314132--7/12/2007--FLEETWOOD_ENTERPRISES

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Investors or potential investors in us should carefully consider the risks described below. These risks are not the only ones we face. Additional risks of which we are presently unaware or that we currently consider immaterial may also impair our business operations and hinder our financial performance. We have had significant losses in the last seven fiscal years and 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. Ongoing weakness in the manufactured housing market and more recent weakness in the recreational vehicle market may continue to reduce the demand for our products. Global tensions and fuel shortages, higher prices for fuel, or rising interest rates could have a negative effect on consumer confidence and in turn diminish sales of our products, particularly recreational vehicles. Availability and cost of financing for our retailers or retail customers, particularly in our manufactured housing business, could continue to reduce our sales. We may be unable to comply in the future with financial tests and covenants in our senior secured credit facility, which could result in a default under that facility, in which event our lenders could accelerate our debt or take other actions that could restrict our ability to operate. We may not be able to obtain corporate 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. Our businesses are both cyclical and seasonal and this can lead to fluctuations in our operating results. When we introduce new products or enter into new business segments, we may incur expenses or consume liquidity that we did not anticipate, such as recall expenses, resulting in reduced earnings. Excess retail inventories of our products, especially in the recreational vehicle industry, and housing repossessions may have a negative effect on our sales volume and profit margins. The market price of our common stock has been volatile, and may decline again in the future. Our repurchase agreements with floorplan lenders could result in increased costs. If the frequency and size of product liability, wrongful death, and other claims against us increase, our business, results of operations and financial condition may be harmed. 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 lower sales volume and earnings for us, which could have an adverse effect on our results of operations and financial condition. Changes in consumer preferences for our products or our failure to gauge those preferences could lead to reduced sales and additional costs. We have offered and expect to continue to offer financial incentives from time to time that can negatively affect our operating results. We established a network of company-owned retail stores that we later sold because it was not profitable. We have not yet fully replaced the distribution network. The market for our manufactured homes is heavily concentrated in the southern part of the United States, especially in Florida and California, and a continued decline in demand in those areas could have a material negative effect on sales. Increased costs, including costs of component parts and labor, potentially affected by changes in labor rates and practices, could reduce our operating income. 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 lower our sales and profit margins. Zoning regulations affect the number of sites available for our manufactured homes, which in turn can affect our sales. Amendments of the regulations governing our businesses could have a material effect on our operations. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have an adverse effect on our business and stock price. Because we do not currently pay dividends on our common stock, we have the right to defer payment of distributions on the convertible trust preferred securities.

Full 10-K form ▸

314132--7/12/2007--FLEETWOOD_ENTERPRISES_INC/DE/