidated Financial Statements

3

CAVCO INDUSTRIES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2005

(Dollars in thousands, except per share data)

(unaudited)

1. Basis of Presentation

     The consolidated interim financial statements include the accounts of Cavco Industries, Inc. (“Cavco Inc.”) and its wholly-owned subsidiary (collectively, the “Company”) after elimination of all significant intercompany balances and transactions. The statements have been prepared, without audit, in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted.

     In the opinion of the Company, all adjustments (consisting of normal, recurring accruals) necessary to present fairly the information in the consolidated financial statements of the Company have been included. The results of operations for such interim periods are not necessarily indicative of results for the full year. The Company suggests that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes to consolidated financial statements included in the Company’s Form 10-K Annual Report filed with the Securities and Exchange Commission on May 20, 2005 (the “Form 10-K”).

     All shares authorized, outstanding and per share amounts for the three and six months ended September 30, 2004 have been restated to give retroactive application to the January 31, 2005 two-for-one stock split effected in the form of a 100 percent stock dividend to Company stockholders of record on January 18, 2005.

     The Company’s deferred tax assets primarily result from financial accruals and its deferred tax liabilities result from excess tax amortization of goodwill.

     For a description of significant accounting policies used by the Company in the preparation of its consolidated financial statements, please refer to Note 1 of the notes to consolidated financial statements in the Form 10-K.

     Accounting For Stock Based Compensation — The Company accounts for its stock-based compensation programs under APB No. 25, Accounting for Stock Issued to Employees and related interpretations (“APB 25”), under which no compensation expense has been recognized, as all options have been granted with an exercise price equal to the fair value of the common stock on the date of grant. The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock Based Compensation, as amended by SFAS No. 148, Accounting for Stock Based Compensation-Transition and Disclosure (“SFAS 123”). For the disclosure requirements of SFAS 123, the fair value of each option grant as of the date of the grant was estimated using the Black-Scholes option pricing method. The assumptions used for the six months ended September 30, 2005 were volatility of 6.67%, risk-free interest rate of 3.87%, dividend rate of 0.0% and an expected life of the options of 5 years.

     Options granted generally vest over a three-year period with 25% becoming vested on the grant date and the remainder becoming vested in cumulative 25% increments on each of the first three anniversaries of the grant date. Had compensation cost been determined as prescribed by SFAS 123, utilizing the assumptions detailed above and amortizing the resulting fair value of the stock options granted over the respective vesting period of the options, net income and earnings per share would have been reduced to the pro forma amounts for the three and six months ended September 30, 2005 and 2004 as follows.

4

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Net income, as reported	$	3,517		$	2,131		$	7,059		$	3,838
Less: Total stock-based employee compensation determined under the fair value based method for all awards, net of related tax effects of $40, $64, $211 and $171, respectively		(71	)		(96	)		(374	)		(257	)
Pro forma net income	$	3,446		$	2,035		$	6,685		$	3,581
Basic net income per share:
As reported	$	0.56		$	0.34		$	1.12		$	0.61
Pro forma	$	0.55		$	0.32		$	1.06		$	0.57
Diluted net income per share:
As reported	$	0.52		$	0.33		$	1.06		$	0.59
Pro forma	$	0.51		$	0.31		$	1.00		$	0.55

Recent Accounting Pronouncements — During December 2004, the Financial Accounting Standards Board issued Statement No. 123R, Share-Based Payment (“SFAS 123R”), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. Share-based payments include stock options which the Company grants to some of its employees and directors under its stock incentive plan at prices equal to the market value of the stock on the dates the options were granted. SFAS 123R is effective for annual periods beginning after June 15, 2005. The Company plans to adopt SFAS 123R effective April 1, 2006.

     Because the Company currently accounts for share-based payments to employees using the intrinsic value method under APB No. 25, it has recognized no compensation cost for stock options granted. Accordingly, the adoption of SFAS 123R’s fair value method will impact our results of operations, although it will have no impact on our overall financial position. The impact of adoption of SFAS 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS 123R in prior periods, the impact of that standard would have approximated the impact of SFAS 123 as described in the disclosure of pro forma net income and net income per share above.

2. Inventories

     Raw materials inventories are valued at the lower of cost (first-in, first-out method which approximates actual cost) or market. Finished goods are valued at the lower of cost or market, using the specific identification method. Inventories at September 30, 2005 and March 31, 2005 were as follows:

	September 30,		March 31,
	2005		2005
Raw materials	$	4,610	$	3,811
Work in process		3,693		2,546
Finished goods		3,594		3,346
Total inventories	$	11,897	$	9,703

5

3. Revolving line of credit

     The Company has established a $15 million revolving line of credit facility (“RLC”) with JPMorgan Chase Bank N.A. which expires on July 31, 2007. As of September 30, 2005, $945 of the line amount is reserved for an outstanding letter of credit issued for the Company’s workers’ compensation program. The Company has not made any draws under the RLC. The outstanding principal amount of borrowings under the RLC bears interest at the Company’s election at either the prime rate or the London Interbank Offered Rate plus 1.75%. The RLC contains certain restrictive and financial covenants, which, among other things, limit the Company’s ability to pledge assets and incur additional indebtedness, and requires the Company to maintain a certain defined fixed charge coverage ratio.

4. Warranties

     Homes are warranted against manufacturing defects for a period of one year commencing at the time of sale to the retail customer. Estimated costs relating to home warranties are provided at the date of sale. The Company has provided a liability for estimated future warranty costs relating to homes sold, based upon management’s assessment of historical experience factors and current industry trends. Activity in the liability for estimated warranties was as follows:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Balance at beginning of period	$	5,563		$	4,601		$	5,576		$	4,596
Charged to costs and expenses		2,065			1,361			3,748			2,866
Deductions		(1,770	)		(1,387	)		(3,466	)		(2,887	)
Balance at end of period	$	5,858		$	4,575		$	5,858		$	4,575

5. Contingencies

     The Company is contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for independent retailers of its products. These arrangements, which are customary in the industry, provide for the repurchase of products sold to retailers in the event of default by the retailer. The risk of loss under these agreements is spread over numerous retailers. The price the Company is obligated to pay generally declines over the period of the agreement and is further reduced by the resale value of repurchased homes. The maximum amount for which the Company was contingently liable under such agreements approximated $28,540 at September 30, 2005. The Company has a reserve for repurchase commitments based on prior experience and market conditions of $1,600 at September 30, 2005. In connection with the repurchase agreement with one financial institution, the Company has provided a guaranty in the amount of $300 to guaranty payment should one of the Company’s larger independent dealers default on certain of its obligations in the event of a repurchase by the lender. The potential liability related to this guaranty is included in the Company’s reserve for repurchase commitments.

     The Company is engaged in various legal proceedings that are incidental to and arise in the course of its business. Certain of the cases filed against the Company and other companies engaged in businesses similar to the Company allege, among other things, breach of contract and warranty, product liability and personal injury. Legal fees associated with these lawsuits are expensed as incurred. In the opinion of management, the ultimate liability, if any, with respect to the proceedings in which the Company is currently involved is not expected to have a material adverse effect on the Company’s financial position or results of operations. However, the potential exists for unanticipated material adverse judgments against the Company.

6

6. Earnings Per Share

     The following table sets forth the computation of basic and diluted earnings per share. Earnings per share calculations for the three and six months ended September 30, 2004 have been restated to give retroactive application to the January 31, 2005 two-for-one stock split effected in the form of a 100 percent stock dividend to Company stockholders of record on January 18, 2005.

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Net income	$	3,517	$	2,131	$	7,059	$	3,838
Weighted average shares outstanding:
Basic		6,302,386		6,288,730		6,295,558		6,288,730
Add: Effect of dilutive stock options		418,011		231,798		390,136		233,448
Diluted		6,720,397		6,520,528		6,685,694		6,522,178
Net income per share:
Basic	$	0.56	$	0.34	$	1.12	$	0.61
Diluted	$	0.52	$	0.33	$	1.06	$	0.59

7. Discontinued Operations

     The Company has plans to dispose of certain of its retail sales centers and these operations are classified as discontinued retail operations. Retail assets held for sale represent finished goods inventories to be liquidated in conjunction with the disposal of these retail sales centers. There were no operating losses for the three and six months ended September 30, 2005 for the stores we have identified for sale or disposal as the costs related to the liquidation of inventory were in line with our expectations of net realizable values. Income from discontinued retail operations for the three and six months ended September 30, 2004 resulted from better than anticipated results from liquidating retail inventories at our closed locations partially offset by an accrual for the estimated remaining lease costs for one retail location closed during these periods. Net sales for the retail sales centers to be disposed of were $1,752 and $3,693 for the three month periods ended September 30, 2005 and 2004, respectively and $3,572 and $8,193 for the six month periods ended September 30, 2005 and 2004, respectively. The decline in sales versus the prior year was primarily due to the closure or disposal of retail sales centers in accordance with the Company’s plans.

8. Business Segment Information

     The Company operates in two business segments in the manufactured housing industry — Manufacturing and Retail. Through its Manufacturing segment, the Company designs and manufactures homes which are sold primarily in the Southwestern and Western United States to a network of dealers which includes Company-owned retail locations comprising the Retail segment. The Company’s Retail segment derives its revenues from home sales to individuals. The accounting policies of the segments are the same as those described in the Form 10-K. Retail segment results include retail profits from the sale of homes to consumers but do not include any manufacturing segment profits associated with the homes sold. Intercompany transactions between reportable operating segments are eliminated in consolidation. Each segment’s results include corporate office costs that are directly and exclusively incurred for the segment. The following table summarizes information with respect to the Company’s business segments for the periods indicated:

7

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Net sales
Manufacturing	$	45,122		$	38,338		$	89,910		$	73,283
Retail		3,309			2,204			6,347			4,935
Less: Intercompany		(1,340	)		(1,907	)		(3,290	)		(3,646	)
Total consolidated net sales	$	47,091		$	38,635		$	92,967		$	74,572
Income (loss) from operations
Manufacturing	$	6,914		$	5,117		$	13,834		$	8,888
Retail		16			(446	)		4			(548	)
Intercompany profit in inventory		85			85			—			285
General corporate charges		(1,613	)		(1,555	)		(2,911	)		(2,681	)
Total consolidated income from operations	$	5,402		$	3,201		$	10,927		$	5,944
Depreciation
Manufacturing	$	191		$	189		$	386		$	385
Retail		16			41			31			79
Corporate		21			42			44			83
Total consolidated depreciation	$	228		$	272		$	461		$	547
Capital expenditures
Manufacturing	$	4,878		$	37		$	5,042		$	201
Corporate		—			—			35			15
Total consolidated capital expenditures	$	4,878		$	37		$	5,077		$	216

	As of
	September 30,		March 31,
	2005		2005
Total assets
Manufacturing	$	97,808	$	89,358
Retail		5,353		4,824
Retail assets held for sale		334		1,114
Corporate, primarily cash, short-term investments and deferred taxes		54,400		50,181
Total consolidated assets	$	157,895	$	145,477

8

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

      The consolidated financial statements contained in this quarterly report reflect the financial condition and results of operations of Cavco Industries, Inc. (the “Company”). The Company is the largest producer of manufactured homes in Arizona and 7th largest manufactured home builder in the United States in terms of total dollar volume, based on 2004 data published by Manufactured Home Merchandiser. Headquartered in Phoenix, Arizona, the Company designs and produces manufactured homes which are sold to a network of retailers located primarily in the Southwestern and Western United States. The retail segment of the Company operates retail sales locations which primarily offer homes produced by the Company to retail customers.

Results of Operations — (Dollars in thousands)
Three and six months ended September 30, 2005 compared to 2004

     Net Sales. Total net sales increased 22% to $47,091 for the three months ended September 30, 2005 compared to $38,635 last year. For the first six months of the fiscal year ending March 31, 2006, net sales increased 25% to $92,967 versus $74,572 last year.

     Manufacturing net sales increased 18% to $45,122 for the three months ended September 30, 2005 from $38,338 for last year and 23% to $89,910 for the first six months of fiscal 2006 from $73,283 last year. These increases in sales were attributable to increases in the number of homes sold and wholesale sales prices. Total homes sold during the current quarter increased 4% to 1,051 wholesale shipments versus 1,008 last year and the average sales price per home increased 13% to $42,932 versus $38,034 last year. The higher volume of homes sold resulted from stronger demand for our products particularly in Arizona and California and expansion of specialty products to markets different from those for traditional manufactured homes. Wholesale sales prices were increased to offset significant material cost increases experienced since early 2004. In addition, customers are trending toward larger homes with more amenities because lower interest rates have made higher priced homes more affordable and traditional mortgage financing can require more square footage to meet appraisal requirements.

     Retail net sales increased $1,105 to $3,309 for the three months ended September 30, 2005 from $2,204 for the same period last year and $1,412 to $6,347 for the first six months of fiscal 2005 from $4,935 last year. This increase in retail sales was due to additional units sold during the quarter and a higher average sales price per unit.

     Gross Profit. Gross profit as a percent of sales increased to 20.4% for the three months ended September 30, 2005 from 18.8% last year and to 20.7% for the first six months of fiscal 2006 from 17.9% last year. The increases in gross profit percentage were primarily due to increases in sales prices, which were enacted to offset material cost increases, and the efficiencies realized through higher production rates. Since early 2004, the Company has experienced significant cost increases in substantially all of the major components in the Company’s products, including lumber and lumber-related products, gypsum products, raw steel and products built with steel and petroleum-based products and services, including delivery costs. The Company anticipates continued upward pressure in material prices and is concerned about the availability of materials, particularly in view of the recent hurricane activity in the gulf coast region of the United States, which has further escalated demand for building products.

     Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 3.4% or $139 to $4,207 or 8.9% of net sales for the three months ended September 30, 2005 versus $4,068 or 10.5% of net sales last year. For the first six months of fiscal 2006, selling, general and administrative expenses increased 12.1% or $901 to $8,319 from $7,418 last year. The increase was primarily the result of incentive compensation programs tied to profitability and an increase in costs influenced by higher sales volume.

     Interest Income. Interest income represents income earned on short-term investments and unrestricted cash. The increases in interest income for the current quarter versus the comparative period for last year resulted from the increase in the Company’s investable funds and higher short-term interest rates.

9

     Income Taxes. The effective income tax rate for the three and six months ended September 30, 2005 approximated the Company’s estimated combined statutory rate of 39% versus 40% for the same periods last year.

     Discontinued Retail Operations. The Company has plans to dispose of certain of its retail sales centers and these operations are classified as discontinued retail operations. Retail assets held for sale represent finished goods inventories to be liquidated in conjunction with the disposal of these retail sales centers. There were no operating losses for the three months ended September 30, 2005 and 2004 for the stores we have identified for sale or disposal as the costs related to the liquidation of inventory were in line with our expectations of net realizable values. Income from discontinued retail operations for the three and six months ended September 30, 2004 resulted from better than anticipated results from liquidating retail inventories at our closed locations partially offset by an accrual for the estimated remaining lease costs for one retail location closed during these periods. Net sales for the retail sales centers to be disposed of were $1,752 and $3,693 for the three month periods ended September 30, 2005 and 2004, respectively and $3,572 and $8,193 for the six month periods ended September 30, 2005 and 2004, respectively. The decline in sales versus the prior year was primarily due to the closure or disposal of retail sales centers in accordance with the Company’s plans.

Liquidity and Capital Resources

     The Company has established a $15 million revolving line of credit facility (“RLC”) with JPMorgan Chase Bank N.A. As of September 30, 2005, $945 of the line amount is reserved for an outstanding letter of credit issued for the Company’s workers’ compensation program. The Company has not made any draws under the RLC. The outstanding principal amount of borrowings under the RLC bears interest at the Company’s election at either the prime rate or the London Interbank Offered Rate plus 1.75%. The RLC expires on July 31, 2007.

     The RLC contains certain restrictive and financial covenants, which, among other things, limit the Company’s ability to pledge assets and incur additional indebtedness, and requires the Company to maintain a certain defined fixed charge coverage ratio.

     We believe that cash on hand at September 30, 2005, together with cash flow from operations, will be sufficient to fund our operations for at least the next twelve months. In addition, our $15 million line of credit facility described above can be used to supplement these sources of liquidity.

     Operating activities provided $8,814 of cash during the six months ended September 30, 2005 compared to providing $5,224 of cash during the first six months of last year. Cash generated by operating activities was primarily derived from operating income before non-cash charges and an increase in accrued liabilities due to operating growth partially offset by higher accounts receivable due to increased sales and higher inventories necessary to supply increased production. Cash generated by operating activities in the prior year was primarily derived from operating income before non-cash charges partially offset by increased accounts receivable due to the timing of payments.

     Investing activities required the use of $44,977 of cash during the six months ended September 30, 2005 compared to the use of $216 last year. The cash was primarily used to make net purchases of $39,900 of short-term investments in order to enhance yields. In addition, the Company also purchased $5,077 of property, plant and equipment, including $1,550 for a production facility in Texas and $3,000 for land in Arizona on which the Company may build an additional production facility.

     Financing activities provided $545 of cash during the six months ended September 30, 2005 from common stock issued for stock options exercised.

Critical Accounting Policies

     In our Form 10-K filed with the Securities and Exchange Commission on May 20, 2005, under the heading “Critical Accounting Policies”, we have provided a discussion of the critical accounting policies that management believes affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

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     During December 2004, the Financial Accounting Standards Board issued Statement No. 123R, Share-Based Payment (“SFAS 123R”), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. Share-based payments include stock options which the Company grants to some of its employees and directors under its stock incentive plan at prices equal to the market value of the stock on the dates the options were granted. SFAS 123R is effective for annual periods beginning after June 15, 2005. The Company plans to adopt SFAS 123R effective April 1, 2006.

     Because the Company currently accounts for share-based payments to employees using the intrinsic value method under APB No. 25, Accounting for Stock Issued to Employees and related interpretations, it has recognized no compensation cost for stock options granted. Accordingly, the adoption of SFAS 123R’s fair value method will impact our results of operations, although it will have no impact on our overall financial position. The impact of adoption of SFAS 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS 123R in prior periods, the impact of that standard would have approximated the impact of SFAS 123 as described in the disclosure of pro forma net income and net income per share in Note 1 to our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

     Various sections of this Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when we are discussing our beliefs, estimates or expectations.

     Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are beyond our control. As a result, our actual results or performance may differ materially from anticipated results or performance. Also, forward-looking statements are based upon management’s estimates of fair values and of future costs, using currently available information. Therefore, actual results may differ materially from those expressed or implied in those statements. Factors that could cause such differences to occur include, but are not limited to, those discussed in our Form 10-K filed with the Securities and Exchange Commission under the heading “Risk Factors”. We expressly disclaim any obligation to update any forward-looking statements contained in this report or elsewhere, whether as a result of new information, future events or otherwise. For all of these reasons, you are cautioned not to place undue reliance on any forward-looking statements included in this report or elsewhere.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

     Market risk is the risk of loss arising from adverse changes in market prices and interest rates. We may from time to time be exposed to interest rate risk inherent in our financial instruments, but are not currently subject to foreign currency or commodity price risk. We manage our exposure to these market risks through our regular operating and financing activities. We are not currently a party to any market risk sensitive instruments that could be reasonably expected to have a material effect on our financial condition or results of operations.

     The Company maintains short-term investments. Short-term investments are comprised of auction rate certificates which are adjustable-rate securities with dividend rates that are reset by bidders through periodic “Dutch auctions” generally conducted every 7 to 35 days by a broker/dealer on behalf of the issuer. The Company believes these securities are highly liquid investments through the related auctions; however, the collateralizing securities have stated terms of up to thirty (30) years. The investment instruments are rated AAA by Standard & Poor’s Ratings Group, or equivalent. The Company’s investments are intended to establish a high-quality portfolio that preserves principal, meets liquidity needs, and delivers an appropriate yield in relationship to the Company’s investment guidelines and market conditions. Given the short-term nature of these investments, and that we have no borrowings outstanding, we are not subject to significant interest rate risk.

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Item 4: Controls and Procedures

     An evaluation has been performed under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2005. Based on that evaluation, our management, including our Chief Executive Officer and Interim Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of September 30, 2005, for the purpose of ensuring that information required to be disclosed in this Report has been processed, summarized and reported in a timely manner. There were no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. Other Information

Item 6: Exhibits

               10.1 Amendment to Credit Agreement dated as of October 25, 2005.

               10.2 Agreement between Cavco Industries, Inc. and Sean K. Nolen dated as of August 11, 2005.

               31.1 Certification of the Chief Executive Officer of Cavco Industries, Inc. pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended.

               31.2 Certification of the Interim Chief Financial Officer of Cavco Industries, Inc. pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended.

               32.1 Certification of the Chief Executive Officer of Cavco Industries, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

               32.2 Certification of the Interim Chief Financial Officer of Cavco Industries, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

All other items required under Part II are omitted because they are not applicable.

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Signatures

     Pursuant to the requirements 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.

	Cavco Industries, Inc.
	Registrant
November 8, 2005	/s/ Joseph H. Stegmayer
	Joseph H. Stegmayer — Chairman,
	President and
	Chief Executive Officer
	(Principal Executive Officer)
November 8, 2005	/s/ Daniel L. Urness
	Interim Chief Financial Officer
	(Principal Financial and
	Accounting Officer)

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EXHIBIT INDEX

               10.1 Amendment to Credit Agreement dated as of October 25, 2005.

               10.2 Agreement between Cavco Industries, Inc. and Sean K. Nolen dated as of August 11, 2005.

               31.1 Certification of the Chief Executive Officer of Cavco Industries, Inc. pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended.

               31.2 Certification of the Interim Chief Financial Officer of Cavco Industries, Inc. pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended.

               32.1 Certification of the Chief Executive Officer of Cavco Industries, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

               32.2 Certification of the Interim Chief Financial Officer of Cavco Industries, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

All other items required under Part II are omitted because they are not applicable.

EX-10.1

Exhibit 10.1

Amendment to Credit Agreement

This agreement is dated as of October 25, 2005, by and between Cavco Industries, Inc. (the “Borrower”) and JPMorgan Chase Bank, N.A. (the “Bank”), and its successors and assigns. The provisions of this agreement are effective on the date that this agreement has been executed by all of the signers and delivered to the Bank (the “Effective Date”).

WHEREAS, the Borrower and the Bank entered into a credit agreement dated September 17, 2003, as amended (if applicable) (the “Credit Agreement”); and

WHEREAS, the Borrower has requested and the Bank has agreed to amend the Credit Agreement as set forth below;

NOW, THEREFORE, in mutual consideration of the agreements contained herein and for other good and valuable consideration, the parties agree as follows:

1.	DEFINED TERMS. Capitalized terms not defined herein shall have the meaning ascribed in the Credit Agreement.
2.	MODIFICATION OF CREDIT AGREEMENT. The Credit Agreement is hereby amended as follows:

2.1 From and after the Effective Date, the provisions in the Credit Agreement under Section 5.2 captioned “I. Investments.” and “J. Leverage Ratio.” are hereby deleted.

2.2 From and after the Effective Date, the provision in the Credit Agreement under Section 5.2 captioned “M. Fixed Charge Coverage Ratio.” is hereby amended and restated to read as follows:

M. Fixed Charge Coverage Ratio. Permit as of each fiscal quarter end, its ratio of net income before taxes, plus amortization, depreciation, interest expense, rent and operating lease payments minus any Distributions, for the twelve month period then ending to prior period current maturities of long term debt and capital leases, interest expense, taxes, rent and operating lease payments for the same such period to be less than 1.25 to 1.00.

2.3 From and after the Effective Date, the provision in the Credit Agreement under Section 5.3 captioned “A. Acquisitions.” is hereby amended and restated to read as follows:

     A. Acquisitions. Purchase or acquire any securities, limited liability company interest or partnership interest (or warrants or other options or rights to acquire the same) of, or make any loans or advances to, any person, firm, limited liability company, partnership or corporation, except for a purchase, acquisition, loan or advance, where the Borrower has provided to the Bank pro forma statements demonstrating to the Bank that such purchase, acquisition, loan or advance will not result in the Borrower being out of compliance with any financial or other covenant contained herein.

3.	RATIFICATION. The Borrower ratifies and reaffirms the Credit Agreement and the Credit Agreement shall remain in full force and effect as modified herein.
4.	BORROWER REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that (a) the representations and warranties contained in the Credit Agreement are true and correct in all material respects as of the date of this agreement, (b) no condition, act or event which could constitute an event of default under the Credit Agreement or any promissory note or credit facility executed in reference to the Credit Agreement exists, and (c) no condition, event, act or omission has occurred, which, with the giving of notice or passage of time, would constitute an event of default under the Credit Agreement or any promissory note or credit facility executed in reference to the Credit Agreement.
5.	FEES AND EXPENSES. The Borrower agrees to pay all fees and out-of-pocket disbursements incurred by the Bank in connection with this agreement, including legal fees incurred by the Bank in the preparation, consummation, administration and enforcement of this agreement.
6.	EXECUTION AND DELIVERY. This agreement shall become effective only after it is fully executed by the Borrower and the Bank, and the Bank shall have received from the Borrower the following documents: Note Modification Agreement.
7.	ACKNOWLEDGEMENTS OF BORROWER. The Borrower acknowledges that as of the date of this agreement it has no offsets with respect to all amounts owed by the Borrower to the Bank arising under or related to the Credit Agreement on or prior to the date of this agreement. The Borrower fully, finally and forever releases and discharges the Bank and its successors, assigns, directors, officers, employees, agents and representatives from any and all claims, causes of action, debts

and liabilities, of whatever kind or nature, in law or in equity, of the Borrower, whether now known or unknown to the Borrower, which may have arisen in connection with the Credit Agreement or the actions or omissions of the Bank related to the Credit Agreement on or prior to the date hereof. The Borrower acknowledges and agrees that this agreement is limited to the terms outlined above, and shall not be construed as an agreement to change any other terms or provisions of the Credit Agreement. This agreement shall not establish a course of dealing or be construed as evidence of any willingness on the Bank’s part to grant other or future agreements, should any be requested.

8.

NOT A NOVATION. This agreement is a modification only and not a novation. Except for the above-quoted modification(s), the Credit Agreement, any loan agreements, credit agreements, reimbursement agreements, security agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, instruments or documents executed in connection with the Credit Agreement, and all the terms and conditions thereof, shall be and remain in full force and effect with the changes herein deemed to be incorporated therein. This agreement is to be considered attached to the Credit Agreement and made a part thereof. This agreement shall not release or affect the liability of any guarantor of any promissory note or credit facility executed in reference to the Credit Agreement or release any owner of collateral granted as security for the Credit Agreement. The validity, priority and enforceability of the Credit Agreement shall not be impaired hereby. To the extent that any provision of this agreement conflicts with any term or condition set forth in the Credit Agreement, or any document executed in conjunction therewith, the provisions of this agreement shall supersede and control. The Bank expressly reserves all rights against all parties to the Credit Agreement.

Borrower:
Cavco Industries, Inc.
By:	/s/ Daniel Urness
	Daniel Urness                 Interim CFO
	Printed Name                                   Title
Date Signed: 10/25/05
Bank:
JPMorgan Chase Bank, N.A.
By:	/s/ Steven J. Krakoski
	Steven J. Krakoski            Senior Vice President
	Printed Name                                           Title
Date Signed: 10/25/05

EX-10.2

Exhibit 10.2

AGREEMENT

     This agreement (this “Agreement”) is entered into on this 11th day of August, 2005, by and between Cavco Industries, Inc. (“Cavco”) and Sean K. Nolen (“Mr. Nolen”).

RECITALS:

     A. Mr. Nolen is an executive of Cavco. On or about June 30, 2003, Cavco and Mr. Nolen entered into an Employment Agreement (the “Employment Agreement”).

     B. The parties mutually agree that it is in their respective best interests to terminate the Employment Agreement and to agree to certain terms regarding Mr. Nolen’s employment and compensation.

AGREEMENT:

          1. Termination of Employment Agreement. The Employment Agreement is terminated as of the date hereof. In addition, Mr. Nolen desires to resign, and hereby resigns, as an officer of Cavco, and as an officer, director, manager, trustee or administrator (or in any other representative capacity) of or with respect to any subsidiary, affiliate or employee benefit plan of Cavco, all effective as of the date hereof. Immediately following the termination of the Employment Agreement, Mr. Nolen is and will be an employee of Cavco through and ending at the close of business on December 31, 2005, and in such capacity he agrees to provide such services from time to time upon the request of Cavco as Cavco deems necessary for the business or operations of Cavco or its subsidiaries and which are related to the services he provided as an employee of Cavco prior to the date of this Agreement. Mr. Nolen expressly waives and releases Cavco from any and all payment obligations set forth in the Employment Agreement.

          2. Base Salary. While Mr. Nolen is an employee of Cavco, Cavco agrees that it will pay Mr. Nolen a base salary of $13,125.00 per month payable in accordance with Cavco’s customary payroll practices.

          3. Consulting Services. During the three-month period following the termination of Mr. Nolen’s employment with Cavco, Cavco agrees to retain Mr. Nolen as a consultant, and Mr. Nolen agrees to provide consulting services from time to time upon the request of Cavco as Cavco deems necessary for the business or operations of Cavco or its subsidiaries, at a rate of $13,125.00 per month payable in accordance with Cavco’s customary payroll practices. The parties will work together to ensure that such consulting services do not unnecessarily interfere with Mr. Nolen’s further employment and/or employment opportunities. However, the retention of Mr. Nolen as a consultant is expressly conditional on Mr. Nolen’s execution (and non-revocation) of (a) promptly after execution of this Agreement, an additional full release and waiver of Cavco with respect to claims relating to the Age Discrimination in Employment Act or similar laws and (b) promptly after termination of employment from Cavco, an additional general release and waiver of Cavco, in each case in form and substance (including scope) satisfactory to Cavco and similar to the release set forth in paragraph 4 hereof.

          4. Release of Claims. In consideration of the promises and payments set forth in this Agreement, Mr. Nolen, on behalf of himself and his heirs or assigns, expressly releases Cavco and its affiliates, and their respective directors, officers, employees, agents and representatives, from any and all claims, complaints, causes of action, and demands of any kind, whether known or unknown, which Mr. Nolen has, ever has had, or may have and which are based on acts or omissions which Mr. Nolen knew or should have known about at the time of the signing of this Agreement, including but not limited to any claims brought under his Employment Agreement.

          This release is a FULL WAIVER AND RELEASE and includes, without limitation, all rights and claims arising under Title VII of the Civil Rights Act of 1964, as amended; the Americans with Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act; the Age Discrimination in Employment Act; the Rehabilitation Act of 1973; the Arizona Civil Rights Act; the Consolidated Omnibus Budget Reconciliation Act; the Fair Labor Standards Act; the Arizona Employment Protection Act; and/or any other federal, state, or local law or regulation. This release also includes any contract or tort causes of action arising from or in any way related to Mr. Nolen’s Employment Agreement or employment relationship with Cavco or any of Cavco’s affiliates, including any claims for wrongful discharge, retaliatory discharge, breach of contract, breach of covenant of good faith and fair dealing and/or prima facie tort.

          5. Non-Compete. During the term of Mr. Nolen’s employment with Cavco hereunder and during the 15-month period following the termination of Mr. Nolen’s employment with Cavco, Mr. Nolen will not directly or indirectly engage in (whether as an employee, consultant, proprietor, shareholder, partner, director, or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of any person, firm, corporation or business that engages in designing, manufacturing or selling manufactured housing, park model homes and/or cabins in the States of Arizona, California, Nevada, New Mexico, Texas, Colorado or Utah or any other states where Cavco or its affiliates do business or that otherwise directly or indirectly competes with Cavco or its affiliates, absent Cavco’s prior written approval upon instructions of its Board of Directors.

          6. Non-Solicitation. During the term of Mr. Nolen’s employment with Cavco hereunder and during the 15-month period following the termination of Mr. Nolen’s employment with Cavco, Mr. Nolen will not (a) solicit or otherwise induce any employee of Cavco or any of its subsidiaries to terminate his or her service with Cavco or any such subsidiary or hire any person who was an employee of Cavco or any of its subsidiaries, or (b) solicit or contact any manufactured housing industry retailers, dealers, suppliers, customers or potential customers on behalf of any corporation or other entity or any other person engaging in the business of designing, manufacturing or selling manufactured housing, park model homes and/or cabins.

          7. Amendment of Stock Option Agreement. Cavco and Mr. Nolen are parties to a stock option agreement dated December 12, 2003 (the “Stock Option Agreement”). Cavco and Mr. Nolen agree that the Stock Option Agreement is hereby modified as follows: (a) the vesting schedule for the 50,000 shares that are unvested as of the date hereof shall be amended, as of the date hereof, so that 15,000 of such shares shall vest on December 12, 2005,

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and the remaining 35,000 shares shall not vest and shall no longer become exercisable, it being expressly agreed by Mr. Nolen that he hereby waives any right to exercise the option for such 35,000 shares, (b) upon termination of Mr. Nolen’s employment with Cavco, all vesting of any unvested shares under the Stock Option Agreement shall cease immediately, (c) upon termination of Mr. Nolen’s employment with Cavco for any reason other than cause (as specified in paragraph 10 hereof), Mr. Nolen will continue to have the right to exercise the option for all shares that are vested as of the date of the termination of his employment for a period of (but not beyond) six months following such termination (it being understood that upon a termination for cause, the option will become null and void) and (d) in the event of Mr. Nolen’s death or disability prior to December 12, 2005, the 15,000 shares will vest on December 12, 2005, and these shares will be exercisable by Mr. Nolen’s heirs or permitted assigns under the same terms included herein.^* In all other respects, the terms of the Stock Option Agreement remain in full force and effect.

          8. Confidential Information. The parties agree to keep the terms of this Agreement confidential except that they may reveal its terms to immediate family, tax advisors, legal counsel and as otherwise required by law or regulation or as Cavco reasonably determines to be necessary in the conduct of its business. Mr. Nolen also agrees that he will not, at any time, disclose or reveal any trade secrets or other confidential or proprietary information regarding Cavco or its subsidiaries or affiliates or their respective businesses, operations or properties to any person, firm, corporation or other entity.

          9. Governing Law. This Agreement is to be construed and interpreted in accordance with the laws of the state of Arizona, except as federal law may preempt those laws.

          10. Breach/Attorneys’ Fees and Costs. Mr. Nolen understands that his employment and engagement as a consultant hereunder will not cease upon his death or disability, and that Cavco will be entitled to terminate his employment and his engagement as a consultant hereunder only for cause, which, for purposes of this Agreement, shall be limited to theft, fraud or embezzlement or a violation of this Agreement as provided in the next sentence. Mr. Nolen understands that if he violates any of the terms of paragraph 5 or 6, or the second sentence of paragraph 8, of this Agreement, payments under this Agreement will cease and Cavco will be entitled to terminate Mr. Nolen’s employment and/or engagement as a consultant hereunder and, in the case of a violation of paragraph 5 or 6, to a refund from Mr. Nolen of all amounts paid to him under this Agreement. In the event of any dispute regarding this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees and costs.

          11. Severability. In any event any provision of this Agreement shall be held to be illegal, invalid or unenforceable for any reason, the illegality, invalidity, or unenforceability shall not affect the remaining provisions, but such illegal, invalid or unenforceable provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had never been included. Mr. Nolen further agrees that:

^* The numbers of shares set forth above reflect the effect of the two-for-one stock split of Cavco stock that occurred on January 31, 2005.

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(a) If the non-competition covenants contained in this Agreement should be held by any court or other constituted legal authority to be void or unenforceable in any particular area or jurisdiction, then he shall consider this Agreement to be amended and modified with respect to that particular area or jurisdiction so as to comply with the order or other constituted legal authority, and as to all other areas and jurisdictions, the non-competition covenants contained herein shall remain in full force and effect as originally written.

(b) If the non-competition covenants contained in this Agreement should be held by any court or other constituted legal authority to be effective in any particular area or jurisdiction only if said covenants are modified to limit their duration or scope, then the non-competition covenants shall be amended and modified with respect to that particular area or jurisdiction so as to comply with the order of any court or other constituted legal authority, and as to all other areas and jurisdictions, the non-competition covenants contained herein shall remain in full force and effect as originally written.

(c) The covenants set forth herein are appropriate and reasonable when considered in light of the nature and extent of the business of designing, manufacturing or selling manufactured housing, park model homes and cabins as conducted by Cavco and its subsidiaries. Mr. Nolen acknowledges that (i) Cavco has a legitimate interest in protecting its business, (ii) the covenants set forth herein are not oppressive to him and contain such reasonable limitations as to time, scope, geographical area and activity, (iii) the covenants do not harm in any manner whatsoever the public interest, and (iv) he has received and will receive substantial consideration for agreeing to such covenants.

          12. Understanding Regarding Agreement. Mr. Nolen, by his execution of this Agreement, vows that the following statements are true:

(a) That he has been given the opportunity to and has, in fact, read this entire Agreement, that it is in plain language, and he has had all questions regarding its contents answered to his satisfaction;

(b) That he has been given the FULL OPPORTUNITY TO SEEK INDEPENDENT ADVICE AND/OR COUNSEL FROM AN ATTORNEY of his own choosing prior to execution of this Agreement;

(c) That he fully understands the content of this Agreement and understands that it is a FULL WAIVER OF ALL CLAIMS AGAINST CAVCO as set forth and defined by paragraph 4 hereof;

(d) That this full waiver of all claims against Cavco as set forth and defined by paragraph 4 hereof is given in return for valuable consideration as provided under the terms of this Agreement;

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(e) That he fully understands that he is WAIVING ANY RIGHTS AND BENEFITS UNDER HIS EMPLOYMENT AGREEMENT previously executed in exchange for the promises and payments set forth in this Agreement.; and

(f) That he enters into this Agreement knowingly and voluntarily in exchange for the promises referenced in this Agreement and that no other representations have been made to him to induce or influence his execution of this Agreement, whether written or oral, except as set forth above.

[remainder of page intentionally left blank]

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     In witness whereof, Mr. Nolen has executed this Agreement on this 11th day of August, 2005.

By:	/s/ Sean K. Nolen
Sean K. Nolen

6

     In witness whereof, Cavco has caused this Agreement to be executed by its duly authorized officer, on this 11th day of August, 2005.

CAVCO INDUSTRIES, INC.
By:	/s/ Joseph H. Stegmayer
Joseph H. Stegmayer, President

7

EX-31.1

Exhibit 31.1

Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Joseph H. Stegmayer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cavco Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’ s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	November 8, 2005
By:	/s/ Joseph H. Stegmayer
	Joseph H. Stegmayer
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Daniel L. Urness, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cavco Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’ s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	November 8, 2005
By:	/s/ Daniel L. Urness
	Daniel L. Urness
	Interim Chief Financial Officer

EX-32.1

Exhibit 32.1
Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     For the purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Joseph H. Stegmayer, the Chief Executive Officer of Cavco Industries, Inc. (the “Company”), hereby certifies that, to his knowledge:

(i)	the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated:	November 8, 2005
By:	/s/ Joseph H. Stegmayer
	Joseph H. Stegmayer
	Chief Executive Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of
Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed as part of
the Form 10-Q.

EX-32.2

Exhibit 32.2
Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     For the purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Daniel L. Urness, the Interim Chief Financial Officer of Cavco Industries, Inc. (the “Company”), hereby certifies that, to his knowledge:

(i)	the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated:	November 8, 2005
By:	/s/ Daniel L. Urness
	Daniel L. Urness
	Interim Chief Financial Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of
Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed as part of
the Form 10-Q.

End of Filing