Most of the Company’s retail sales locations and certain of its other facilities and equipment are leased under terms that range from monthly to 18 years. Management expects that in the normal course of business, leases will be renewed or replaced by other leases to support continuing operations.

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of April 25, 2004:

(AMOUNTS IN THOUSANDS)
Fiscal Year	Minimum Rental Payments
2005	$	10,536
2006		9,322
2007		7,577
2008		6,186
2009		4,825
Later years		25,683
Total minimum lease payments	$	64,129

Minimum payments have not been reduced by future minimum sublease rentals of $2.9 million. In March 2000, Fleetwood entered into a sale and leaseback agreement involving 22 manufactured housing retail stores. The agreement includes a contingent rental reset provision which provides that, in the event that the Company’s credit rating falls below a certain level anytime prior to March 2005, the Company could be required, at the option of the lessor, to make an accelerated rent payment equal to the unamortized principal of the lessor’s underlying debt. Since entering into the agreement, the Company’s credit rating has fallen below the specified level, raising the possibility that the provision could be exercised in March 2005. The accelerated payment would be approximately $20 million.

A number of alternatives to the accelerated rent payment are currently available to the Company and are being considered. It is likely that sometime prior to March 2005, the Company will move to restructure the arrangement to mitigate the potential negative cash impact.

Rental expense for the last three fiscal years was as follows:

(AMOUNTS IN THOUSANDS)			2004				2003			2002
Rental expense		$	11,967			$	12,518		$	16,952
Less: Sublease rental income			(632	)			(780	)		(943	)
		$	11,335			$	11,738		$	16,009

Under the Company’s Amended and Restated 1992 Stock-Based Incentive Compensation Plan, as amended, stock options may be granted to officers and other key employees of the Company for the purchase of up to 9,900,000 shares of the Company’s common stock. Expiration dates for the options may not exceed 10 years from the date of grant. Under a separate plan for non-employee directors, up to 400,000 shares have been authorized for distribution of options. Automatic grants are made annually under this plan.

The following is a summary of the stock option activity for employees and non-employee directors for the last three fiscal years.

		2004							2003						2002
		Shares			Wtd. Avg. Exercise Price				Shares			Wtd. Avg. Exercise Price			Shares			Wtd. Avg. Exercise Price
Outstanding at
beginning of year			6,494,952		$	13.06				4,166,408		$	18.82			3,566,633		$	21.55
Granted			667,400			11.68				2,610,598			4.21			1,047,300			10.76
Exercised			(811,062	)		6.56				(20,200	)		9.13			(30,000	)		9.01
Forfeited			(538,345	)		17.85				(261,854	)		16.80			(417,525	)		22.34
Outstanding at end of year			5,812,945		$	13.37				6,494,952		$	13.06			4,166,408		$	18.82
Exercisable at end of year			3,618,300		$	17.40				3,401,866		$	20.21			2,945,029		$	22.16
Weighted average fair value
of options granted					$	6.00						$	2.82					$	6.24

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in fiscal years 2004, 2003 and 2002, respectively: risk-free interest rates of 4.0 percent, 4.0 percent and 5.0 percent; expected dividend yields of 0.0 percent for all periods presented; expected lives of four years, four years and six years; and an expected volatility range of 60 to 92 percent for fiscal 2004, 92 percent for fiscal 2003 and 60 percent for fiscal 2002.

The following table summarizes information about stock options outstanding and exercisable as of the current fiscal year end:

													Wtd. Avg.
	Number			Wtd. Avg.						Number			Exercise
	Outstanding			Remaining			Wtd. Avg.			Exercisable			Price of
	as of			Contractual			Exercise			as of			Exercisable
Range of Exercise Price	4/25/04			Life			Price			4/25/04			Options
$2.57 – $3.17		1,487,832			8.71		$	3.03			425,026		$	3.00
$6.94 – $9.01		1,101,750			7.16		$	7.93			696,004		$	8.48
$9.06 – $12.62		1,070,091			7.44		$	10.79			605,898		$	10.62
$13.53 – $20.13		845,750			5.31		$	15.85			583,850		$	16.89
$20.63 – $28.63		972,109			3.35		$	27.70			972,109		$	27.70
$28.79 – $39.63		335,413			4.12		$	37.46			335,413		$	37.46

On September 15, 1998, the Company’s Board of Directors adopted a new stockholder rights agreement to replace the previous plan that expired on November 9, 1998, granting certain new rights to holders of the Company’s common stock. Under the new plan, which was effective November 10, 1998, one right was granted for each share of common stock held as of November 9, 1998, and one right will be granted for each share subsequently issued. Each right entitles the holder, in an unfriendly takeover situation and after paying the exercise price (currently $160), to purchase Fleetwood common stock having a market value equal to two times the exercise price. Also, if the Company is merged into another corporation, or if 50 percent or more of the Company’s assets are sold, then rightholders are entitled, upon payment of the exercise price, to buy common shares of the acquiring corporation at a 50 percent discount from their then current market value. In either situation, these rights are not available to the acquiring party. However, these exercise features will not be activated if the acquiring party makes an offer to acquire all of the Company’s outstanding shares at a price that is judged by the Board of Directors to be fair to all Fleetwood shareholders. The rights may be redeemed by the Company under certain circumstances at the rate of $0.02 per right. The shareholder rights plan dated September 15, 1998, was amended effective April 30, 2001, and again effective December 31, 2002. The rights will expire on November 9, 2008.

The unaudited results by quarter for fiscal years 2004 and 2003 are shown below:

	FISCAL YEAR ENDED APRIL 2004
	(AMOUNTS IN THOUSANDS,	First			Second			Third			Fourth
	EXCEPT WEEKS AND PER-SHARE DATA)	Quarter			Quarter			Quarter			Quarter
	Number of weeks in the quarter		13			13			13			13
	Revenues	$	646,131		$	674,743		$	597,750		$	689,364
	Gross profit		117,076			125,435		106,527				121,173
	Operating income		13,345			15,246			1,414			11,325
	Income (loss) before income taxes		3,098			4,779			(9,787)			(1,902)
	Net income (loss) used for basic
	and diluted earnings (loss)
	per common share(1)	$	1,916		$	3,758		$	(10,171)		$	(17,764)
	Earnings (loss) per common share(2):
	Basic	$	.05		$	.10		$	(.26)		$	(.42)
	Diluted	$	.05		$	.10		$	(.26)		$	(.42)
	Weighted average common shares:
	Basic		35,935			36,124			38,871			42,497
	Diluted		36,669			37,116			38,871			42,497
	FISCAL YEAR ENDED APRIL 2003
	(AMOUNTS IN THOUSANDS,	First			Second			Third			Fourth
	EXCEPT WEEKS AND PER-SHARE DATA)	Quarter			Quarter			Quarter			Quarter
	Number of weeks in the quarter		13			13			13			13
	Revenues	$	611,275		$	641,146		$	493,215		$	572,657
	Gross profit		122,019			128,255			81,906			93,477
	Operating income (loss)(3)		8,838			17,481			(19,654)			(33,096)
	Income (loss) before income taxes		(1,021)			7,557			(29,818)			(42,955)
	Net income (loss) used for basic
	and diluted earnings (loss)
	per common share(3)	$	(1,520)		$	4,601		$	(18,405)		$	(55,415)
	Earnings (loss) per common share(2):
	Basic	$	(.04)		$	.13		$	(.51)		$	(1.54)
	Diluted	$	(.04)		$	.13		$	(.51)		$	(1.54)
	Weighted average common shares:
	Basic		35,694			35,911			35,935			35,935
	Diluted		35,694			36,005			35,935			35,935