The Company has owned three Delaware business trusts that each issued a separate series of optionally redeemable convertible trust preferred securities convertible into shares of the Company’s common stock. The combined proceeds from the sale of the transactions and from the purchase by the Company of the common shares of the business trusts were tendered to the Company in exchange for separate series of convertible subordinated debentures. These debentures represent the sole assets of the business trusts. Under FIN 46R, “Consolidation of Variable Interest Entities,” the business trusts are deemed to have no primary beneficiary and, although wholly owned by the Company, are not to be consolidated. As a result, the convertible subordinated debentures, issued by the Company, are presented as a long-term liability. The Company recently called the securities held by two of the trusts and entered into a series of transactions (described below) that spanned our fiscal year end. As of June 4, 2004, all of the outstanding securities held by two of the trusts were redeemed for cash or were converted into common stock.

These transactions are more fully described below and the securities and amounts outstanding as of April 25, 2004, are summarized in the following table:

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
Series	Convertible Subordinated Debentures Outstanding			Number of Trust Preferred Securities Outstanding			Par Value Per Share			Aggregate Amount of Trust Preferred Securities Outstanding			Maturity			Interest Rate			Conversion Price
Trust I	$	210,142			4,025,000		$	50		$	201,250			2028			6%		$48.72 or 1.02627 shares of
																			common stock per share
																			of Trust I Securities
Trust II		39,124			1,725,000		$	22			37,950			2013			9.5%		$12.56 or 1.752 shares of
																			common stock per share of
																			Trust II Securities
Trust III		23,525			377,726		$	50			18,886			2013			9.5%		$ 10.36 or 4.826 shares of
																			common stock per share of
																			Trust III Securities
	$	272,791								$	258,086

During fiscal 1998, Fleetwood Capital Trust (Trust I), a Delaware business trust wholly owned by the Company, completed a $287.5 million private placement of 5,750,000 shares of 6% Convertible Trust Preferred Securities due February 15, 2028, (Trust I Securities) with a liquidation value of $50 per security. The combined proceeds from the transaction and from the purchase by the Company of the common shares of Trust I were tendered to the Company in exchange for 6% Convertible Subordinated Debentures due February 15, 2028, (Trust I Debentures) in the aggregate principal amount of $296.4 million. In a subsequent exchange offer, described below, the number of Trust I Securities outstanding was reduced to 4,025,000 and the aggregate principal amount outstanding was reduced to $201,250,000.

Distributions on the Trust I Securities are cumulative and are paid quarterly in arrears at an annual rate of 6 percent. The Company has the option to defer payment of the distributions for an extended period of up to 20 consecutive quarters, so long as the Company is not in default in the payment of interest on the debentures and discontinues the payment of dividends on common stock while the deferral is in effect. Considered together, the undertakings under the trust, the related indentures and guarantees, and the convertible subordinated debentures constitute a full and unconditional guarantee by the Company of the trust’s obligations under the securities. Beginning with the third quarter of fiscal 2002, the Company elected to defer the quarterly distributions on the Trust I Securities. The total amount deferred, including accrued interest, was $35.3 million at the end of fiscal 2004. The Company intends to continue to defer the distribution on the Trust I Securities for the foreseeable future, subject to the terms in the governing documents.

The Trust I Securities are convertible, at the option of the holder, at any time at the rate of 1.02627 shares of Fleetwood common stock (i.e., a conversion price of $48.72 per common share), subject to adjustment in certain circumstances. Since February 15, 2001, the Trust I Debentures have been redeemable in whole or in part, at the option of the Company, at a price equal to a premium currently 101.50 percent of the principal amount plus accrued and unpaid interest, declining annually to par if redeemed on or after February 15, 2006. The Trust I Securities are subject to mandatory redemption to the extent of any early redemption of the Trust I Debentures and upon maturity of the Trust I Debentures on February 15, 2028.

In December 2001, Fleetwood Capital Trust III (Trust III), also a Delaware business trust wholly owned by the Company, completed a $150.0 million private placement of 3,000,000 shares of 9.5% Convertible Trust III Preferred Securities due February 15, 2013, (Trust III Securities) with a face value of $50 per share. The combined proceeds from the transaction and from the purchase by the Company of the common shares of Trust III were tendered to the Company in exchange for 9.5% Convertible Trust III Subordinated Debentures due February 15, 2013, (Trust III Debentures) in the aggregate principal amount of $154.6 million.

On March 9, 2004, the Company announced that it was calling $50 million aggregate principal amount of the Trust III Securities for redemption. On March 30, 2004, the Company called the remaining $100 million aggregate principal amount of Trust III Securities for redemption. Subsequently, virtually all of the holders of the Trust III Securities converted their securities into an aggregate of 14,478,578 shares of the Company’s common stock, including some who had entered into privately negotiated transactions with the Company to convert their securities, prior to the respective redemption dates, in exchange for a cash incentive. As a result, as of April 25, 2004, there remained 377,726 shares of Trust III Securities outstanding, with an aggregate principal amount of $18.9 million, and as of April 29, 2004, which was the final redemption date pursuant to the Company’s calls for redemption, there were no Trust III Securities outstanding.

In January 2002, Fleetwood Capital Trust II (Trust II), another wholly owned Delaware business trust, issued 1,725,000 shares of 9.5% Convertible Trust II Preferred Securities due February 15, 2013, (Trust II Securities) with a face value of $22 per share and an aggregate liquidation value of $37.95 million to Trust I Securities holders in exchange for 1,725,000 shares of Trust I Securities with a $50 face value and an aggregate liquidation value of $86.25 million. The Trust I Securities and the proceeds from the purchase by the Company of the common shares of Trust II were tendered to the Company in exchange for new 9.5% Convertible Subordinated Debentures due February 15, 2013, (Trust II Debentures) in the amount of $39.12 million. In turn, the Company tendered the $86.25 million of Trust I securities to Trust I to be retired in exchange for the cancellation of a like amount of Trust I Debentures.

Subsequent to fiscal year end, on May 5, 2004, the Company called the Trust II Securities for redemption with a redemption date of June 4, 2004. Several of the holders of the Trust II Securities converted their holdings to shares of the Company’s common stock, including some who entered into privately negotiated transactions with the Company to convert their securities, prior to the redemption date, in exchange for a cash incentive. Accordingly, as of the June 4, 2004, redemption date, pursuant to the Company’s call for redemption, 781,065 shares of the Trust II Securities had been converted into an aggregate of 1,368,074 shares of the Company’s common stock, and 943,935 shares of the Trust II Securities were redeemed for an aggregate of $22.2 million in cash, representing $20.8 million in aggregate principal amount, $1.3 million in redemption premium and $104,000 in accrued but unpaid interest to the redemption date.

The Company has estimated the fair value of its financial instruments as of April 25, 2004, and April 27, 2003, based on relevant market information or using management estimates of discounted cash flows. The book and estimated fair values of financial instruments include those set out below or discussed in Note 5:

		April 25, 2004							April 27, 2003
		Book			Estimated				Book			Estimated
(AMOUNTS IN THOUSANDS)		Value			Fair Value				Value			Fair Value
Cash		$	14,090		$	14,090			$	31,515		$	31,515
Finance loans receivable, net			43,291			43,770				13,293			13,293
Cash value of Company-owned life insurance			48,809			48,809				55,004			55,004
Investments in unconsolidated subsidiaries			14,705			14,705				14,705			14,705
Retail flooring liability			21,868			21,868				15,357			15,357
Other short-term borrowings			10,451			10,451				16,054			16,054
Long-term debt			102,159			161,159				2,357			2,357
Convertible subordinated debentures			272,791			268,212				403,905			232,861

REPURCHASE COMMITMENTS:

Producers of recreational vehicles and manufactured housing customarily enter into repurchase agreements with lending institutions that provide wholesale floorplan financing to independent dealers. Our agreements generally provide that, in the event of a default by a dealer in its obligation to these credit sources, we will repurchase product. With most repurchase agreements our obligation ceases when the amount for which we are contingently liable to the lending institution has been outstanding for more than 12, 18 or 24 months, depending on the terms of the agreement. The contingent liability under these agreements approximates the outstanding principal balance owed by the dealer for units subject to the repurchase agreement, less any scheduled principal payments waived by the lender. Although the maximum potential contingent repurchase liability approximated $148 million for inventory at manufactured housing dealers and $644 million for inventory at RV dealers as of April 25, 2004, the risk of loss is reduced by the potential resale value of any products that are subject to repurchase, and is spread over numerous dealers and financial institutions. The gross repurchase obligation will vary depending on the season and the level of dealer inventories. Typically, the repurchase obligation for the third fiscal quarter will be greater than other periods due to high dealer inventories. The RV repurchase obligation is significantly more than the manufactured housing obligation due to a higher average cost per motor home and more units in dealer inventories. Past losses under these agreements have not been significant and lender repurchase demands have been funded out of working capital.

In the past three fiscal years we have had the following repurchase activity:

(DOLLAR AMOUNTS IN MILLIONS)			2004				2003			2002
Units			177				182			417
Repurchase amount		$	3.7			$	4.4		$	10.5
Loss recognized		$	0.6			$	—		$	2.1

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 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.

The Company is also subject to other litigation from time to time in the ordinary course of business. Fleetwood’s 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 the Company’s insurance coverage cannot currently be determined, in the opinion of management such liability is not expected to have a material adverse effect on our financial condition or results of operations.