Secured Credit Facility:

On July 27, 2001, the Company entered into an agreement for a senior secured credit facility to be funded by a syndicate of lenders led by Bank of America. Prior to fiscal 2005, various amendments to the credit agreement were executed mainly to redefine several financial performance covenants and to reset financial covenants to preempt possible covenant defaults. During May 2004, the credit facility was renewed and extended until July 31, 2007. On March 2, 2005, the Company entered into an amendment to the facility to provide greater borrowing flexibility by establishing an overall limit on borrowings of $175 million, with an additional seasonal increase from December through April to $200 million. In addition, a provision for borrowing against inventory within the asset borrowing base was raised to $110 million, with a seasonal increase to $135 million for the December through April time period. The amendment also reset the cumulative EBITDA covenant requirements that could be invoked in the event that average monthly liquidity, defined as cash, cash equivalents and unused borrowing capacity, falls below $60 million within the borrowing subsidiaries or $90 million, including the parent company. Further, the interest rate for revolving loans under the line was increased slightly.

In May 2005, the borrowing base was supplemented by $15 million of additional real estate collateral provided to the bank group. Borrowings are secured by receivables, inventory and certain other assets, primarily real estate, and are used for working capital and general corporate purposes. In July 2005, the agreement governing the credit facility was further amended and restated, to incorporate prior amendments and increase total loan commitments to accommodate the previous $15 million addition to the revolver borrowing base and fund a new term loan collateralized by real estate in the amount of $22 million. These additions raised gross loan commitments to $212 million, with a seasonal uplift to $237 million from December through April. The loan commitments for both the addition to the revolver and the term loan were reduced on the first day of each fiscal quarter beginning on October 31, 2005, in the amounts of $750,000 and $785,715, respectively. As of April 30, 2006, after consideration of these reductions, the loan commitments for the revolver and the term loan stood at $213.5 million and $20.4 million, respectively. Our borrowing capacity, however, is governed by the amount of a borrowing base, consisting of inventories and accounts receivable, that fluctuates significantly from week to week. The borrowing base is revised weekly for changes in receivables and monthly for changes in inventory balances. At the end of the year, the borrowing base totaled $184 million. After consideration of standby letters of credit of $63.2 million and the outstanding borrowings, unused borrowing capacity was approximately $98.7 million. Under the amended facility, real estate with an approximate appraised value of $108 million is pledged as security. In November 2005, the facility was further amended to reset the designated EBITDA covenant requirements. On May 9, 2006, subsequent to fiscal year end, the facility was once again amended to authorize the Company, if it should elect to do so, to engage in certain financial transactions with respect to either the outstanding 6% convertible trust preferred securities of Fleetwood Capital Trust due 2028, or the 5% convertible senior subordinated debentures due 2012, including repurchases for up to $50 million in cash, incentivized conversions, or exchange offers. The May 2006 amendment also made refinements to the fixed-charge coverage ratio calculation that governs various pricing factors under the revolver that, in conjunction with the Company’s improved financial performance, resulted in a reduction in loan rates as of May 1, 2006.

The weighted average interest rate on these short-term borrowings was 8.9 percent and 7.0 percent at the end of fiscal 2006 and 2005, respectively.