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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

Commission file number 1-7699

F L E E T W O O D  E N T E R P R I S E S ,  I N C .
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Registrant's telephone number, including area code: (909) 351-3500

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None
(Title of class)

        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.

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. /X/

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

        The aggregate market value of common stock held by non-affiliates computed by reference to the price at which the common stock was last sold as of the last business day of the registrant's most recently completed second fiscal quarter was $223,172,700.

Common stock outstanding on July 2, 2004: 55,374,843 shares

Documents incorporated by reference:

        To the extent indicated herein, portions of the registrant's Proxy Statement with respect to its 2004 Annual Meeting, which will be filed no later than 120 days after the close of the registrant's fiscal year ended April 25, 2004, are incorporated by reference into Part III, Items 10, 11, 12 and 13 of this Form 10-K.

FLEETWOOD ENTERPRISES, INC.

PART I

        Unless otherwise indicated, "we," "us," "our," "Fleetwood," the "Company" and similar terms refer to Fleetwood Enterprises, Inc. Throughout this report, we use the term "fiscal," as it applies to a year, to represent the fiscal year ending on the last Sunday in April of that year.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Statements used in this report, including the sections entitled "Business Outlook" and "Risk Factors," that relate to future plans, events, financial results or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs of the Company's management as well as assumptions made by it, and information currently available to it. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of these terms or other comparable terminology. These forward-looking statements are only predictions, and may be inaccurate. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors including the factors listed under "Risk Factors," as well as elsewhere in this report and in other SEC filings. These risk factors include, without limitation, the following items:

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the cyclical nature of both the manufactured housing and recreational vehicle industries;



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ongoing weakness in the manufactured housing market;



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continued acceptance of Fleetwood's products;



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the potential impact on demand for Fleetwood's products as a result of declining consumer confidence;



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the effect of global tensions on consumer confidence;



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expenses and uncertainties associated with the manufacturing and introduction of new products;



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the future availability of manufactured housing retail financing as well as housing and RV wholesale financing;



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exposure to interest rate and market changes affecting certain assets and liabilities;



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availability and pricing of raw materials;



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changes in retail inventory levels in the manufactured housing and recreational vehicle industries;



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competitive pricing pressures;



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the ability to attract and retain quality dealers, executive officers and other personnel; and



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the Company's ability to obtain financing needed in order to execute its business strategies.

        Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and actual results, events or performance may differ materially. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Fleetwood undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may arise from changing circumstances or unanticipated events.

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Item 1. Business

General

        Fleetwood is the nation's leader in producing recreational vehicles, including motor homes, travel trailers and folding trailers, as well as one of the nation's largest producers of manufactured housing. We are also the third largest retailer of manufactured homes in the United States.

        In fiscal year 2004, we sold 60,097 recreational vehicles. In calendar 2003, we held a 16.8 percent share of the overall recreational vehicle market, consisting of a 17.8 percent share of the motor home market, a 12.7 percent share of the travel trailer market and a 41.6 percent share of the folding trailer market. For calendar year 2003, our Folding Trailer division was the leader in market share in that segment, while our motor home business was in second position and the Travel Trailer division in third position.

        For calendar year 2003, we shipped 19,653 manufactured homes and were the second largest producer of HUD-Code homes in the United States in terms of units sold. HUD-Code homes are homes manufactured in accordance with regulations published by the Federal Department of Housing and Urban Development. In calendar 2003, the manufactured housing industry had a 9 percent share of the single-family housing starts, of which we had a 2 percent share and a 15.0 percent share of the manufactured housing wholesale market. During the same period, our retail operations had a 3.8 percent share of the manufactured housing retail market.

        Our vertically integrated housing operations are completed by our financial services subsidiary, HomeOne Credit Corp., which offers finance and insurance products to our retail customers. In addition, we operate four supply companies that provide components for the recreational vehicle and housing operations, while also generating outside sales.

        Our business began in 1950 producing travel trailers and quickly evolved to manufactured homes. We re-entered the recreational vehicle business with the acquisition of a travel trailer operation in 1964. Our manufacturing activities are conducted in 16 states within the U.S., and to a much lesser extent in Canada. We distribute our manufactured products primarily through a network of independent dealers throughout the United States and Canada. In fiscal 1999, we entered the manufactured housing retail business through a combination of key acquisitions and internal development of new retail sales centers. At the end of fiscal 2004, we operated 129 retail sales locations in 21 states.

        This annual report, and each of our other periodic and current reports, including any amendments, are available, free of charge, on our website, www.fleetwood.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The information contained on our website is not incorporated by reference into this annual report on Form 10-K and should not be considered part of this report.

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        The following table sets forth revenues by business segment and the relative contribution of these revenues to total revenues for the past three fiscal years. Information with respect to operating profit (loss) and identifiable assets by industry segment is shown in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Form 10-K.

Recreational Vehicles

Industry Overview

        Recreational vehicles include motor homes, travel trailers, folding trailers and slide-in truck campers. Recreational vehicles are either driven or towed and are primarily used for vacations, camping trips and other leisure activities.

        A motor home is a motorized mobile unit used not only as a temporary dwelling during vacation and camping trips but also to support a variety of lifestyle activities, including outdoor recreation such as hunting and fishing, both on and off road racing and tailgating at assorted local and national events. In many cases a motor home is utilized for extended travel and is often considered a second home. It consists of a truck or bus chassis with a living unit built onto it. The driver's compartment (on Class A models) and living area are designed and produced by the recreational vehicle manufacturer. Motor homes are classified by the Recreation Vehicle Industry Association (RVIA) into three categories: Class A, Class B and Class C. Conventional, or Class A, motor homes are constructed directly on medium-duty truck chassis that include the engine and drive train components. They are fully self-contained, typically including a driver area and kitchen, dining, bathroom and sleeping accommodations for four to eight people, and have such optional features as air conditioning, an auxiliary power generator and home electronics such as a stereo, television and DVD. Approximately 42 percent of Class A units are diesel-powered. Class B models, which comprise a small segment of the market, are panel-type trucks to which kitchen, sleeping and toilet facilities are added. Many of these models also have a top extension added to them for more headroom. Compact, or Class C, models are classified as mini motor homes, which are built on a cut-away van-type chassis onto which the manufacturer constructs a living area with access to the driver's compartment. Class C models have basically the same features and options as Class A products, but the chassis manufacturer's original dashboard and front cab section are retained.

        RVIA reported factory shipments of 41,500 Class A motor homes and 18,300 Class C motor homes for calendar 2003. These figures compare with shipments of 39,600 Class A motor homes and 18,000 Class C

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motor homes in calendar 2002. There are numerous competitors in this industry. However, the five largest manufacturers, including Fleetwood, represented approximately 68 percent of the combined Class A and Class C motor home retail market for calendar 2003.

        There are two major classes of towable recreational vehicles: travel trailers and folding trailers. Travel trailers are designed to be towed by pickup trucks, vans or other tow vehicles, and are similar to motor homes in use and features. Typically, travel trailers include sleeping, kitchen, dining and bathroom facilities and are self-contained units with their own lighting, heating, refrigeration, fresh water storage tanks and sewage holding tanks so that they can be used for short periods without being attached to utilities. RVIA identifies travel trailers as being either conventional or fifth-wheel trailers. Fifth-wheel trailers extend over the bed of their tow vehicles and are hitched to the bed of the truck. For calendar 2003, RVIA reported factory shipments of 139,800 conventional trailers and 74,600 fifth-wheel trailers, compared with shipments of 129,700 and 66,100, respectively, for calendar 2002. The five largest manufacturers in calendar 2003, including Fleetwood, represented approximately 68 percent of the total travel trailer retail market.

        Folding trailers are smaller and lighter than their travel trailer counterparts and are consequently less expensive and easier to tow. Folding trailers typically include sleeping and eating facilities, fresh water storage and either a built-in icebox or a refrigerator. RVIA reported shipments of 35,700 folding trailers in calendar 2003, in contrast to 44,800 shipments in calendar 2002. Of all of the markets for recreational vehicles, the folding trailer market is the most concentrated, with the five largest manufacturers, including Fleetwood, holding almost 88 percent of the retail market in calendar 2003.

        Slide-in truck campers represent another class of towable recreational vehicles, but have a less significant market presence. Slide-in truck campers are similar to travel trailers in terms of use and features, but are designed to fit in the bed of a pickup truck. For calendar 2003, RVIA reported factory shipments of 8,800 slide-in truck campers, compared to shipments of 10,000 for calendar 2002.

        Sales of recreational vehicles tend to be a leading economic indicator and, along with the stock market, recreational vehicle shipment growth rebounded post September 11, 2001, stimulated by low interest rates and a heightened awareness by consumers of the benefits of the RV lifestyle. Based on recent RVIA forecasts, recreational vehicle shipments are expected to increase during calendar 2004 from the much improved 2003 levels, although we believe that a decline in consumer confidence, resulting from international hostilities, high gas prices and an uncertain stock market, could impede growth. Recreational vehicles typically are a discretionary purchase for consumers, and sales are therefore affected principally by general economic conditions and consumer confidence, and to a lesser extent by the price of fuel. Retail financing conditions have historically been a less significant factor affecting the recreational vehicle industry than the manufactured housing business. Purchasers of recreational vehicles generally have proven to have an overall greater ability to obtain necessary credit than customers of the manufactured housing industry.

Our Recreational Vehicle Business

        We have been the nation's leading producer of recreational vehicles since 1973 and distribute our products through a network of approximately 1,300 independent retailers in 49 states and Canada. In calendar 2003, approximately 81 percent of our recreational vehicles were shipped to retailers in the 25 states with the highest retail sales, including California, Texas, Florida, Michigan and Ohio. We were the market share leader in terms of units sold in four of the top 25 recreational vehicle states. Our retail

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market share and industry unit sales for each of the three segments in which we participated for the last three calendar years are as follows:

        Source: Statistical Surveys, Inc.

        Fleetwood's overall motor home market share has consistently increased over the last three calendar years. This has been driven mainly by new, innovative diesel products and both mid- and high-line Class A gas products partially offset by market share erosion in Class C products. Over the past 36 months, we launched three new diesel products and introduced three other completely redesigned diesel products and five completely redesigned gas products. Our continued focus on supplying the marketplace with innovative products with the appropriate price-to-value relationship has resulted in our Class A market share improvements. Our Class C market share has declined over the past three calendar years primarily due to our inability to provide product to the marketplace resulting from the closure of two manufacturing plants that produced Class C products. Subsequently, we have moved Class C production to a different facility and have expanded production capacity for the Class C products.

        The Fleetwood brand is represented by the Jamboree, Tioga, Terra, Fiesta, Flair, Storm, Bounder, Southwind, Pace Arrow, Bounder Diesel, Expedition, Discovery, Providence, Excursion, Revolution, American Tradition, American Eagle and American Heritage models. Our Class A motor homes range in length from 26 to 45 feet and have an average retail price of approximately $155,000. Class C units range in length from 22 to 31 feet and have an average retail price of approximately $71,000. For calendar 2003, four of the industry's 10 top-selling Class A motor homes were manufactured by Fleetwood, as well as two of the 10 top-selling Class C motor homes.

        Over the past three calendar years, Fleetwood's travel trailer market share has declined from 15.0 percent to 12.7 percent due to increased competition in the travel trailer industry, our lack of participation in a few growing market segments including the luxury, hybrid, and sport-utility segments and only moderate acceptance of redesigned core products of conventional and fifth wheel travel trailers introduced at the industry's largest trade show in November 2002. Recently we entered the sports utility segment with our Gearbox lifestyle support vehicle, as well as introducing several new, innovative floorplans in other market segments. We believe that with these recently introduced floorplans, combined with new products under development, our market share position should improve.

        We manufacture a variety of travel trailers under the Pioneer, Mallard, Wilderness, Prowler, Terry, Gearbox, Pride, and Triumph nameplates. Our travel trailers are generally 8 feet wide, vary in length from 15 to 39 feet (including trailer hitch) and have an average retail price of approximately $24,000. For calendar 2003, two of the industry's 10 top-selling travel trailers were manufactured by us.

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        We are the largest manufacturer of folding trailers, which we currently sell under the Fleetwood Folding Trailer brand name. Our folding trailers range in length from 17 to 27 feet when deployed, and have an average retail price of approximately $8,800.

Manufactured Housing

Industry Overview

        A manufactured home is a single-family house that is constructed in accordance with HUD construction and safety standards in a factory environment rather than at the home site. There are two basic categories of manufactured housing: single-section and multi-section. The manufactured housing industry grew significantly from 1991 to 1998, but has retrenched since then. According to the Manufactured Housing Institute (MHI), domestic shipments increased from 170,713 homes in calendar 1991 to 372,843 homes in calendar 1998, before declining to 130,937 in calendar 2003. Total retail sales increased overall from approximately $4.7 billion in calendar 1991 to more than $7.2 billion in calendar 2003. In addition, the manufactured housing industry's share of new single-family housing starts increased significantly, from about 17 percent in calendar 1991 to 24 percent in calendar 1998, before declining to 9 percent in calendar 2003. We believe that the growth during the 1990s resulted from the increased availability of financing and also in large part from increasing consumer acceptance of and preference for manufactured housing, both of which were driven by the following:

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improved product quality and design, and enhanced features;



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a significant difference in the average price per square foot between site-built housing and manufactured housing;



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favorable demographic and regional economic trends;



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increased attractiveness of financing terms available to manufactured housing dealers and consumers in 1991 through 1998; and



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liberal credit underwriting due to competition among retail lenders for more volume.

        Today's manufactured homes offer customers quality similar to many site-built homes at a more affordable price. Manufactured homes are constructed in a factory environment, utilizing assembly line techniques, which allows for volume purchases of materials and components and more efficient use of labor. The quality of manufactured homes has increased significantly over the past 20 years, as producers generally build with the same materials as site-built homes. In addition, many features associated with site-built homes are included in manufactured homes, such as central heating, name brand appliances, carpeting, cabinets, walk-in closets, vaulted ceilings, wall coverings and porches. Also, optional features include such amenities as fireplaces, wet bars and spa tubs, as well as retailer-installed options such as central air conditioning, garages and furniture packages.

        As acceptance of manufactured housing has increased among higher-income buyers and financing for single-section homes has become more scarce, demand has shifted toward larger, multi-section homes, which accounted for 80 percent of industry shipments in calendar 2003, up from 47 percent in calendar 1991.

        More than half of the manufactured homes produced in the United States are placed on individually owned lots. The balance are located on leased sites in manufactured housing communities. Most manufactured housing is sold in rural regions and towns outside of major urban areas.

        The manufactured housing industry is cyclical, and is affected by general economic conditions and consumer confidence. For the last four years, the industry has been burdened by excess manufacturing and retailing capacity, high dealer inventories, competition from repossessed units being resold at greatly distressed prices and a slowing of retail sales. This imbalance between capacity and inventories on one

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hand and retail demand on the other has largely been caused by the reversal of loose credit practices, which artificially stimulated demand during most of the 1990s until replaced by the current restrictive financing conditions. Prior rapid overexpansion of the retail distribution network and dealers' inflated expectations of future business also contributed to the imbalance.

        With respect to the retail financing of manufactured housing, interest rates are generally higher and the terms of loans shorter than for site-built homes. In addition, some lenders have stopped extending loans to finance the purchase of manufactured homes, including four national lenders that have exited the business since the last half of fiscal 2002. This has had the effect of making financing for manufactured homes even more expensive and more difficult to obtain relative to financing for site-built homes.

        Retail financing was a significant factor in the expansion of the industry, particularly toward the latter part of the 1990s growth cycle, when competitive retail lenders employed relatively liberal underwriting standards to capture more business. Although a major catalyst in fueling higher sales volume through 1998, the lower standards have given rise to an abnormally high rate of defaults and repossessions as loan portfolios have matured in the last four calendar years. In turn, retail lenders have responded by sharply curtailing the availability of financing to our retail customers and elevating underwriting standards to overly restrictive levels. At the same time, manufacturers have found themselves competing for the sale of new homes with resellers of these repossessed homes. Due to the difficult environment for chattel financing nationwide, the industry has been trending toward more "land and home" type financing. Chattel financing is personal property financing secured only by the home and not by the underlying land on which the home is sited.

        Calendar year 2002 and 2003 industry shipments were negatively impacted by legislation passed in Texas, a state which accounted for 11 percent of industry shipments in calendar year 2001, that required mortgage-type or "land and home" financing instead of chattel financing, which had been the industry norm, especially for the purchase of single-section homes. The chattel financing process is simpler for customers, understood by dealers, and faster to process than mortgage-type lending. For example, industry shipments in Texas fell 28 percent in 2002 and 30 percent in 2003, compared to a drop in shipments for the industry nationwide of 13 percent and 22 percent, respectively. New legislation was passed in Texas in 2003 that substantially eased the negative impact on chattel financing, although the closures of plants and dealers seem to have precluded quick recovery.

        Another industry development affecting wholesale sales volume was the announcement in March 2002 by Conseco Finance Servicing Corp. (Conseco), the largest wholesale floorplan lender, that it would stop approving and funding new floorplan requests. Another large wholesale lender, Deutsche Financial Services (Deutsche), announced in October 2002 it was exiting the business. Independent retailers generally finance their inventory purchases with wholesale floorplan financing provided by lending institutions. Despite some disruption to the industry, generally there has been sufficient wholesale floorplan financing available through other lenders to fill the vacuum created by the Conseco and Deutsche departures.

        Industry manufacturing and retail capacity have been reduced significantly in response to the financing environment and the related inventory imbalance. More than half of the retail lending capacity available in 2000 has exited the business including, most recently, Chase Manhattan Mortgage Finance (Chase), which announced its decision to exit the industry in May 2004. Although a number of significant lenders have entered the market since late 2003, the volume of financing has not yet translated into higher shipments. Ultimately, the reasonable availability of retail financing will be the key to an industry recovery. The MHI projects that calendar 2004 will, however, show a 9 percent improvement over 2003 shipments.

Our Manufactured Housing Business

        We are the second largest producer of HUD-Code manufactured housing in the United States in terms of units shipped by us to dealers, and we distribute our products through a network of approximately

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1,250 dealers in 48 states. At the end of fiscal 2004, we operated 129 retail locations under the name Fleetwood Retail Corp., with the balance owned and operated by independent dealers. In calendar 2003, approximately 77 percent of our manufactured homes were shipped to dealers in the 20 states with the highest shipments to dealers, including Texas, Florida, California, North Carolina and Tennessee. We are a leading producer of both single-section and multi-section manufactured homes, and our share of the manufactured housing market, based upon shipments to dealers, was 15.0 percent in calendar 2003.

        Source: Manufactured Housing Institute

        We held a 12.9 percent share of the single-section manufactured housing market in calendar 2003, as measured by shipments to dealers. Our single-section homes range in size from 550 square feet to 1,290 square feet. The average single-section home retailed for approximately $25,600 (excluding land costs) and represented approximately 17 percent of our manufactured housing unit shipments in calendar 2003. Our single-section homes are designed for the affordable housing market, which includes first-time, retiree and value-oriented buyers.

        We held a 15.5 percent share of the multi-section manufactured housing market in calendar 2003, as measured by shipments to dealers. Our multi-section homes, which range in size from 1,040 square feet to 3,090 square feet, sold for an average retail price of approximately $49,200 (excluding land costs) and represented approximately 83 percent of our manufactured housing unit shipments in calendar 2003.

Manufactured Housing—Retail

Industry Overview

        The manufactured housing retail industry generated over $7.2 billion in sales in calendar year 2003 and is highly fragmented, with approximately 5,200 retail sales centers. Most manufactured housing dealers are independently owned by private companies operating a single sales center. Until 1997, Fleetwood and most other manufacturers, with the exception of a few vertically integrated entities, marketed their manufactured homes exclusively through independent dealers. At that time, however, certain manufactured housing producers began to acquire dealers with the objective of exercising greater control over retail distribution and upgrading marketing and merchandising practices, including brand name development. Additionally, some financial consolidators and residential developers entered the manufactured housing business by acquiring dealers.

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        One factor leading to the industry imbalance between retail inventories and consumer demand has been the large number of dealers, each of which must maintain adequate inventory at its location to appeal to potential customers. The number of retail stores in the industry has decreased significantly since 2000 and it is anticipated that further reduction may occur.

Our Retail Housing Business

        In the latter part of calendar 1997 and during the first half of calendar 1998, a few competing manufacturers acquired several of our important dealers, which collectively accounted for about 25 percent of our distribution network in terms of volume. In order to protect our distribution channels and to take advantage of business opportunities in the manufactured housing retail industry, in 1998 we acquired HomeUSA, Inc., then the nation's largest independent dealer of manufactured homes. In addition, we completed several other acquisitions of independent dealers during fiscal 1999 and fiscal 2000. We also expanded our Company-owned retail network through the development of "greenfield" locations, which are locations that we have started ourselves rather than through acquisition of existing operations. The combination of these two strategies carried us to a high of 244 stores in November 2000. Since then, as the retail market for manufactured housing has continued to slow down and losses in our retail operation have risen, we have implemented a downsizing strategy to better match our retail capacity to market demand. By assigning retail store operations of certain locations to a third party and closing and selling other locations, we have reduced the number of stores that we operate to 129 at the end of fiscal 2004. The downsizing actions may extend into fiscal 2005, although they may be offset by strategic openings of new stores in selected markets.

Supply Operations and Other Businesses

        During most of fiscal year 2004, our supply manufacturing operations included two fiberglass companies, a component parts business, a drapery operation and a lumber milling operation. The drapery operation was sold in our third fiscal quarter. These businesses provide a reliable source of quality components for our principal manufacturing businesses, while also generating outside sales. In fiscal year 2004, approximately 53 percent of the product volume of these manufacturing operations was used internally, and the remaining 47 percent was sold to third parties. The supply operations also include a lumber brokerage operation and a component import distribution business, each of which provides our manufactured housing and recreational vehicle businesses with reliable sources of quality raw materials and components.

Competition in Our Business

        The recreational vehicle market is highly competitive, with numerous participants. The five largest manufacturers represented approximately 70 percent of the retail market in calendar 2003, including our sales, which represented 16.8 percent of the total market. For calendar year 2003, we held a 17.8 percent share of the motor home market, a 12.7 percent share of the travel trailer market and a 41.6 percent share of the folding trailer market.

        The manufactured housing industry is also highly competitive. For calendar 2003, there were approximately 62 manufacturers, with the 10 largest companies accounting for 78 percent of the retail market, including our sales, which represented 15.9 percent of the retail market. Manufactured homes compete with used and repossessed manufactured homes, new and existing site-built homes, apartments, townhomes and condominiums. Competition exists at both the wholesale and retail levels and is based primarily on price, product features, reputation for service and quality, merchandising, and terms and availability of dealer and retail customer financing. Growth in the manufactured housing market in the southern United States during the 1990s increased competition at both the wholesale and retail levels and resulted in both regional and national competitors increasing their presence in the region.

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Competitive Advantages

        We believe that we have certain competitive advantages as described below.

Commitment to Quality and Customer Satisfaction

        Our quality improvement process focuses on increasing customer satisfaction by improving the quality and design of Fleetwood products and enhancing the customer's shopping experience. In this regard, we have developed a number of ongoing processes, including:

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designing our products with materials that frequently exceed both government requirements and industry standards;



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training both our employees and our dealers' employees in customer satisfaction techniques and quality improvement procedures;



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providing additional services, such as comprehensive training of our dealers' employees and contractors regarding proper installation techniques for manufactured homes;



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offering extensive warranties in the manufactured housing and recreational vehicle industries; and



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responding quickly and effectively to customer inquiries and concerns.

        We use independent consumer surveys to determine whether retail customers are satisfied with the quality of our products and the level of service provided by us and our dealers. An independent consumer research firm conducts telephone surveys and communicates customer responses to our manufacturing entities and dealers to reinforce quality performance and minimize customer problems. Each year, specific customer satisfaction goals are established for our manufacturing operations and independent dealers. Dealers who meet these performance standards are recognized with our Circle of Excellence Award, and our manufacturing centers are similarly honored for meeting targeted levels of customer satisfaction. We believe that these efforts have resulted in increased awareness of the importance of product quality and service, which in turn has significantly improved our customer satisfaction ratings.

Focus on Engineering and Innovative Product Development

        Fleetwood conducts product development activities on a national basis for recreational vehicles and on a regional basis for manufactured housing in order to reflect regional preferences and trends. Under this system, projects are carefully evaluated throughout the entire product development process. We develop innovative new products and product enhancements through an integrated approach that includes customer surveys, marketing research, engineering, manufacturing and external consultants. As a result, we are able to proactively design and manufacture quality products that address both industry trends and specific customer requirements in an efficient, cost-effective and timely manner.

Experienced Management Team

        Both our Manufactured Housing and RV Groups benefit from the significant experience of our senior managers, many of whom have over 20 years of operating expertise with us. As previously noted, both of our core businesses are subject to significant cyclical swings, similar to the one we are currently experiencing in manufactured housing. Current circumstances in that industry are not unlike those encountered in previous downturns in the 1979-80 and 1990-91 periods. Many of our managers have previously navigated through times such as these and possess valuable knowledge and skills that are well suited to our current challenges.

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Our Business Strategy

        Our goals are to enhance our position as a leading provider of affordable, high-quality manufactured homes and recreational vehicles, to sustain long-term profitable growth, and to enhance shareholder value. The key components of our business strategy are described below.

Providing the Best Product and Value Proposition to Our Customer

        Our goal is to consistently offer the highest quality product at an attractive value that is not exclusively price-driven. We seek to achieve the value proposition by focusing on the needs and preferences of our buyer populations at different price points by product. We believe we are also effective at controlling cost factors while maintaining high quality standards because of our economies of scale, purchasing efficiencies, and a leverageable fixed infrastructure. Our focus on engineering and innovative product development translates into products that meet ever-changing consumer preferences at the business unit level for recreational vehicles and at the regional level for manufactured housing. For example, because of the relative affluence of the recreational vehicle buyer and the discretionary nature of the recreational vehicle purchase, the design process is critical and is embedded throughout the development, manufacturing and marketing cycle. Those costs are absorbed over significant unit volumes because of the economies of our market penetration and volumes. Our customers expect consistency and quality because of the brand reputation and awareness of our products in the market. Finally, we believe that the customers' experience with our products remains consistent through changing economic and social cycles because of the depth and background of our management team which has experience functioning in different environments.

Upgrading Our Retail Distribution Networks

        Since 1991, we have reduced the number of independent third-party retail distribution centers approved to sell our manufactured housing products from approximately 1,800 to about 1,100 at April 25, 2004. We believe that this action has allowed us to focus our efforts on larger dealers that share our approach to merchandising homes and customer satisfaction. Historically, we had not focused on exclusive retailer arrangements and most dealers sold competitive lines; however, in recent years, we have developed exclusive retailer arrangements. Currently, approximately 45 percent of our manufactured housing dealers, including Company-owned stores, are exclusive, up from approximately 30 percent seven years ago. During fiscal 2000, our housing group introduced the Pinnacle Retailer Program, which is designed to encourage more exclusive retailer relationships. This program includes a number of attractive retailer incentives, including funding for signage and additional marketing support not available to non-exclusive dealers, as well as, in some cases, making available retail financing capacity through HomeOne. We have increased our efforts to develop and implement "best practices" for our dealers through our sponsored training programs and manuals. Topics of recent training seminars have included professional selling techniques and proper home installation procedures. We actively seek to expand our manufactured housing retail network by adding dealers that meet our criteria.

        With respect to recreational vehicles, we have implemented a comprehensive dealer agreement for all Fleetwood recreational vehicle dealers that is endorsed by the Recreation Vehicle Dealer Association (RVDA). The agreement requires the dealer to meet our criteria in regard to sales and stocking requirements and customer satisfaction goals. The new agreement provides measurement tools and enables us to replace underperforming dealers with market leaders. Programs such as sales training, service training and certification, quarterly promotions and other marketing programs add value to our dealer network.

Promoting and Expanding Recognition of the "Fleetwood" Brand Name

        We seek to expand consumer awareness of the "Fleetwood" name in both our manufactured housing and recreational vehicle operations. Beginning in fiscal 1997, we began working with selected

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manufactured housing dealers to develop "Fleetwood Home Centers," which exclusively carry our products, have consistent signage identifying the location as a Fleetwood Home Center and meet our highest standards for home presentation and customer satisfaction.

        In the RV Group we are delivering retail marketing support to the dealer network, expanding marketing reach with strategic partnerships and product placement and identifying growth opportunities via customer-driven product planning. These efforts are supplemented with market research, direct marketing and advertising campaigns.

        We have developed a new logo and brand message, accompanied by consistent representation of the brand and message including a new graphic standards program, and increased prominence of the logo in the marketing collateral and on our recreational vehicles.

        The new logo, "Driven to Explore" tagline, visual imagery and theme has been effectively integrated into the consumer website, new product literature, dealer show room materials and training programs. Delivery of successful direct marketing campaigns, with positive returns on investment, led to the launch of the Retail Performance Marketing (RPM) program which includes national ad campaigns.

Sales and Distribution of Our Products

        Consistent with industry practice, we have historically marketed our products through many independent dealers, none of which individually accounted for a material part of our total sales. We expect this industry practice to continue with respect to recreational vehicles. However, the acquisition activity in the late 1990s in the retail sector of the manufactured housing industry prompted us to modify our manufactured housing sales and distribution strategies. We responded to this industry trend by upgrading our manufactured home retail distribution network, developing alternatives to replace dealers purchased by competitors, and promoting and expanding recognition of the Fleetwood brand name through exclusive "Fleetwood Home Centers" and through our own retail strategies, including acquisitions and the opening of stores built and owned by us. Our entry into the manufactured housing retail business required that we maintain an inventory of finished homes for purposes of display and immediate sale to retail homebuyers. This was a departure from our manufacturing policy of building homes to order and not maintaining inventories of completed homes. Largely as a result of the move into the retail business, our inventories increased sharply to $343 million at April 2000. Reflecting weaker market conditions and a reduction in the number of Company-owned stores, inventories have declined to $263 million at the end of April 2004.

        As part of the sales process, we offer purchasers of our recreational vehicles comprehensive one-year warranties against defects in materials and workmanship, excluding only certain components separately warranted by a supplier. The warranty period for motor homes is one year or until the unit has been driven 15,000 miles, whichever occurs first, except for structural items, which are covered for three years. The travel trailer warranty is for 24 months (with the exception of the Gearbox product which comes standard with a one-year warranty), while the folding trailer warranty covers 12 months on most parts and manufacturing-related defects. The warranty period for all Model Year 2005 travel trailer products has been reduced from two years to one year. Our RV Group has installed an electronic dealer communications network that facilitates the processing of product warranty claims and parts ordering. With respect to manufactured homes, our warranty now covers a one-year period, and includes coverage for factory-installed appliances. Between March 2000 and December 2002, our home warranty covered a two-year period. Our annual expenses for product warranties and service were approximately $103 million for fiscal year 2004, $118 million for fiscal year 2003, and $144 million for fiscal year 2002. We believe that our warranty program is an investment that enhances our reputation for quality and reliability.

Financing of Our Products

        Sales of recreational vehicles and manufactured housing are generally made to dealers under commitments by financial institutions that have agreed to finance dealer purchases. Consumer financing

12

for recreational vehicles is currently readily available from a variety of sources including commercial banks, savings and loan institutions, credit unions and consumer finance companies. With respect to manufactured housing, wholesale and retail financing has historically been provided by similar lending sources, although highly concentrated with a few large institutions and by the finance affiliates of certain vertically integrated manufacturers/retailers.

        Until May 1996, we owned Fleetwood Credit Corp., which provided a substantial portion of the wholesale and retail financing for sales of our recreational vehicles. We sold Fleetwood Credit Corp. to Associates First Capital Corporation (Associates) in May 1996. In connection with the sale, an agreement was signed to assure continuing cooperation between Associates and us and to facilitate wholesale and retail financing for our retailers and customers. Early in calendar 1999, Fleetwood Credit Corp. was sold by Associates to Bank of America. We consented to an assignment of the operating agreement to the new owner. Under the agreement, we agreed to certain limitations on our permissible involvement in recreational vehicle financing programs until May 2006.

        Manufactured housing lenders have experienced higher loan losses and a more difficult funding environment over the past three years. Repossessions increased due to the fact that some lenders had made loans in earlier periods to less-qualified applicants, and a significant number of these borrowers had begun to default on their loans. Access to the asset-backed securities market as a source of funding similarly has been constricted and the cost of funds has risen sharply. As a result, lenders have reacted by tightening credit standards for manufactured housing borrowers, by significantly increasing interest rates and in some cases exiting the business.

        Conseco, which acquired GreenTree Financial Corp. and was the largest manufactured housing lender, announced in October 2002 it would no longer provide retail financing. GreenPoint announced in January 2002 that it was discontinuing its manufactured housing finance business, as did Chase in May 2004. These announcements followed the previously announced exits from the retail finance business by Associates, Bombardier Capital, Inc. and CIT Group Inc. In addition, several other smaller lenders have exited the business during the past three to four years. These unfavorable developments have created a very restrictive retail financing environment, which in turn has constrained sales activity at both the wholesale and retail levels.

        Recently, both U.S. Bancorp and GreenTree, which was acquired out of the Conseco bankruptcy by a consortium of investment funds, announced their intention to provide manufactured housing retail financing. A unit of General Motors Acceptance Corp. has become a liquidity provider through purchases of loans in the secondary market. Depending on the extent of financing actually made available by these or other lenders in the future, combined with retail financing that Fleetwood may make available through our HomeOne Credit Corp. finance subsidiary, it is possible that these new sources of financing could begin to moderate the effect of the restrictive retail financing environment that has challenged the manufactured housing industry in recent years.

        Conseco, also the largest wholesale inventory lender, announced on March 1, 2002, it would exit that business, and in October 2002, Deutsche, another large housing wholesale floorplan lender, announced it was exiting the business. Since the announcements by Conseco and Deutsche, dealer transitions to other floorplan lenders have been orderly and we have experienced relatively little difficulty finding alternative sources of inventory financing for most of our dealers, including Company-owned stores. Despite some disruption to the industry, generally, there has been sufficient wholesale floorplan financing available through other lenders to fill the vacuum created by the Conseco and Deutsche departures.

Regulatory Issues Applicable to Our Business and Products

        Our manufactured housing operations are subject to provisions of the Housing and Community Development Act of 1974, under which the U.S. Department of Housing and Urban Development (HUD) establishes construction and safety standards for manufactured homes, and also may require manufactured

13

housing producers to send notifications to customers of noncompliance with standards or to repair or replace manufactured homes that contain certain hazards or defects. Our recreational vehicle operations are subject to a variety of Federal, state and local regulations, including the National Traffic and Motor Vehicle Safety Act, under which the National Highway Traffic Safety Administration (NHTSA) may require manufacturers to recall recreational vehicles that contain safety-related defects, and numerous state consumer protection laws and regulations relating to the operation of motor vehicles, including so-called "Lemon Laws." Recently, the Transportation Recall Enhancement Accountability Documentation Act was approved by Congress and administered by the NHTSA. Under this rule, motor vehicle manufacturers (automotive, truck and RV) and motor vehicle equipment manufacturers are now required to report information and submit documents relating to customer complaints, warranty claims, field reports, injuries, property damage and deaths. This information may assist NHTSA to promptly identify defects related to motor vehicle safety. Fleetwood has implemented systems and processes to meet the new reporting requirements. Amendments to any of these regulations and the implementation of new regulations could significantly increase the costs of manufacturing, purchasing, operating or selling our products and could have a material adverse effect on our results of operations.

        Our failure to comply with present or future regulations could result in fines, potential civil and criminal liability, suspension of sales or production, or cessation of operations. In addition, a major product recall could have a material adverse effect on our results of operations.

        Certain U.S. tax laws currently afford favorable tax treatment for the purchase and sale of recreational vehicles that are used as the equivalent of second homes. These laws and regulations have historically been amended frequently, and it is likely that further amendments and additional regulations will be applicable to us and our products in the future. Amendments to these laws and regulations and the implementation of new regulations could have a material adverse effect on our results of operations.

        Our operations are subject to a variety of Federal and state environmental regulations relating to noise pollution and the use, generation, storage, treatment, emission and disposal of hazardous materials and wastes. Although we believe that we are currently in material compliance with applicable environmental regulations, our failure to comply with present or future regulations could result in fines, potential civil and criminal liability, suspension of production or operations, alterations to the manufacturing process, costly cleanup or capital expenditures.

Our Intellectual Property

        Fleetwood®, Fleetwood Homes®, Fleetwood RV® and the principal brand and series names we use in connection with our recreational vehicles and manufactured homes are registered trademarks of ours. We believe that our trademarks and trade names are significant to our business, and we vigorously protect them against infringement. Aside from design patents on certain distinctive features of our most prominent motor home models, we have not typically obtained patent protection on our products. In addition to our trademarks and patents, we have developed numerous trade secrets in connection with the design, manufacture, sales and marketing of our products. We believe that these trade secrets are of great significance to our business success and we will take reasonable steps to prevent their disclosure to competitors.

Our Relationship with Our Employees

        As of April 25, 2004, we had approximately 13,800 employees. Most full-time employees are provided with paid annual vacations, group life insurance, medical and hospitalization benefits, a retirement plan and other fringe benefits. Approximately 870 of these employees hold management or supervisory positions.

        As of April 25, 2004, collective bargaining agreements were in effect at two of our manufacturing locations covering a total of approximately 1,000 employees. The expiration dates for these agreements are

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in October 2005 and September 2007. Except for employees at these two plants, none of our other employees are represented by a certified labor organization. In recent years, we have experienced labor union organizing activity at several other manufacturing locations, but employees at all these locations voted against union representation.

Risks Relating to Our Business

        If any of the following risks actually occur, they could materially adversely affect our business, financial condition or operating results.

We have had significant losses in the last three fiscal years and it is possible that we may not be able to regain profitability in the foreseeable future. This could cause us to limit future capital expenditures and also increase the difficulty of implementing our business and finance strategies or meeting our obligations when due.

        We had net losses totaling $22 million, $71 million and $162 million for fiscal years 2004, 2003 and 2002, respectively. Continued losses may reduce our liquidity and may cause us to reduce our expenditures on capital improvements, machinery and equipment, and research and development. This could have a negative effect on our ability to maintain production schedules, manufacture products of high quality, and develop and manufacture new products that will achieve market acceptance. This could, in turn, have a negative effect on our sales and earnings. If we continue to suffer losses, we could be unable to implement our business and financial strategies or meet our obligations when due. Our losses for fiscal years 2004, 2003 and 2002 were partially caused by the following conditions:

•

reduced demand in the manufactured housing and, until the third quarter of fiscal 2002, recreational vehicle industries;



•

excess capacity, particularly in our manufactured housing plants;



•

some wholesale and retail lenders abandoning the manufactured housing market;



•

excess retail inventories;



•

restrictive lending standards in the manufactured housing market by the remaining retail lenders;



•

tightened credit standards by wholesale lenders for both manufactured housing and recreational vehicles;



•

relatively high interest rates for manufactured homes as opposed to site-built homes;



•

competition with resellers of repossessed manufactured homes;



•

weaker general economic conditions, stock market declines, and diminished consumer confidence;



•

unforeseen manufacturing complexities resulting from the introduction of new products, primarily in the travel trailer segment; and



•

lack of market acceptance of new products.

        We cannot provide assurance that the conditions that have resulted in our substantial losses in fiscal years 2002 through 2004 will not continue into fiscal 2005 and beyond.

        In addition to the foregoing conditions, actions taken by us in response to the circumstances that contributed significantly to the losses included:

•

charges in 2002 related to the impairment of goodwill that originated with our acquisitions of retail housing businesses in prior years, some of which have been closed or downsized; and

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•

downsizing initiatives within our manufacturing and retail housing businesses, including asset impairment charges, write down of idled manufacturing facilities, employee severance payments and plant closing costs.

We may be unable to comply in the future with financial covenants contained in our senior secured credit facility, which could result in a default under our debt obligations, and our lenders could accelerate our debt or take other actions which could restrict our ability to operate.

        Subsequent to our fiscal year end, we announced the early renewal and extension of the secured credit facility with Bank of America. If our liquidity and our operating results deteriorate significantly due to business or economic conditions, we may breach covenants under the amended and restated facility, resulting in a default.

        Under the new agreement, we are not subject to a financial performance covenant, except in the event that our average monthly liquidity, defined as cash, cash equivalents and unused borrowing capacity, falls below $90 million on a consolidated basis or $60 million within the borrowing subsidiaries. Under these circumstances we are required to meet a designated cumulative EBITDA requirement that has been restated to reflect the current outlook for earnings. A breach of the covenants could result in a default under this facility, as well as our retail floorplan facility with Textron Financial Corp. (Textron), which includes cross-default provisions. In addition, our HomeOne Credit Corp. subsidiary's warehouse line of credit with Greenwich Capital contains financial covenants that apply to HomeOne and also to our parent company. In the event of a future default under our debt obligations, we cannot assure you that our lenders will agree to forebear from enforcing any remedies otherwise available to them or that they will grant us waivers or amend our covenants.

        Our credit facility ranks senior to our senior convertible subordinated debentures and our convertible subordinated debentures, and is secured by substantially all of our assets, except for some inventories that are used to secure floorplan arrangements, the cash value of our Company-owned life insurance, certain fixed assets, including most of our real property, and housing retail finance receivables (chattel loans and/or mortgages). Upon the occurrence of an event of default, our lenders could elect to declare all amounts outstanding under the facility, together with accrued interest, to be immediately due and payable. A default under our senior secured facility could also cause a default under our retail floorplan debt with Textron. If we were unable to repay all outstanding balances, the lenders could proceed against our assets, and any proceeds realized upon the sale of assets would be used first to satisfy all amounts outstanding under our senior debt, and thereafter, any of our other liabilities, including liabilities relating to our convertible securities. In addition, we may be prevented from borrowing additional amounts under our other existing credit agreements, including any retail inventory floorplan facilities.

        Lender actions in the event of default might:

•

restrict our investment in working capital and capital expenditures;



•

limit our ability to react to changes in market conditions due to a lack of resources to develop new products;



•

hamper the marketing of our products due to a lack of funds to support advertising expenditures;



•

increase our risk of not surviving an extended downturn in the business compared to other competitors whose capital structures are less highly leveraged;



•

restrict our ability to merge, acquire or sell properties; and



•

cause us to seek protection from our creditors through bankruptcy proceedings or otherwise.

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Reduced availability of financing for our retailers or retail customers, particularly in our manufactured housing business, could continue to affect our sales volume.

        Our dealers, as well as retail buyers of our products, generally secure financing from third party lenders, which, in the case of manufactured housing, have been negatively affected by adverse loan experience. For example, Conseco, Associates, Chase and GreenPoint, which had been very important lenders for customers of our dealers in the 1990s, have withdrawn from the manufactured housing finance business. Reduced availability of such financing and higher interest rates are currently having an adverse effect on the manufactured housing business and our housing sales. If third party financing were to become unavailable or were to be further restricted, this could have a material adverse effect on our results of operations. Availability of financing is dependent on the lending practices of financial institutions, financial markets, governmental policies and economic conditions, all of which are largely beyond our control. For example, floorplan lenders have tightened credit availability and Conseco and Deutsche have exited that business in the manufactured housing industry. In addition, quasi-governmental agencies such as Fannie Mae and Freddie Mac, which are important purchasers of loans from financial institutions, have tightened standards relating to the manufactured housing loans that they will buy. Most states classify manufactured homes as personal property rather than real property for purposes of taxation and lien perfection. Interest rates for manufactured homes are generally higher and the terms of the loans shorter than for site-built homes. In the current environment, financing for the purchase of manufactured homes is often more difficult to obtain than conventional home mortgages. There can be no assurance that affordable wholesale or retail financing for either manufactured homes or recreational vehicles will continue to be available on a widespread basis.

Our repurchase agreements with floorplan lenders could result in increased costs.

        In accordance with customary practice in the manufactured housing and recreational vehicle industries, we enter into repurchase agreements with various financial institutions pursuant to which we agree, in the event of a default by an independent retailer in its obligation to these credit sources, to repurchase product at declining prices over the term of the agreements, typically 12, 18 or 24 months. The difference between the gross repurchase price and the price at which the repurchased product can then be resold, which is typically at a discount to the original sale price, presents a financial expense to us. Thus, if we were obligated to repurchase a large number of manufactured homes or recreational vehicles in the future, this would increase our costs, which could have a negative effect on our earnings. Tightened credit standards by lenders and more aggressive attempts to accelerate collection of outstanding accounts with dealers could result in defaults by dealers and consequent repurchase obligations on our part that may be higher than has historically been the case. During fiscal 2004, we repurchased 76 manufactured homes and 101 recreational vehicles at an aggregate gross purchase price to us of $3.7 million, incurring a loss upon resale of about $600,000, compared to repurchases of 136 manufactured homes and 46 recreational vehicles at an aggregate purchase price of $4.4 million, without incurring a loss from the resale of the repurchased units, during fiscal 2003.

Excess inventories of our products among retailers and repossessions could continue to have a negative effect on our sales volume and profit margins.

        The level of manufactured housing and recreational vehicle retail inventories and the existence of repossessed homes in the market can have a significant impact on manufacturing shipments and operating results, as evidenced in the manufactured housing industry during the past four years. For example, due to the rapid overexpansion of the retail distribution network in the manufactured housing industry, dealers' overstocking based on inflated expectations of future business, and readily available wholesale financing, there is currently an imbalance among the number of retail dealers, industry retail inventories and consumer demand for manufactured homes. The recent and continuing deterioration in the availability of retail financing has already extended the inventory adjustment period beyond what was originally expected.

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Competition from repossessed homes has further extended this inventory adjustment period. More liberal lending standards in the past resulted in loans to less-creditworthy customers, many of whom have defaulted on these loans. Lenders are repossessing the customers' homes and reselling them at prices significantly below the retail price of a new home, thereby increasing competition for manufacturers of new homes. This situation was exacerbated by the bankruptcy filings of Oakwood Homes and Conseco in 2003, which led both companies to sell large numbers of repossessed homes for cash at distressed prices at auctions or at wholesale, rather than to attempt to refinance the defaulted loans. This practice led to an increase in recent years in the number of available repossessed homes and to a further deterioration in the price of these homes. These trends appear to have stabilized; however, if these trends were to deteriorate once more, or if retail demand were to significantly weaken, the resulting inventory overhang could result in price competition and further pressure on profit margins within the industry and could have an adverse impact on our operating results.

We may not be able to obtain financing in the future, and the terms of any future financings may limit our ability to manage our business. Difficulties in obtaining financing on favorable terms would have a negative effect on our ability to execute our business strategy.

        In addition to capital available under the senior secured credit facility and HomeOne's warehouse facility, we anticipate that we may be required to seek additional capital in the future, including financing necessary to support the growth of HomeOne and to finance capital expenditure needs in our recreational vehicle business. There can be no assurance that we will be able to obtain future financings on acceptable terms, if at all.

        Further, in November 2001, Moody's Investors Services, Inc. announced that it had lowered its rating on our senior implied debt from B1 to B2, and on our convertible trust preferred securities from B3 to Caa3, with a negative rating outlook. At the time, Moody's stated that its action reflected the continuing erosion in our operating performance due to a protracted decline in the manufactured housing industry and a slowdown in the recreational vehicle business, and that the negative outlook reflected the highly uncertain intermediate-term outlook for demand in the manufactured housing and recreational vehicle markets. In December 2001, Standard and Poor's announced that it had lowered our corporate credit rating from BB+ to BB-, and the rating on our convertible trust preferred securities from B+ to D, with a negative rating outlook. At the time, Standard and Poor's cited our materially weakened business position due to a continuation of very competitive business conditions in both our manufactured housing and recreational vehicle business segments, and our constrained financial profile, as reflected by the granting of security to our lenders and the discontinuation and deferral of our common dividends and existing convertible trust preferred security distributions, respectively. Standard and Poor's attributed its negative outlook to the prospects for continued weak performance within both of our primary business segments and the vulnerability of our corporate credit ratings to further downgrades. These actions could result in any capital that we might raise in the future being more expensive or more difficult to raise.

        If we are unable to obtain alternative or additional financing arrangements in the future, or if we cannot obtain financing on acceptable terms, we may not be able to execute our business strategies. Moreover, the terms of any such additional financing may restrict our financial flexibility, including the debt we may incur in the future, or may restrict our ability to manage our business as we had intended.

We may incur additional losses related to our HomeOne Credit finance subsidiary as we build its loan portfolio, including losses relating to defaults and delinquencies, and we may be required to bear a greater portion of that risk than certain of our competitors if we are unable to securitize our loans in the secondary market.

        We have limited recent experience operating a consumer finance business. We previously originated loans for our recreational vehicle business through our Fleetwood Credit Corp. subsidiary, but we sold that subsidiary in 1996. We have never previously originated or serviced manufactured housing loans. Our

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ability to build our loan portfolio in connection with this new consumer finance business depends in part upon our ability to compete with established lenders, and to effectively market our consumer finance services to buyers of our manufactured homes, in the same unfavorable economic conditions that have caused experienced consumer finance companies to exit the manufactured housing business.

        We may incur losses as we develop our loan portfolio and integrate our consumer finance business into our existing operations. Many purchasers of manufactured homes may be deemed to be relatively high credit risks due to various factors, including the lack of or impaired credit histories and limited financial resources. Accordingly, the loans we originate may bear relatively high interest rates and may involve higher than average default and delinquency rates and servicing costs. In the event that we foreclose on delinquent loans, our ability to sell the underlying collateral to recover or mitigate our loan losses will be subject to market valuations of the collateral. These valuations may be affected by factors such as the amount of available inventory of manufactured homes in the market, the availability and terms of consumer financing and general economic conditions.

        Moreover, due to our limited operating history and non-participation in the housing securitization market to date, we may be unable to sell our loans in the asset-backed securities market. Currently the asset-backed securities market for manufactured housing-related consumer loans is uncertain as a result of poor performance of such securities in recent years. As a result, and due to our recent entry into the business, we may have difficulty accessing that market. Even if we are able to securitize our loans, they may receive lower ratings than those of our competitors that have an established consumer finance record. As a result, we may be required to bear a larger portion of the risk of loss on the financing agreements and may pay higher interest rates or provide greater over-collateralization than our competitors. Alternatively, if we should endeavor to sell the loans as whole loans, our lack of experience in the whole loan sale market may impact the proceeds we receive from whole loan sales transactions. These conditions could negatively affect our cash flow or result in losses at our consumer finance business.

        Prepayments of our managed receivables, whether due to refinancing, repayments or foreclosures, in excess of management's estimate could result in reduced future cash flow due to the resulting loss of net interest income on such prepaid receivables. Prepayments can result from a variety of factors, all of which are beyond our control, including changes in interest rates and general economic conditions.

        The foregoing risks become more acute in any economic slowdown or recession. Periods of economic slowdown or recession may be accompanied by decreased demand for consumer credit and declining asset values. Delinquencies, foreclosures and losses generally increase during economic slowdowns or recessions. Loss of employment, increases in cost-of-living, increases in rents on leased land for homes in manufactured housing communities or other adverse economic conditions would likely impair the ability of our consumer borrowers to meet their payment obligations, which could impair our ability to continue to fund our finance operations.

The recreational vehicle and manufactured housing industries are highly competitive and some of our competitors have stronger balance sheets and cash flows, as well as greater access to capital, than we do. The relative strength of our competitors could result in decreased sales volume and earnings for us, which could have a material adverse effect on our results of operations and financial condition.

        The manufactured housing industry is highly competitive. As of December 31, 2003, there were approximately 62 manufacturers of homes and fewer than 5,200 retail sales centers. Based on retail sales, the 10 largest manufacturers accounted for approximately 78 percent of the retail manufactured housing market in calendar 2003, including our sales, which represented 15.9 percent of the market. The manufactured housing retail market is much more fragmented.

        Competition with other housing manufacturers on both the wholesale and retail levels is based primarily on price, product features, reputation for service and quality, retail inventory, merchandising, and the terms and availability of wholesale and retail customer financing. Growth in manufacturing

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capacity during the 1990s increased competition at both the manufacturing and retail levels and resulted in both regional and national competitors increasing their presence in the markets in which we compete. Overproduction of manufactured housing in these regions could lead to greater competition and result in decreased margins, which could have a material adverse effect on our results of operations.

        In addition, manufactured homes compete with new and existing site-built homes, apartments, townhouses and condominiums. The supply of such housing has increased in recent years with the increased availability of construction financing and low-rate mortgage financing, reducing the demand for manufactured homes.

        Manufactured homes also compete with resales of homes that have been repossessed by financial institutions as a result of credit defaults by dealers or customers. Repossession rates for manufactured homes have increased in recent years and there can be no assurance that repossession rates will not continue to increase, thereby adversely affecting our sales volume and profit margins.

        The manufactured housing industry, as well as the site-built housing development industry, has experienced consolidation in recent years, which could result in the emergence of competitors, including developers of site-built homes, that are larger than we are and have greater financial resources than we have. For example, the large conglomerate Berkshire Hathaway recently acquired our competitors, Clayton Homes and Oakwood Homes. This combination could strengthen competition in the industry and adversely affect our business.

        The recreational vehicle market is also highly competitive. Sales from the five largest manufacturers represented approximately 70 percent of the retail market in calendar 2003, including our sales, which represented 16.8 percent of the market. Competitive pressures, especially in the entry-level segment of the recreational vehicle market for travel trailers, have resulted in a reduction of profit margins. Sustained increases in competitive pressures could have a material adverse effect on our results of operations. There can be no assurance that existing or new competitors will not develop products that are superior to our recreational vehicles or that achieve better consumer acceptance, thereby adversely affecting our sales volume and profit margins.

Our businesses are cyclical and this can lead to fluctuations in our operating results.

        The industries in which we operate are highly cyclical and there can be substantial fluctuations in our manufacturing shipments, retail sales and operating results, and the results for any prior period may not be indicative of results for any future period. Companies within both the manufactured housing and recreational vehicle industries are subject to volatility in operating results due to external factors such as economic, demographic and political changes. Factors affecting the manufactured housing industry include:

•

interest rates and the availability of financing for manufactured housing products, both of which have had a particularly adverse effect on our business in the past four fiscal years;



•

defaults by retail customers resulting in repossessions, which have also had a particularly adverse effect on our business in the past three fiscal years;



•

inventory levels, which have also negatively impacted our business;



•

availability of manufactured home sites;



•

commodity prices;



•

unemployment trends;



•

international tensions and hostilities;



•

consumer confidence; and

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•

general economic conditions.

        Factors affecting the recreational vehicle industry include:

•

overall consumer confidence and the level of discretionary consumer spending, which had an adverse effect on our business in calendar years 2001 and 2002 and may do so again depending on consumer reaction to economic uncertainty and potential volatility in the stock market;



•

general economic conditions;



•

interest rates;



•

international tensions and hostilities;



•

employment trends;



•

fuel availability and prices; and



•

commodity prices.

        We cannot provide assurance that the factors that are currently adversely affecting our business will not continue to have an adverse effect beyond fiscal 2004.

Our businesses are seasonal, and this leads to fluctuations in sales, production and operating results.

        We have experienced, and expect to continue to experience, significant variability in sales, production and net income as a result of seasonality in our businesses. Demand for manufactured housing and, particularly, recreational vehicles generally declines during the winter season, while sales and profits in both industries are generally highest during the spring and summer months. In addition, unusually severe weather conditions in some markets may delay the timing of purchases and shipments from one quarter to another.

We have replaced some of our manufactured housing dealers, and in the past some of our dealers have been acquired. This may lead to a decrease in our sales volume and a loss of market share.

        Our market share in the manufactured housing market, based on unit shipments, declined from 21.6 percent in calendar 1994 to 15.0 percent in calendar 2003. The reason for this change was, in part, our reduction of the number of independent retail distribution points from approximately 1,800 to 1,100 during the period from January 1994 through April 2004, in order to concentrate on more sophisticated dealers that share our approach towards merchandising and customer satisfaction. We have also, from time to time in the past, lost significant dealers that were acquired by competitors. Such acquisitions can reduce our retail distribution network and market share, as the competitors may choose not to sell our products. There can be no assurance that we will be able to adequately replace dealers acquired by competitors if they cease selling our manufactured homes, or that we will be able to maintain our sales volume or market share in these competitive markets.

We established a network of Company-owned retail stores that has required significant restructuring and downsizing, but our efforts may not succeed in making it profitable.

        We responded to the retail consolidation in the manufactured housing sector, beginning in fiscal 1998, by forming our own retail business and establishing a network of Company-owned stores to replace distribution points lost to competitors. We made numerous acquisitions between June 1998 and August 2001, the largest of which was the purchase of HomeUSA in August 1998, comprising 65 stores. We also originated more than 100 "greenfield" locations, which are locations that we have started ourselves rather than through acquisition of existing operations. The combination of the two strategies carried us to a high of 244 stores in November 2000. Since its inception, this business segment has operated at a loss, and as the retail market for manufactured housing has slowed, the losses have grown. During fiscal 2002,

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we implemented a downsizing strategy to better match our retail capacity to market demand. By assigning management of some of our locations to third parties, and closing and selling other locations, we reduced the number of stores that we operate to 129 at the end of fiscal 2004. These actions have resulted in goodwill impairment and restructuring charges and other costs, including severance payments to employees. Given existing industry conditions and the performance of this new business to date, there can be no assurance that we will be able to complete the restructuring of our retail network as a successful and profitable part of our manufactured housing group in the future. In addition, we may have to undergo additional downsizing of this business depending on the length of time that the current factors affecting it continue to have a negative impact.

Changes in consumer preferences for our products or our failure to gauge those preferences could lead to reduced sales and additional costs.

        We believe that historical consumer preferences for our products in general, and recreational vehicles in particular, are likely to change over time. We further believe that the introduction of new features, designs and models will be critical to the future success of our recreational vehicle operations. Delays in the introduction of new models or product features, or a lack of market acceptance of new features, designs or models, could have a material adverse effect on our business. For example, we may incur significant additional costs in designing or redesigning models that are not accepted in the marketplace. Products may not be accepted for a number of reasons, including changes in consumer preferences, or our failure to properly gauge consumer preferences. We may also experience production difficulties, such as inefficiencies in purchasing and increased labor costs, as we introduce new models. We cannot be certain that new product introductions will not reduce revenues from existing models and adversely affect our results of operations. There can be no assurance that any of these new models or products will be introduced to the market on time or that they will be successful when introduced.

If there is a rise in the frequency and size of product liability and other claims against us, including wrongful death, our business, results of operations and financial condition may be harmed.

        We are frequently subject, in the ordinary course of business, to litigation involving products liability and other claims, including wrongful death, against us related to personal injury and warranties. We partially self-insure our products liability claims and purchase excess products liability insurance in the commercial insurance market. We cannot be certain that our insurance coverage will be sufficient to cover all future claims against us. Any increase in the frequency and size of these claims, as compared to our experience in prior years, may cause the premiums that we are required to pay for insurance to rise significantly. It may also increase the amounts we pay in punitive damages, which may not be covered by our insurance. We are also presently party to actions in litigation that the plaintiffs are seeking to have certified as class actions. If any of these actions is decided in a manner adverse to us, the resulting liability may be significant. These factors may have a material adverse effect on our results of operations and financial condition. In addition, if these claims rise to a level of frequency or size that is significantly higher than similar claims made against our competitors, our reputation and business will be harmed.

When we introduce new products we may incur expenses that we did not anticipate, such as recall expenses, resulting in reduced earnings.

        The introduction of new models is critical to our future success, particularly in our recreational vehicle business. We have additional costs when we introduce new models, such as initial labor or purchasing inefficiencies, but we may also incur unexpected expenses. For example, we may experience unexpected engineering or design flaws that will force a recall of a new product. In addition, we may make business decisions that include offering incentives to stimulate the sales of products not adequately accepted by the market, or to stimulate sales of older or obsolete models. The costs resulting from these types of problems could be substantial and have a significant adverse effect on our earnings.

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Fuel shortages, or higher prices for fuel, could have a negative effect on sales of recreational vehicles.

        Gasoline or diesel fuel is required for the operation of motor homes and most vehicles used to tow travel trailers and folding trailers. Particularly in view of increased international tensions, there can be no assurance that the supply of these petroleum products will continue uninterrupted, that rationing will not be imposed or that the price of or tax on these petroleum products will not significantly increase in the future. Increases in gasoline prices and speculation about potential fuel shortages have had an unfavorable effect on consumer demand for recreational vehicles from time to time in the past, which then had a material adverse effect on our sales volume, and may do so in the future.

If we do not successfully upgrade our computer systems, we may lose sales to those of our competitors that have more sophisticated and better integrated systems than we do.

        Some of our computer systems are not as sophisticated as those that are currently available, and are not fully integrated. We are in the process of upgrading our computer systems, but we are still in the relatively early stages of this process. Competitors with more sophisticated and fully integrated computer systems may have efficiencies that will lead to lower costs and faster delivery schedules, and that may make it difficult for us to compete with them. We will be required to expend significant resources to fully implement a system suitable for a business as large and complex as ours. It is possible that the cost of building a computer system of this nature will be higher than budgeted, and that the system, when completed, will not perform as originally planned. This would increase our costs and disrupt our business.

The market for our manufactured homes is heavily concentrated in the southern part of the United States, and a continued decline in demand in that area could have a material negative effect on sales.

        The market for our manufactured homes is geographically concentrated, with the top 15 states accounting for over 70 percent of the industry's total retail sales in calendar 2003. The southern United States accounts for a significant portion of our manufactured housing sales. As is the case with our other markets, we have experienced a downturn in economic conditions in the southern states, and a continuing downturn in this region that is worse than that of other regions could have a disproportionately material adverse effect on our results of operations. There can be no assurance that the demand for manufactured homes will not continue to decline in the southern United States or other areas in which we experience high product sales and any such decline could have a material adverse effect on our results of operations.

Changes in zoning regulations could affect the number of sites available for our manufactured homes, and zoning regulations could affect the market for our new products, both of which could affect our sales.

        Any limitation on the growth of the number of sites available for manufactured homes, or on the operation of manufactured housing communities, could adversely affect our sales. In addition, new product opportunities that we may wish to pursue for our manufactured housing business could cause us to encounter new zoning regulations and affect the potential market for these new products. Manufactured housing communities and individual home placements are subject to local zoning ordinances and other local regulations relating to utility service and construction of roadways. In the past, there has been resistance by property owners to the adoption of zoning ordinances permitting the location of manufactured homes in residential areas, and we believe that this resistance has adversely affected the growth of the industry. The inability of the manufactured home industry to affect change in these zoning ordinances could have a material adverse effect on our results of operations and we cannot be certain that manufactured homes will receive more widespread acceptance or that additional localities will adopt zoning ordinances permitting the location of manufactured homes.

Increased costs, including costs of component parts and labor costs, potentially impacted by changes in labor rates and practices, could reduce our operating income.

        Our results of operations may be significantly affected by the availability and pricing of manufacturing components and labor, as well as changes in labor rates and practices. Although we attempt to offset the

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effect of any escalation in components and labor costs by increasing the sales prices of our products, we cannot be certain that we will be able to do so without it having an adverse impact on the competitiveness of our products and, therefore, our sales volume. Changes in labor rates and practices, including changes resulting from union activity, could significantly affect our costs and thereby reduce our operating income. If we cannot successfully offset increases in our manufacturing costs, this could have a material adverse impact on our margins, operating income and cash flows. Even if we were able to offset higher manufacturing costs by increasing the sales prices of our products, the realization of any such increases often lags behind the rise in manufacturing costs, especially in our manufactured housing operations, due in part to our commitment to give our retailers price protection with respect to previously placed customer orders.

We depend on a small group of suppliers for some of our components, and the loss of any of these suppliers could affect our ability to obtain components at competitive prices, which would decrease our margins.

        Most recreational vehicle and manufactured home components are readily available from a variety of sources. However, a few components are produced by only a small group of quality suppliers that have the capacity to supply large quantities on a national basis. Primarily, this occurs in the case of gasoline-powered motor home chassis, where Workhorse Custom Chassis is the dominant supplier of Class A gas chassis and Ford Motor Company is the dominant supplier of Class C chassis. Shortages, production delays or work stoppages by the employees of such suppliers could have a material adverse effect on our sales. If we cannot obtain an adequate chassis supply, this could result in a decrease in our sales and earnings.

The market price of our common stock has been volatile, and may decline again in the future.

        The market price of our common stock has fluctuated significantly in recent years and generally declined, from a closing price of $47.44 per share on March 6, 1998, to a low of $2.57 per share on August 9, 2002. The market price of our common stock may continue to fluctuate as a result of a number of factors. Factors that could cause fluctuations in the market price of our common stock include:

•

actual and anticipated variations in our operating results;



•

general economic and market conditions;



•

interest rates;



•

general conditions, including changes in demand, in the manufactured housing and recreational vehicle industries;



•

future issuances of our common stock, including issuances of common stock in connection with financing activities, conversion of our convertible trust preferred securities or convertible senior subordinated debentures, or upon exercise of stock options, any of which could have a dilutive effect on our earnings per share and otherwise cause the market price of our common stock to decline;



•

perceptions of the strengths and weaknesses of the manufactured housing and recreational vehicle industries;



•

our ability to pay principal and interest on our debt when due;



•

developments in our relationships with our lenders, customers, and/or suppliers;



•

announcements of alliances, mergers or other relationships by or between our competitors and/or our suppliers and customers;



•

announcements and the introduction of new products and models by us or our competitors and the success or failure of these new products and models;



•

developments related to regulations, including zoning regulations; and

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•

further downgrades of our corporate credit ratings of our senior implied debt or of specific securities.

        In addition, in recent years the stock market in general has experienced extreme price and volume fluctuations that have affected the manufactured housing and recreational vehicle industries and that may be unrelated to the operating performance of the companies within these industries. These broad market fluctuations may also adversely affect the market price of our common stock.

We do not pay dividends on our common stock, and under the terms of the documents governing our 6% convertible trust preferred securities, we are currently deferring payment of dividends on those securities.

        On October 30, 2001, we elected to defer distributions due to be made on November 15, 2001, on our then outstanding 6% convertible trust preferred securities and we have subsequently elected to defer all subsequent quarterly distributions to date. In light of our business environment and recent operating results, we currently anticipate that we will find it prudent to defer distributions on our existing 6% convertible trust preferred securities for the foreseeable future, subject to the terms in the governing documents. The deferral of distributions on our existing preferred securities prevents us from declaring or paying any dividends on our common stock during the period of such deferrals. Additionally, even if we choose to resume cash distributions on our 6% convertible preferred securities in the future, we may choose not to pay dividends on our common stock.

Item 2. Properties

        We own our executive offices, which are located at 3125 Myers Street in Riverside, California. The corporate administrative offices, which occupy 201,000 square feet, are situated on parcels of land owned by us, totaling approximately 18.1 acres. Regional, sales and service offices located in North Carolina, Tennessee, Texas and Virginia occupy a total of 59,800 square feet of leased office space. The following table describes additional property and buildings utilized for manufacturing, research and development and administrative purposes as of April 25, 2004. For the most part, these properties and buildings are owned by the Company, except as noted below, and we believe they are suitable and adequate for our purposes. We have granted a security interest in some of these properties to our lenders under the senior secured credit facility.

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(1)

Manufacturing facility partially used for housing service operations.

(2)

Includes 4.0 acres and a 28,100 square foot building leased from an unaffiliated third party.

(3)

Includes a 17,800 square foot building leased from an unaffiliated third party.

(4)

Includes a 40,000 square foot building leased from an unaffiliated third party.

Retail Properties

        At the end of fiscal 2004, we operated 129 retail sales locations in 21 states, of which 16 are owned and 113 are leased from third parties. An additional 31 retail sales locations are managed under an operating agreement by a large dealer of which 5 are owned and 26 are leased from third parties. The current annual lease obligation related to these properties is approximately $6.4 million.

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Idle Facilities

        There were 20 idle manufacturing facilities at the end of fiscal 2004 and 22 at the end of fiscal 2003. During fiscal 2004, active manufacturing capacity for the manufactured housing group was reduced by the closure of a facility in Pembroke, North Carolina. Idle travel trailer facilities in Omaha, Nebraska, and Longview, Texas, were sold during the year and an idle housing facility in Nampa, Idaho, was leased to a third party in fiscal 2004.

        The following Company-owned manufacturing facilities were not in operation as of April 25, 2004.

(1)

Manufacturing facility partially used for housing service operations.

(2)

Manufacturing facility deactivated in fiscal 2004.

(3)

Acreage shared with active manufacturing facility in Pembroke, North Carolina.

Item 3. Legal Proceedings

        As previously reported, we filed a complaint in state court in Kansas, in the 18th Judicial District, District Court, Sedgwick County, Civil Department (the Court), against The Coleman Company, Inc. (Coleman) in connection with a dispute over the use of the Coleman's trademarks. Our Folding Trailer division had licensed the name since 1989, when we bought Coleman Recreational Vehicles, Inc. After approximately 13 years, Coleman suddenly notified us that it had a different interpretation of the manner in which royalties were intended to be calculated under the license agreement. We had entered into discussions with Coleman to address these concerns in good faith, but on March 12, 2003, Coleman notified us that it had terminated the agreement and ordered us to cease using the Coleman trademarks. Our lawsuit sought declaratory and injunctive relief. On June 6, 2003, Coleman filed an answer and counterclaimed against us alleging various counts, including breach of contract and trademark infringement. A hearing on the matters was held on June 17, 18 and 19. On July 11, 2003, the Court issued an order stating that the rights and obligations of the parties should be resolved at a trial and not by injunctive relief. On July 16, 2003, Coleman filed a motion for reconsideration. The Court heard arguments on Coleman's motion on August 15, 2003, and on August 18, 2003, the Court issued an order granting a temporary injunction to Coleman enjoining Fleetwood from certain conduct, including using

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Coleman's name, trademark or logos. On November 12, 2003, the Court heard arguments on our motion to reconsider the August 18, 2003 order and Coleman's motion for partial summary judgment. On December 9, 2003, the Court heard another motion by Coleman for partial summary judgment. On February 6, 2004, the court ruled that Fleetwood Enterprises, Inc., (Fleetwood) was not the alter ego of its subsidiary, Fleetwood Folding Trailers, Inc., (Folding Trailers) and therefore not subject to the temporary injunction against Folding Trailers. This is important because arising from the original purchase of Coleman's folding trailer business in 1989, Fleetwood also purchased a covenant (the negative covenant) from Coleman that Coleman would not license to any company, other than Fleetwood, the Coleman brand for use on recreational vehicles. The Court also ruled that the existing temporary injunction was overly broad and ordered the parties to submit a more balanced temporary injunction. Notwithstanding this ruling, the Court held that Folding Trailers had violated the existing injunction and imposed sanctions against Folding Trailers. The sanctions will likely amount to several thousand dollars. Prior to the February 6, 2004 ruling, Coleman and Coachmen Industries, Inc. (Coachmen), a manufacturer of recreational vehicles, announced an agreement whereby Coachmen would produce a line of recreational vehicles under the Coleman brand. Since we believe any such agreement to be in violation of our negative covenant with Coleman, Fleetwood, on February 13, 2004, filed a lawsuit against Coachmen in the state court in Kansas alleging among other counts that Coachmen is interfering with our business opportunities. Coachmen has now answered and filed a counterclaim, alleging various statutory restraint-of-trade allegations. We expect this lawsuit will be consolidated with the existing Coleman litigation. On March 1, 2004, Coleman filed another motion to show cause relating to further alleged violations by Fleetwood of the injunction. The Court has denied that motion. On April 27, 2004, the Court entered an order dissolving the temporary injunction against Folding Trailers, stating that the temporary injunction was contrary to public policy. On that date, the court also denied Coleman's request for permanent injunctive relief. On May 19, 2004, Fleetwood filed a motion for partial summary judgment requesting that the Court grant declaratory relief in regard to the negative covenant, establishing that Coleman is prohibited from licensing the Coleman trademark to Coachmen or any other company and that Coleman's use of the trademark in connection with recreational vehicles constitutes a breach of its contract with Fleetwood, as a matter of law. The hearing is set for July 8, 2004. Trial in this matter is likely to be scheduled for the third or fourth quarter of calendar year 2004. We intend to aggressively pursue this litigation and provide a vigorous defense to the counterclaims by Coleman and Coachmen. It is not possible at this time to properly assess the risk of an adverse verdict or the magnitude of the possible exposure.

        We are also subject to other litigation from time to time in the ordinary course of business. Our liability under some of this litigation is covered in whole or in part by insurance. Although the amount of any liability with respect to such claims and litigation over and above our insurance coverage cannot currently be determined, in the opinion of our management such liability is not expected to have a material adverse effect on our financial condition or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

        We held a Special Meeting of Shareholders on April 12, 2004. At the meeting, the shareholders approved a proposal to amend our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our Common Stock from 75,000,000 to 150,000,000 shares.

        Of the 39,156,862 shares represented and voting in person or by proxy at the Special Meeting, 33,303,691 shares were voted for the proposal, 2,076,543 shares were voted against the proposal and 43,954 shares abstained from voting.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        The following table lists the high and low intraday sales prices for our common stock during the past two fiscal years as reported on the New York Stock Exchange Composite Tape. There were no dividends declared per share during the same periods. Our common stock is listed on the New York and the Pacific Stock Exchanges and trades on various regional exchanges (Ticker Symbol: FLE). Call and put options are traded on the American Stock Exchange and the Chicago Board Options Exchange.

        On July 2, 2004, there were approximately 1,100 shareholders of record of our common stock.

Dividend Policy

        On October 30, 2001, the Company announced that it would discontinue the payment of dividends after the previously declared dividend payment on November 14, 2001. Dividends until such time had been paid quarterly. This decision was made in conjunction with an election to defer the distribution on our existing 6% convertible trust preferred securities due to be made on November 15, 2001. When we defer a distribution on the 6% convertible trust preferred securities, we are prevented from declaring or paying dividends on our common stock during the period of deferral. Any future resumption of dividends and distributions on the 6% securities would be at the discretion of our Board of Directors, and is not currently contemplated.

Equity Compensation Plan Information

        The following table provides information as of April 25, 2004, for compensation plans under which equity securities may be issued.

(1)

Includes securities available for future issuance under shareholder approved compensation plans other than upon the exercise of an option, warrant or right, as follows:

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The Company's Amended and Restated 1992 Stock-Based Incentive Compensation Plan presently provides that awards may be granted in the form of shares of common stock to replace all or a portion of compensation (other than base salary) that could otherwise become payable to any employee. A limit of 990,000 shares of common stock is imposed on stock awards. In addition, the Plan provides that awards may be made in shares of restricted stock, up to an aggregate of 600,000 shares.

(2)

Reflects warrants granted in November 2001 to Bain & Company, Inc. as partial consideration for business consulting services. The warrants to purchase up to 150,000 shares of Fleetwood common stock may be exercised at $14.45 per share, through January 3, 2005. Shares issuable upon exercise of the warrants have been registered for resale.

(3)

Reflects restricted stock granted as an inducement to becoming an employee of the Company to Edward B. Caudill effective August 12, 2002.

(4)

Reflects stock options awarded as an inducement to becoming an employee of the Company to Edward B. Caudill effective August 12, 2002.

Material Features of Equity Compensation Plans Not Approved by Shareholders

        The Company issued warrants in November 2001 to Bain & Company, Inc. as partial consideration for business consulting services. The warrants to purchase up to 150,000 shares of Fleetwood common stock may be exercised at $14.45 per share, through January 3, 2005. Shares issuable upon exercise of the warrants have been registered for resale. Effective June 24, 2004, Bain transferred the warrants to Sagamore Hill Hub Fund Ltd.

        The Company granted 147,860 shares of restricted stock, pursuant to the Edward B. Caudill Restricted Stock Plan and Agreement effective August 12, 2002, to Edward B. Caudill as an inducement to his becoming an employee of the Company. Mr. Caudill became President and Chief Executive Officer of Fleetwood on that date. Good and adequate consideration was provided by Mr. Caudill in the amount of the par value of the stock, or $1 per share, insofar as he had commenced his employment with the Company, terminated his employment with his previous employer and forfeited significant benefits with his former employer. Pursuant to the Agreement, the shares may not be sold, assigned, transferred or otherwise disposed of until they vest in accordance with the schedule described in this paragraph. In addition, unvested shares will be repurchased by the Company at no cost if Mr. Caudill is terminated other than in a Qualifying Termination, as defined in the Agreement. In the event of a Qualifying Termination, the restrictions lapse. The shares vest according to the following schedule: 96,109 on the first anniversary of the effective date; 44,358 on the second anniversary; and 7,393 on the third anniversary.

        The Company granted options to acquire 352,698 shares of common stock, pursuant to the Edward B. Caudill Stock Option Plan and Agreement, effective August 12, 2002, to Edward B. Caudill as an inducement to his becoming an employee of the Company. Mr. Caudill became President and Chief Executive Officer of Fleetwood on that date. Pursuant to the Agreement, the options generally may not be transferred except in limited circumstances for estate planning purposes. The options vest according to the following schedule: one-third on the first anniversary of the effective date; one-third on the second anniversary; and one-third on the third anniversary. The exercise price is $2.57 per share, and the options expire if unexercised on August 12, 2012. In the event of a change in control, the options may be exercised in full if adequate provision is not otherwise made for replacement awards or other consideration.

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Item 6. Selected Financial Data

Five-Year Summary of Selected Financial Data

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(1)

The effect of the distributions on preferred securities was anti-dilutive in fiscal years 2004, 2003, 2002 and 2001 and was, therefore, not added back to determine diluted earnings (loss) per share.

(2)

Adjusted EBITDA is defined as operating income (loss) plus depreciation and amortization less gains (losses) on sales of property, plant and equipment in accordance with the definition per our amended and restated credit agreement. Under this new agreement, we are not subject to a financial covenant; except in the case that we fail to meet minimum liquidity requirements, as defined. In that circumstance, we are required to meet a designated cumulative adjusted EBITDA requirement. Failure to meet the covenant would constitute a default which could have a material adverse effect on the Company and its operations. Management believes adjusted EBITDA to be a meaningful indicator of our performance that provides useful information to investors regarding our financial condition and results of operations. Presentation of adjusted EBITDA is consistent with our past practice, and adjusted EBITDA is a non-GAAP financial measure commonly used in our industries and by financial analysts and others who follow the industries to measure operating performance and to determine a valuation for companies in our industries. While management considers adjusted EBITDA to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, operating income, net income and other measures of financial performance reported in accordance with GAAP. Adjusted EBITDA does not reflect cash available to fund cash requirements. Not all companies calculate adjusted EBITDA in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies. Included in adjusted EBITDA were non-cash charges for goodwill impairment of $165.9 million in fiscal 2001 and other asset impairment charges of $1.2 million and $12.5 million in fiscal years 2003 and 2002, respectively.

        The following table reconciles adjusted EBITDA to net income (loss):

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

Selected Segment Data