KIT Signs Non-Binding Letter of Intent to Sell Recreational Vehicle Division

LONG BEACH, Calif., Oct. 12, 2002 KIT Manufacturing Company announced today that it has signed a non-binding Letter of Intent under which KIT's RV Division Sales Manager, Scott Thorpe, will acquire all of the assets of KIT's RV Division. The Letter of Intent contemplates execution of a definitive agreement by November 8, 2002. The Company will retain all assets and liabilities related to its Manufactured Housing Division and will continue its operations as a top 10 seller of manufactured homes in the western U.S.

Under the terms of the Letter of Intent, Mr. Thorpe will pay KIT $1.75 million in cash and will assume RV Division debt and liabilities in an aggregate amount of approximately $5.5 million in exchange for all of the assets related to KIT's RV Division. The acquisition will be financed by Progressive Investment Group, based in Fountain Valley, California.

"We are very pleased to enter into this Letter of Intent for the sale of KIT's RV Division," said Dan Pocapalia, KIT Chairman and CEO. The execution of a definitive agreement for the sale of the RV Division will allow Kit to focus on its Manufactured Homes operations, which have produced positive EBITDA for the Company in each of the past 6 years. We believe this transaction will significantly strengthen KIT's balance sheet and leave the Company better poised for future success."

"I am very excited to continue KIT's tradition as America's value leader in manufacturing RVs," said Mr. Thorpe. "Dan Pocapalia founded KIT 58 years ago and has built a strong track record of providing dealers and consumers with innovative RV products manufactured to the highest standards. I feel privileged to be able to continue the KIT tradition."

KIT Manufacturing Company, headquartered in Long Beach, California, is a leading producer of recreational vehicles and manufactured homes. KIT manufactures RVs and manufactured homes from facilities in Caldwell, Idaho. KIT makes RVs under well-known brand names such as Road Ranger, Companion, Millennium and Extreme. Additionally, KIT also constructs both single-section and multi-section manufactured homes under brand names that include Cypress, Chateau, Sierra XL, Sunrise and Golden State. The Company sells its products through a network of more than 160 dealers in the western US and Canada and a wholly-owned manufactured homes retail facility.

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