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Starcraft Conversion Vans to Continue Operations Under New Ownership

    GOSHEN, Ind.--May 8, 2001--Kelly L. Rose, Chairman of the Board of Starcraft Corporation of Goshen Indiana, today announced that the Company has agreed to sell its conversion van division to Centurion Vehicles, Inc. of White Pigeon, Michigan.
    Most of Starcraft's 110 associates working in the van division will be given the opportunity to retain their employment with the new owner. In addition, plans are being finalized to move parts inventory, tools, fixtures, jigs and support services to the new home of Starcraft Vans, a 120,000 square foot complex on SR 12 in White Pigeon, Michigan.
    The total value of the transaction is estimated to be approximately $5 million. Under the terms of the agreement, Starcraft is selling certain assets of its van division, including inventory, machinery and equipment, valued at approximately $2.25 million. In turn, Centurion will pay approximately $1.0 million in cash and a one-year note, and assume Starcraft's future warranty obligations. Starcraft will also receive royalties under a license agreement for the use of the Starcraft name, certain trademarks and patents. Starcraft does not expect to record a significant gain or loss from the transaction.
    In recent years, Starcraft Corporation has been involved in an aggressive diversification process, that has taken the Company into several new product categories, including a broad range of mid-size buses, school vans, shuttle vans, wheelchair accessible vehicles, and OEM parts supply. As a result, conversion vehicles, once the Company's sole revenue stream, most recently represented less than 30% of its annual sales.
    "As we entered into these new businesses, we developed many highly specialized skills," commented Rose. "We feel it is in the best interests of our Company and our Shareholders to capitalize on these strategic diversifications, in markets where profit margins are healthy, demand is growing, and new opportunities persist.
    "At the same time, I am most pleased that Starcraft conversions will continue to be known as the safest, most luxurious and most stylish conversion vans on the market. Centurion realizes the values inherent in the Starcraft name -- but more than that, they realize the value of the dedicated people who will continue to build the world's finest luxury conversion vehicles. Our long heritage of quality and integrity will help insure a smooth transition for all associates, dealers, customers, as well as suppliers," Rose said.
    Industry figures reveal that the conversion van industry has been shrinking in recent years, and the smaller market has led to the closing of several of Starcraft's competitors. This consolidation represents an excellent opportunity for the Starcraft brand, by far the strongest name in the industry, to increase its share of the market, a fact that makes the timing of the transaction particularly attractive to all involved.
    "We are convinced that our acquisition of the Starcraft brand makes us the undisputed first choice for dealers around the country who want to ally themselves with the strongest, most dynamic conversion vehicle supplier," Bob Froschauer, President of Centurion said. "Clearly, Starcraft has emerged as a winner in the battle of the fittest."
    Starcraft Corporation will continue its aggressive pursuit of direct OEM supplier-relationships through its Tecstar joint venture, which has earned sizable contracts to engineer, test, and install upfit appearance packages on OEM SUVs and pickup trucks. Growth in the bus and mobility segments is also expected to continue, following a 93% gain in sales for the second quarter of 2001, compared to the same quarter a year ago.
    "Starcraft Corporation has every intention of making the Starcraft name just as prominent in the bus, mobility and OEM supply markets," Rose commented. "We continue to live up to the principles of our motto, "Quality and Integrity Since 1903," in this most recent business decision as well as all future endeavors."
    The Company will conduct a teleconference on Wednesday, May 9, 2001 at 2:00 p.m. Central Time. Investors may participate in the teleconference by calling 800-586-2517 and identifying Michael H. Schoeffler as the host of the teleconference.
    For additional information contact Richard J. Mullin, Chief Financial Officer, Starcraft Corporation at (219) 533-1105 ext. 239.

    This news release contains forward-looking statements regarding estimated results of operations, market demand, sales, profitability and other matters. Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, the level of customer demand, competitive pressures and other important factors detailed in the Company's annual report on Form 10-K for fiscal 2000 or Form 10-Q filed with the Securities and Exchange Commission since the Form 10-K filing.