We provide products and services that exceed

our customers' expectations and improve people's lives.

One out of every four

RV's on the road today

is a Fleetwood product,

making Fleetwood the

nation's leading producer

of folding trailers,

travel trailers

and motor homes.

We are the nation's largest producer of recreational vehicles.

The RV Industry in Calendar 1999: Strongest Market Since 1978
On top of a 15 percent increase in wholesale shipments in calendar 1998, the RV industry in 1999 posted a 10 percent shipment gain to 321,200 units, the highest level achieved since 1978. A robust economy, high levels of consumer confidence and positive demographic factors all contributed to a very favorable market environment. Another year of the extended economic expansion allowed RV manufacturers to cap a very productive decade in which nearly 2.4 million RVs were sold. Motor homes led the growth in the RV market during 1999 with a 12.8 percent gain in unit shipments. Travel trailer shipments for the industry were up 14.2 percent, while folding trailer shipments declined 5.1 percent.

Fleetwood RV Group
Achieved Record Fiscal 2000 Revenues
Capitalizing on the healthy RV market, Fleetwood shipped a record 80,120 units during fiscal 2000, up seven percent from fiscal 1999. This strong shipment volume pushed revenues up 11 percent to an all-time high of $1.91 billion. Fiscal 2000 operating profits for the group totaled $104 million, down slightly from last year's record $110 million, and operating margins eased from 6.3 percent to 5.4 percent of sales. Higher sales of more competitively-priced travel trailers and Class C motor homes, along with increases in selling and product warranty costs, accounted for most of the decline in operating margin.

Fleetwood Continued to Lead RV Industry
For more than 25 years, Fleetwood has led the industry in the production of recreational vehicles that facilitate travel, camping and outdoor recreation for a growing customer base. We build a full line of exciting RV products, including folding trailers, conventional and fifth-wheel travel trailers, and Class A and Class C motor homes. The range in price is broad — from affordable entry-level towable products for budget-conscious consumers, to luxurious motor homes designed for affluent buyers. One out of every four RVs on the road today is a Fleetwood product.

Fleetwood RV is a proud sponsor of 1999 Winston Cup champion Dale Jarret and Robert Yates Racing.

Motor Home Division
Produced Record Results
Fueled by a 16 percent increase in retail sales, calendar year 1999 was the best year for industry motor home shipments since 1984. Combined industry shipments of Class A and Class C products totaled 68,000 units, 13 percent ahead of 1998. In this vigorous market environment, Fleetwood posted fiscal 2000 shipments of 16,294 units, a gain of nine percent over the prior year. Our Class A units were up four percent, while Class C shipments, buoyed by unusually high rental company demand, soared 27 percent. Motor home rev-enues for fiscal 2000 rose 13 percent to a record $1.20 billion.
    We take great pride in our long-held status as the market leader in motor home sales. RV buyers have grown very familiar with Fleetwood brands, including Class A names Flair, Storm, Bounder, Bounder Diesel, Pace Arrow, Southwind, Vision, Discovery, American Tradition, American Dream, American Eagle and American Heritage. Class C products manufactured under the names of Tioga, Jamboree, Arrow and Rallye round out a complete motor home line that offers customers everything from basic convenience and function to the ultimate in luxury and style.
    In calendar 1999, Fleetwood once again held a significant lead over the competition with 24.6 percent of the entire motor home market. Our product line-up included six of the twelve top-selling Class A brands, and two of the five most popular Class Cs. Despite this strong showing, our share of the overall market dropped from 26.3 percent in the prior year, in part because our 1999 diesel product line did not cover all price points in the rapidly growing low to mid-priced diesel category. Along with our relatively small presence in the low-end gas-powered market, this caused our Class A market share to decline from 28.1 percent to 25.9 percent. Our Class C market share, which was enhanced by significantly higher sales of rental units, improved from 20.8 percent to 21.5 percent. We believe we've taken appropriate steps to stem our motor home market share erosion. For example, late in fiscal 2000 we introduced the Expedition, a competitively-priced diesel product which offers customers both traditional Fleetwood value and the option of upgraded features. Another new diesel product will be added in the next model year to fill an important price niche in which Fleetwood has not been represented. Also, we expect that lower-priced Fleetwood Class C models introduced last winter will soon be making market share inroads.

75 percent of RV owners adopt the RV lifestyle and stay in the market for life.

Industry Travel Trailer Sales Reached New High
Industry travel trailer shipments reached an all-time high in calendar 1999, rising 14 percent to 189,500 units. Shipments of conventional units totaled 117,500, the highest since 1978, and fifth-wheel shipments rose to an industry record 60,500 units. Fleetwood's unit volume in fiscal year 2000 improved nine percent to 41,936 units, our best year since fiscal 1979. This led to record travel trailer revenues of $590 million, seven percent ahead of the prior year.
    Fleetwood manufactures travel trailer products under the brand names of Prowler, Terry, Wilderness, Mallard, Avion, Savanna and Westport, and slide-in campers under the Caribou, Elkhorn and Angler names. For calendar 1999, Prowler was the number one selling travel trailer brand in the country, while Prowler, Terry, Wilderness and Mallard represented four of the nation's six top-selling brands. Overall, Fleetwood captured 20.5 percent of the travel trailer market in calendar 1999, down from 21.6 percent in 1998 due to strong competition at the low end of the market.
    A strong presence in the entry-level product segment is strategically important to Fleetwood, since it now represents almost 40 percent of the travel trailer market. Our successful efforts in fiscal 2000 to expand product offerings in this fast-growing market segment resulted in a higher mix of lower-priced, lower-margin products, causing a short-term decrease in operating margins. Consequently, we've been diligently pursuing cost reduction strategies to miti-gate the impact of these lower-margin products, such as initiating organizational changes in the travel trailer division to streamline plant management and reduce overhead costs. Also, the division succeeded in reducing production cycle times and raw material costs. Our involvement in this price-sensitive market segment presents one of our best opportunities for market share expansion and revenue growth. We're confident that our increased emphasis on the entry-level market, along with a disciplined approach to product development and cost controls, will result in long-term market share growth and higher returns.

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Folding Trailer Division Set
Standard of Excellence for the Industry
Contrary to the trend in other RV product categories in calendar 1999, industry shipments of folding trailers declined five percent to 60,100 units, down from a 25-year high in 1998. Bucking the industry trend, Fleetwood's folding trailer division in fiscal 2000 posted a three percent gain in ship-ments to a record 21,890 units and generated a seven percent increase in revenues to $124 million.
    Folding trailer products have been gaining in popularity with young families in recent years. The appeal of affordable vacations that foster family togetherness continues to attract many first-time buyers to this entry-level product. Owners who are satisfied with their first exposure to the RV lifestyle often become RV customers for life. For this reason, Fleetwood's resounding success in this product segment uniquely positions us to achieve future sales of more upscale Fleetwood products as buyers move up the product value chain.
    Over the years, the Coleman® brand has earned the distinction of being the most trusted name in outdoor recreation. The family of folding trailers manufactured by Fleetwood and marketed under the Coleman® brand name, proudly carries on this legacy, as evidenced by our industry-leading 36.9 percent market share in calendar 1999. The division's market leadership is rooted in its reputation as a high quality manufacturer and the industry innovator. Signature Coleman® design features such as the one-piece seamless ABS roof, the swing-level galley, the one-piece screen door, the stepper door and storage trunks have established Fleetwood as the premier company in the folding trailer business.

Fleetwood RV's are designed with innovative features that enhance outdoor recreation.

Long-term RV Business Prospects Look Favorable
Given the discretionary nature of an RV purchase, the variability of economic forces can cause significant short-term swings in RV buying activity. However, the long-term outlook for the RV market is supported by a broad foundation of powerful demographic changes and evolving lifestyle preferences, which we believe will stimulate strong RV demand for many years to come. A 1997 University of Michigan study indicated that a record 8.6 million U.S. households owned an RV, in large part due to baby boomers moving into the prime buying years for RV purchases. The study further showed that from 1993 to 1997, RV ownership expanded by 25 percent in households headed by boomers aged 45 to 54. These households now represent more than 45 percent of all RV owners, outnumbering the over-55 empty nesters that have traditionally dominated the RV market. More significantly, the study projected that RV ownership will rise from the 1997 level of 8.6 million households to 10.4 million by the year 2010, a gain of 21 percent, outpacing projected household growth of 15 percent. These powerful demographic trends make a compelling case for long-term RV industry growth, and present a tremendous opportunity for Fleetwood as the leader in the RV market.