MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

Net sales of $5,641,000 for the quarter ending November 29, 1998 increased $327,000 or 6% from the same period of the prior year. Sales growth resulted from an increase in sales in the recreational vehicle market.

Gross margin remained steady at 15% in comparison to the year ago period. Gross margin is lower than the full year 1998 rate of 18% due primarily to higher depreciation costs and larger than anticipated equipment repair and maintenance expenditures.

Selling and administrative expense was $544,000 in the period as compared to $526,000 in the prior year period. Both period's expenses represented about 10% of sales in their respective years.

Interest and other income was $46,000 higher than the comparable period of the prior year due to increased interest income from a higher average money market investment balance.

Interest and other expense increased $15,000 in the period versus the year prior due to the addition of $859,000 of capital leases.

In the thirteen week period ended November 29, 1998, the Company recorded a tax provision of $11,800 to cover mandatory state income taxes and federal alternative minimum taxes, and was able to recognize the benefit of a portion of its net operating loss carry-forwards. The Company has not recorded the benefit of net operating losses and other net deductible temporary differences in the consolidated statement of operations due to the fact that the Company has not been able to establish that it is more likely than not that the tax benefits will be realized.

LIQUIDITY AND CAPITAL RESOURCES:

On November 29, 1998 working capital was $3,452,000 compared to $3,238,000 at August 30, 1998, an increase of $214,000, due primarily to lower accrued compensation. The ratio of current assets to current liabilities at November 29, 1998 and August 30, 1998 was 2.25 to 1.0 and 1.94 to 1.0, respectively.

Cash provided from operating activities was $188,000 in the current period versus $387,000 in the prior year. The decrease resulted primarily from the level of accounts receivable at the end of each period as compared to the levels at the beginning of each fiscal year.

Long term debt increased $573,000 to $2,375,000 at November 29, 1998 as compared to August 30, 1998. The increase resulted from new machinery and equipment acquired via capital lease during the period.

It is management's belief that its internally generated funds combined with the line of credit will be sufficient to enable the Company to meet its financial requirements during fiscal 1999.

YEAR 2000 COMPLIANCE:

The Year 2000 issue is the result of computer systems that use two digits rather than four to define the applicable year, which may prevent such systems from accurately processing dates ending in the year 2000 and beyond. This could result in computer system failures or disruption of operations, including, but not limited to, an inability to process transactions, to send and receive electronic data, or to engage in routine business and production activities.

The Company has completed its initial assessment of all currently used computer and network systems as well as its precision machining production equipment and has developed a plan to correct those areas that will be affected by the year 2000 issue. The Company's plan includes replacement or upgrades of certain computer hardware and software. The Company will utilize outside vendors to assist in the upgrade of certain computer systems. For its precision machining equipment, the Company has received written assurance from the equipment manufacturers as to year 2000 compliance of their machines. The Company is also developing a limited testing plan that will test the equipment's ability to maintain operations in the year 2000. The Company estimates that it is 75% complete with respect to its major computer systems and 85% complete with respect to its precision machining equipment in its compliance programs. The Company's goal is to be substantially year 2000 compliant by the end of fiscal 1999.

In addition to reviewing its internal systems, the Company has begun formal communications with its significant vendors concerning Year 2000 compliance. There can be no assurance that the systems of other companies that interact with the Company will be sufficiently Year 2000 compliant so as to avoid an adverse impact on the Company's operations, financial condition and results of operations. The Company does not believe that its products involve any material Year 2000 risks.

The Company presently anticipates that the costs associated with addressing the year 2000 issues compliance will not have a material adverse impact on the Company's financial condition, results of operations or liquidity. Present estimated costs for the Company's compliance programs are less than $25,000.

The Company anticipates that it will complete its Year 2000 assessment and compliance programs by the end of fiscal 1999. However, there can be no assurance the Company will be successful in implementing its programs according to the anticipated schedule. In addition, the Company may be adversely affected by the inability of other companies whose systems interact with the Company to become Year 2000 compliant and by potential interruptions of utility, communication or transportation systems as a result of Year 2000 issues.

Although it expects its internal computer and manufacturing systems to be Year 2000 compliant as described above, the Company intends to prepare a contingency plan that will specify what it plans to do if it or important external companies are not Year 2000 compliant in a timely manner. The Company expects to prepare its contingency plan during calendar year 1999.

CAUTIONARY STATEMENT:

Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations, in the letter to shareholders, in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made with the approval of an authorized executive officer which are not historical or current facts are "forward-looking statements." These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect the Company's actual results and could cause the Company's actual financial performance to differ materially from that expressed in any forward-looking statement: (i) the Company's ability to obtain additional manufacturing programs and retain current programs; (ii) the loss of significant business from any one of its current customers could have a material adverse effect on the Company; (iii) a significant downturn in the industries in which the Company participates, principally the agricultural industry, could have an adverse effect on the demand for Company services; (iiii) Year 2000 issues which may result in computer system failures or disruption of operations including engaging in routine business activities. The foregoing list should not be construed as exhaustive and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.