SecProbe.io

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Mail Stop 7010

June 27, 2005

via U.S. mail and facsimile

David A. Roberson
Director, President and Chief Executive Officer
Cavalier Homes, Inc.
32 Wilson Boulevard 100
Addison, Alabama  35540

	Re:	Cavalier Homes, Inc.
		Form 10-K for Fiscal Year Ended December 31, 2004
		Filed March 31, 2005
		Form 10-K/A for Fiscal Year Ended December 31, 2004
		Filed May 2, 2005
		Form 10-Q for Fiscal Quarter Ended April 2, 2005
		File No. 0-21682

Dear Mr. Roberson:

      We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review  to
other
portions of your documents.  Where indicated, we think you should
revise your document in future filings in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary.  Please be
as
detailed as necessary in your explanation.  In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure.  After reviewing this information, we
may
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-K for the Fiscal Year Ended December 31, 2004

Consolidated Statements of Cash Flows

1. In future filings, please remove the subtotal, "Cash provided
by
(used in) operations," from your operating activities section, as
this subtotal appears to be a non-GAAP measure since it is not
contemplated by SFAS 95.

Item 7.  Management`s Discussion and Analysis of Financial
Condition
and Results of Operations

Liquidity and Capital Resources

2. In future filings, please expand your liquidity discussion to
cover the three-year period covered by the financial statements
and
not just fiscal year 2004, using year-to-year comparisons or any
other format to enhance the reader`s understanding.  Refer to
Instruction 1 to paragraph 303(a) of Regulation S-K.

3. We note that you stated in your discussion that operating
activities provided net cash of $1,144,000 in 2004 and used net
cash
of $3,011,000 in 2003.  However, your consolidated statements of
cash
flows for fiscal years 2004 and 2003 reported cash used in
operating
activities of $930,000 and $902,000, respectively.  As such, it is
unclear how you arrived at such results in your liquidity
discussion.
Please advise.  In addition, it does not appear that your
liquidity
discussion and analysis fully provides the information required by
Item 303(A)(1) of Regulation S-K.  In future filings, please
revise
your disclosure to provide detailed discussions and analysis of
your
liquidity position, including the following areas:
* Historical sources of cash (e.g., operations, financing, sale of
assets, etc.).
* A detailed evaluation of the amounts and certainty of cash flows
and a comprehensive discussion and analysis of known trends and
uncertainties.
o Your accounts receivable, net balance as of December 31, 2004
increased 121% compared to your December 31, 2003 balance, which
significantly impacted your cash flows used in operations.  In
addition, inventory increased 36% as of December 31, 2004 compared
to
your December 31, 2003 balance.  However, revenue decreased by 6%
for
the year ended December 31, 2004 compared to the year ended
December
31, 2003.  Due to the significant impact of your accounts
receivable
and inventory balances had on your cash flows used in operations
and
the lack of correlation with revenues, it is unclear why you did
not
provide a detailed discussion and analysis of these two balances,
including the collectibility of accounts receivable balance and
the
realizability of your outstanding inventory.
o You have not generated positive cash flows from operations for
the
past three fiscal years.  It is unclear why your liquidity section
does not include a comprehensive discussion and analysis of the
causes this negative trend; the reasonably likely exposure to
future
cash requirements from this negative trend; and how management is
addressing this negative trend.
Note that this is not meant to represent an all-inclusive list of
where your MD&A could be improved.  You should provide
quantification
of amounts and further clarification and analysis throughout your
discussion.  Refer to Item 303 of Regulation S-K and the SEC
Interpretive Release No. 33-8350 dated December 19, 2003 for
further
guidance.

4. In future annual filings, please expand your contractual
obligations table to include all of your operating leases and
purchase obligations information.  Refer to Item 303(a)(5) of
Regulation S-K and Release No. 33-8182 for guidance.

1.  Summary of Significant Accounting Policies

Revenue Recognition

5. In future filings, please expand your revenue recognition
policy
for to include a discussion of your policy for recognizing dealer
incentives.  In your response, please provide us with the
disclosure
you intend to include in future filings and tell us the
authoritative
literature that supports your accounting policy.

Product Warranties

6. In future filings, please revise your disclosure to break out
"warranty expenses, net" between product warranties issued during
the
reporting period and changes in the reserve related to pre-
existing
warranties.  Refer to paragraph 14.b. of FIN 45 for guidance.

7. We note your intention to adopt the provisions of FIN 45 to new
guarantees on January 1, 2005.  We also note, from your
disclosures
in note 8 of your Form 10-Q for the quarter ended April 2, 2005,
that
your adoption of FIN 45 resulted in a $638 charge against
revenues.
Please tell us your basis for adopting the initial recognition
provisions of FIN 45 on January 1, 2005, instead of as discussed
in
paragraph 20 of FIN 45.  Please also tell us the impact on your
net
income for 2003 and 2004, had you applied FIN 45 to guarantees
issued
or modified after December 31, 2002.

3.  Installment Contracts Receivable

8. We note that you sell a majority of loans to financial
institutions with limited recourse.  Please tell us the nature of
this limited recourse.  Please also explain your consideration of
each of the three criteria for sale treatment discussed in
paragraph
9 of SFAS No. 140, particularly in light of this limited recourse.
See also paragraph 113 of SFAS No. 140.

10.  Commitments and Contingencies

Contingent Liabilities and Other

9. We note that 127 dealers exclusively sell your products.  We
also
note that where your dealers finance their purchases of
manufactured
homes, you are obligated, upon default of the dealer, to
repurchase
the financed homes at a declining price.  It appears that this
obligation may represent a significant variable interest in your
independent exclusive dealers.  Please explain, in detail, your
consideration of whether these dealers represent variable interest
entities and whether you represent the primary beneficiary of
these
dealers, in light of your variable interests, under FIN 46R.

10. We note that you do not expect your legal proceedings to
materially affect your Company.  In future filings, please
specifically state whether you believe your legal proceedings will
have a material affect on your results of operations, financial
position or liquidity.  In addition, please note that a statement
that a contingency is not expected to be material does not satisfy
the requirements of SFAS 5 if there is at least a reasonable
possibility that a loss exceeding amounts already recognized may
have
been incurred and the amount of that additional loss would be
material to a decision to buy or sell your securities.  Your
statement that "the potential exists for unanticipated material
adverse judgments against the Company..." appears to indicate that
the reasonably possible loss in excess of accrual is material to
your
results of operations, financial position and/or liquidity
position.
As such, please either disclose the estimated additional loss or
range of loss that is reasonably possible, or disclose that such
an
estimate cannot be made in future filings.  Please provide us with
the disclosure you intend to include in future filings.  Refer to
Question 2 of SAB Topic 5:Y for guidance.

Item 15.  Exhibits and Financial Statement Schedules, c.

Report of Independent Registered Public Accounting Firm -
WoodPerfect, Ltd.

11. In future filings, please ensure that the audit report for
WoodPerfect, Ltd. includes the name of its independent registered
public accounting firm, Deloitte & Touche LLP.

Form 10-Q for the Fiscal Quarter Ended April 2, 2005

4.  Impairment and Other Related Charges, page

12. We note that the impairment charges for property, plant and
equipment you recorded in fiscal year 2004 and the first quarter
of
2005 along with the charges for involuntary terminations in the
first
quarter of 2005 relate to the closing of your Fort Worth, Texas
plant.  In future filings, please provide additional disclosure
regarding the details of the closure of this plant, as you
provided
in your Form 8-K filed on February 14, 2005.  Specifically, please
include (a) a description of the facts and circumstances leading
to
the expected disposal; (b) the number of employees that were
involuntarily terminated; (c) the expected manner and timing of
the
disposal; and (d) any other relevant information included in the
Form
8-K filed on February 14, 2005.  Refer to paragraphs 47-48 of SFAS
144 and paragraph 20 of SFAS 146 for guidance.  In addition,
please
revise your MD&A discussion in future filings to include
information
about the reasonably likely material effects on future revenues
and
cash flows resulting from the closing and sale of the plant,
including quantification of these effects and when they were or
are
expected to be realized.

Item 4.  Controls and Procedures, page

13. We note your disclosure that "[e]xcept as described above,
there
has been no significant changes in the Company`s internal control
over financial reporting that has occurred since December 31,
2004,
that has materially affected, or is reasonably likely to
materially
affect, the Company`s internal control over financial reporting."
In
future filings, please revise to state clearly, if correct, that
there were changes in your internal control over financial
reporting
that occurred during the quarter that have materially affected, or
are reasonably likely to materially affect, your internal control
over financial reporting.

*    *    *    *

      As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your responses to our comments
and
provides any requested supplemental information.  Detailed
response
letters greatly facilitate our review.  Please file your response
letter on EDGAR.  Please understand that we may have additional
comments after reviewing your responses to our comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

?        the company is responsible for the adequacy and accuracy
of
the disclosure in the filing;

?        staff comments or changes to disclosure in response to
staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

?        the company may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

      You may contact Tracey Houser, Staff Accountant, at (202)
551-
3736, or me at (202) 551-3255, if you have questions regarding
comments on the financial statements and related matters.

Sincerely,

Nili Shah
Accounting Branch Chief

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David A. Roberson
Cavalier Homes, Inc.
June 27, 2005
Page 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010

         DIVISION OF
CORPORATION FINANCE

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