FORM 10-K
                            
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
(Mark one)     
(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
     For the fiscal year ended December 31, 1998.
                                   OR
( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
     For the transition period from _____ to _____.

     Commission file number 1-7160

                        COACHMEN INDUSTRIES, INC.
          (Exact name of registrant as specified in its charter)

            Indiana                                    35-1101097
    (State of incorporation                (IRS Employer Identification No.)
        or organization)

             601 E. Beardsley Ave., Elkhart, Indiana  46514
          (Address of principal executive offices)  (Zip Code)

                             (219) 262-0123
           (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: 

 Common Stock, Without Par Value               New York Stock Exchange
       (Title of each class)                  (Name of each exchange on 
                                                   which registered)

      Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  X Yes _ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of the registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment hereto.  X 

While it is difficult to determine the number of shares owned by 
non-affiliates  (within the meaning of such term under the applicable 
regulations of the Securities and Exchange Commission), the registrant 
estimates that the aggregate market value of the registrant's Common Stock on
March 16, 1999 held by non-affiliates was $293.08 million (based upon the 
closing price on the New York Stock Exchange and an estimate that 90.3% of 
such shares are owned by non-affiliates).

As of March 16, 1999, 16,644,454 shares of the registrant's 
Common Stock were outstanding.

<PAGE>
Documents Incorporated by Reference

                                        Parts of Form 10-K into which
            Document                    the Document is Incorporated


Portions of the Proxy Statement for
the Annual Meeting of Shareholders
to be held on April 29, 1999                       Part III 

<PAGE>
                              Part I.

Item 1.  Business

Coachmen Industries, Inc. (the "Company" or the "Registrant") was 
incorporated under the laws of the State of Indiana on December 31, 1964, as 
the successor to a proprietorship established earlier that year.  All 
references to the Company include its wholly owned subsidiaries and divisions.

The Company is one of the largest full-line producers of recreational 
vehicles ("RVs") and is the largest builder of modular homes in the country. 
The Company's RVs are marketed under various brand names including Coachmen, 
Shasta, and Viking through approximately 1,300 independent dealers located in
49 states and internationally and through eight Company-owned dealerships.  
Modular homes are manufactured by the Company's All American Homes operation 
which sells homes through approximately 300 builders.  
     
The Company maintains approximately 59 trademarks, which are up for renewal 
from 1999 through 2008, and approximately 8 patents due to expire between 
2001 and 2015.  There are no material licenses, franchises, or concessions 
and no material foreign operations.

The Company operates primarily in two business segments, vehicles and 
housing.  The vehicle segment consists of the manufacture and distribution of
Class A and Class C motorhomes, travel trailers, fifth wheel trailers, 
camping trailers, truck campers, van campers, van and truck conversions and 
related parts and supplies.  The housing segment consists of factory produced
modular homes.

The table below sets forth the composition of the Company's net sales for 
each of the last three years (dollar amounts in thousands):

                            1998          1997          1996
                        Amount    %   Amount    %   Amount    %
   Vehicles:
    Motorhomes         $400,953  53  $346,435  52  $327,802  54  
    Travel Trailers     150,632  20   134,045  20   119,268  20    
    Camping Trailers     25,686   3    22,527   4    19,013   3     
    Truck Campers         3,673   1     4,593   1     2,306   1     
    Parts and Supplies   44,804   6    39,941   6    39,327   6    
        
     Total Vehicles     625,748  83   547,541  83   507,716  84   

   Housing              130,282  17   114,050  17    98,758  16    

     Total             $756,030 100  $661,591 100  $606,474 100  

   Note:  See Note 2 of Notes to Consolidated Financial Statements           
          regarding segment information on page 27.

<PAGE> 1
Vehicle Segment

The Vehicle Segment consists of recreational vehicles and parts and supplies.
The recreational vehicles consists of five divisions:  Coachmen Recreational 
Vehicle Company, Georgie Boy Mfg., Inc., Shasta Industries, Coachmen 
Automotive and Viking Recreational Vehicles, Inc.  Recreational vehicles are 
either driven or towed and serve as temporary living quarters for camping, 
travel and other leisure activities.  Recreational vehicles may be 
categorized as motorhomes, travel trailers, camping trailers or truck campers.
A motorhome is a self-powered mobile dwelling built on a special heavy-duty 
chassis.  A travel trailer is a mobile dwelling designed to be towed behind 
another vehicle.  Camping trailers are smaller towed units constructed with 
sidewalls that may be raised up and folded out.  Truck campers are designed 
to be mounted on the bed of a pickup truck.

The Company's principal brand names for its recreational vehicles are 
Coachmen, Shasta, Viking, Sportscoach, Santara, Catalina, Travelmaster, 
Cruise Air, Encounter, Cruise Master, Swinger, Pursuit, Custom Swinger, 
Starflyte, Dearborn, Jimmy, Greenbriar and Saratoga.  Other brand names 
the Company has protected and used and anticipates using in the future 
include Normandy, Cross Country, Pathfinder and Frolic.  

Parts and Supply consists of Viking Formed Products and The Lux Company, Inc.
("Lux") which provide a variety of products to the recreational vehicle and 
automotive industries, as well as other industries.  Viking Formed Products 
is a diversified manufacturer of fiberglass and thermoplastic parts, 
including fiberglass van camper tops, raised roofs for van conversions and 
ground effects produced at its Prodesign operations.  Additional products 
produced include plastic and fiberglass flared fenders, running boards and
lower front and rear moldings.  Lux  manufactures seating products for the 
recreational vehicle, office and healthcare industries.  The largest portion 
of Lux's sales are in the recreational vehicle seating category, including 
sofa beds, convertible pit groups, swivel chairs and ergonomic pilot seats.  
Lux also manufactures managerial, conference, guest and high-back executive 
chairs. Lux healthcare products encompass end-opening sofas and task chairs 
for laboratory and emergency care workers.

The Company currently produces recreational vehicles on an assembly line 
basis in Indiana, Michigan, Georgia and Oregon.  Components used in the 
manufacture of recreational vehicles are primarily purchased from outside 
sources.  However, in some cases (such as cushions, fiberglass products and 
furniture) where it is profitable for the Company to do so, or where the 
Company has experienced shortages of supplies, the Company has undertaken to 
manufacture its own supplies.  The Company depends on the availability of
chassis from a limited number of manufacturers.  Occasionally, chassis 
availability has limited the Company's production.  (See Note 11 of Notes to 
Consolidated Financial Statements on page 35 for information concerning the 
use of converter pool agreements to purchase vehicle chassis.)

The Company considers itself as being customer driven.  Sales and service 
representatives regularly visit dealers in their regions, and respond quickly
to questions and suggestions.  Divisions host dealer advisory groups and 
conduct informative dealer seminars and specialized training classes in areas
such as sales and service.  Open forum meetings with owners are held at 
campouts, providing ongoing focus group feedback for product improvements.  
Engineers and product development team members are encouraged to travel and
vacation in Company RVs to

<PAGE> 2 
gain a complete understanding and appreciation for the products.

The Company believes it has the ability to respond promptly to changes in 
market conditions.  Most of the manufacturing facilities can be changed over 
to the assembly of other existing products in two to six weeks.  In addition, 
these facilities may be used for other types of light manufacturing or 
assembly operations.  This flexibility enables the Company to adjust its 
manufacturing capabilities in response to changes in demand for its products.
    
Recreational vehicles are generally manufactured against orders received from
the Company's dealers.  Sales are seasonal with the highest level of sales 
occurring during the spring and summer months.  Agreements with most of its 
dealers are cancelable on short notice, provide for minimum inventory levels 
and establish sales territories.  No dealer accounts for more than 5% of the 
Company's net sales.

Most dealers' purchases of RVs from the Company are financed through "floor 
plan" arrangements.  Under these arrangements, a bank or other financial 
institution agrees to lend the dealer all or most of the purchase price of 
its RV inventory, collateralized by a lien on such inventory.  The Company 
generally executes repurchase agreements at the request of the financing 
institution.  These agreements provide that, for up to twelve months after a 
unit is financed, the Company will repurchase a unit which has been 
repossessed by the financing institution for the amount then due to the 
financing institution, which is usually less than 100% of the dealer's cost. 
Risk of loss resulting from these agreements is spread over the Company's 
numerous dealers and is further reduced by the resale value of the products 
repurchased. (See Note 11 of Notes to Consolidated Financial Statements on 
page 35.)  In 1998 the Company terminated its arrangement to guarantee 
certain obligations of dealers to a financial institution for purchases of 
the Company's products and no such guarantees exist at December 31, 1998.  
Over the past three years, the Company has not reported any significant 
losses from the repurchase agreements or the guarantee arrangement.  The 
Company does not finance retail consumer purchases of its products, nor does 
it generally guarantee consumer financing.

Housing Segment

The Company's principal brand name in its housing segment is All American 
Homes.  This segment is the largest producer of modular homes in the country 
and is composed of five All American Homes ("All American") operations 
strategically located in Indiana, Iowa, North Carolina, Ohio and Tennessee.  
Together these plants serve approximately 300 builders in 19 states.  

All American's modular homes are built to the same local building codes as 
site-built homes by skilled craftsmen in a factory environment unaffected by 
weather conditions.  Nearly complete when they leave the plant, modular homes
are delivered to their final location, typically in two to five sections, and
are crane set onto a waiting basement or crawl space foundation.  Production 
takes place on an assembly line, with components moving from workstation to 
workstation for framing, electrical, plumbing, drywall, roofing, and cabinet
setting, among other operations.  An average two-module home can be produced 
in just a few days.

<PAGE> 3
All American regularly conducts builder meetings to review the latest in new 
design options and component upgrades.  These meetings provide an opportunity
for valuable builder input and suggestions from their customers at the 
planning stage.  

Business Factors

Many RVs produced by the Company require gasoline for their operation.  
Gasoline has, at various times in the past, been difficult to obtain, and 
there can be no assurance that the supply of gasoline will continue 
uninterrupted, that rationing will not be imposed or that the price of, or 
tax on, gasoline will not significantly increase in the future.  Shortages of
gasoline and significant increases in gasoline prices have had a substantial 
adverse effect on the demand for RV's in the past and could have a material
adverse effect on demand in the future.  

The vehicle and housing businesses are dependent upon the availability of and
terms of the financing used by dealers and retail purchasers.  Consequently, 
increases in interest rates and the tightening of credit through governmental
action or other means have adversely affected the Company's business in the 
past and could do so in the future.  

Competition and Regulation

The RV and housing industries are highly competitive, and the Company has 
numerous competitors and potential competitors in each of its classes of 
products, some of whom have greater financial and other resources.  Initial 
capital requirements for entry into the manufacture of recreational vehicles 
or housing are comparatively small; however, codes, standards, and safety 
requirements introduced in recent years may deter potential competitors.  

Recreational vehicles, the largest portion of the Company's business, 
generally compete in the lower to mid-price range markets.  The Company 
believes it is a leader in the RV industry in its focus on quality.  A 
quality product and a strong commitment to competitive pricing are emphasized
by the Company in the markets it serves.  The Company estimates that its 
current share of the recreational vehicle market is in excess of nine percent.  
                                    
The Company continues to recognize its obligations to protect the environment
insofar as its operations are concerned.  To date, the Company has not 
experienced any material adverse effect from existing federal, state, or 
local environmental regulations.

Employees

At December 31, 1998, Coachmen employed 4,690 persons, of whom 887 were 
employed in office and administrative capacities.  The Company provides group
life, dental, vision service, hospitalization, and major medical plans under 
which the employee pays a portion of the cost.  In addition, employees can 
participate in a stock purchase plan and certain employees can participate in
the stock award and stock option plans.  The Company considers its relations 
with employees to be good.

Research and Development

During 1998, the Company spent approximately $4,076,000 on research related 
to the development of new products and improvement of existing products.  The
amounts spent in 1997 and 1996 were approximately $3,521,000 and $2,721,000, 
respectively.

<PAGE> 4
Item 2. Properties

The Registrant owns or leases 3,164,399 square feet of plant and office 
space, located on 1,178 acres, of which 2,246,853 square feet are used for 
manufacturing, 340,320 square feet are used for warehousing and distribution,
46,024 square feet are used for research and development, 69,644 square feet 
are used for customer service and 168,941 square feet are offices.  134,334 
square feet are leased to others and 158,283 square feet are available for 
sale or lease.  The Registrant believes that its present facilities, 
consisting primarily of steel clad, steel frame or wood frame construction 
and the machinery and equipment contained therein, are well maintained and in
good condition.

The following table indicates the location, number and size of the 
Registrant's properties by segment as of December 31, 1998:
                                   
                                                  No. of   Building Area
             Location                   Acreage  Buildings   (Sq. Ft.)

Properties Owned and Used by Registrant:

  Vehicles

     Elkhart, Indiana                     93.7       18       551,645
     Middlebury, Indiana                 518.6       33       763,230
     Fitzgerald, Georgia                  17.0        3        67,070
     Centreville, Michigan               105.0        4        84,865
     Edwardsburg, Michigan                83.0       12       303,254
     Colfax, North Carolina                4.0        2        14,000
     Stuart, Florida                       4.4        1        26,216
     Goshen, Indiana                      18.0        1        80,000
     Lake Park, Georgia                    8.0        1        11,720   
     Melbourne, Florida                    8.1        1        32,000
     Grants Pass, Oregon                  24.5        1        62,563
     Marietta, Georgia                     5.2        1        17,400
     
          Subtotal                       889.5       78     2,013,963
                                     
  Housing
     Decatur, Indiana                     43.3        4       286,500
     Dyersville, Iowa                     20.0        1       141,902
     Springfield, Tennessee               45.0        1       131,453
     Rutherfordton, North Carolina        37.8        1       131,497
     Zanesville, Ohio                     23.0        1       129,753

          Subtotal                       169.1        8       821,105

          Total owned                  1,058.6       86     2,835,068

<PAGE> 5   
                         Properties (continued)

Properties Leased and Used by Registrant:

  Vehicles

     Elkhart, Indiana                     1.6         1         8,000
     Wildwood, Florida                   10.0         1        14,414
     Banning, California                  3.0         1         2,700
     Ft. Myers, Florida                   3.1         1        10,400
     Colfax, North Carolina               1.5         1         1,200
     Grants Pass, Oregon                  9.4         -             -

          Subtotal                       28.6         5        36,714

Properties Owned by Registrant and Leased to Others:

  Vehicles

     Winter Garden, Florida               5.0         1        42,176
     Crooksville, Ohio                   10.0         2        39,310
     Grapevine, Texas                     5.0         4        52,848

          Subtotal                       20.0         7       134,334

Properties Owned by Registrant and Available for Sale or Lease: 

  Vehicles 

     Perris, California                  15.5         -             -
     Grapevine, Texas                     4.0         -             -
     Longview, Texas                      9.2         -             -

          Subtotal                       28.7         -             -
   
  Housing

     Montezuma, Georgia                  42.6         2       158,283

          Subtotal                       71.3         2       158,283
  
          Total                       1,178.4       100     3,164,399        
        
<PAGE> 6
Item 3.  Legal Proceedings                                              

From time to time, the Company is involved in certain litigation arising out 
of its operations in the normal course of business.  The Company believes 
that there are no claims or litigation pending, the outcome of which will 
have a material adverse effect on the financial position of the Company. 
                 
Item 4.  Submission of Matters to a Vote of Security Holders

No matters were submitted during the quarter ended December 31, 1998 to a 
vote of security holders.   

Executive Officers of the Registrant

The following table sets forth the executive officers of the Company, as of 
December 31, 1998:

       Name                         Position
  
  *Claire C. Skinner....Chairman of the Board and Chief Executive Officer

  *Keith D. Corson......President and Chief Operating Officer and Director

 **Gary L. Groom........Executive Vice President, Finance, Secretary and 
                        Director

  *Gene E. Stout........Executive Vice President, Corporate Development

   * Member of Finance Committee
  ** Resigned effective March 22, 1999 

Claire C. Skinner (age 44) has served as Chairman of the Board and Chief  
Executive Officer since August 1997.  Before that, Vice Chairman of the 
Company since May 1995, and served as Executive Vice President from 1990 to 
1995.  From 1987 through July 1997, Ms. Skinner served as the President of 
Coachmen RV, the Company's largest division.  Prior to that, she held several
management positions in operations and marketing since 1983.

Keith D. Corson (age 63) has served as President and Chief Operating Officer 
of the Company since November 1991.  From June 1991 to November 1991 he 
served in the position of Office of the President after rejoining the 
Company.  Mr. Corson was owner and President of Koszegi Products, a soft case
manufacturer for the eight years prior to June 1991.   He was a co-founder of
the Company in 1964, and served in several senior management positions from 
1964 until 1982, including President of the Company from 1978 until 1982.

Gene E. Stout (age 65) has served as Executive Vice President, Corporate 
Development of the Company since May 1983. From April 1982 to May 1983 he was
Senior Vice President Corporate Planning and Industry Relations.  Between 
1971 and 1982 he held various management positions with the Company.

<PAGE> 7
                                Part II

Item 5.  Market for Registrant's Common Equity
         and Related Stockholder Matters

The following table discloses the high and low closing prices for Coachmen's 
common stock during the past two years as reported on the New York Stock 
Exchange, along with information on dividends paid per share during the same 
periods.

                      High & Low Closing Prices              Dividends Paid
                     1998                 1997              1998        1997
       
1st Quarter   $28.75   - $20.375   $29.875  -$18.25         $.05        $.05 

2nd Quarter    30.00   -  23.4375   19.625  - 15.50          .05         .05

3rd Quarter    27.9375 -  17.3125   19.625  - 16.625         .05         .05

4th Quarter    26.250  -  16.00     22.625  - 19.00          .05         .05

The Company's common stock is traded on the New York Stock Exchange.
The number of shareholders of record as of January 31, 1999 was 1,718.

Item 6.  Selected Financial Data

                                Five-Year Summary of Selected Financial Data
                                       -Year Ended December 31-
 
                   1998         1997         1996         1995         1994  

 Net sales    $756,029,526 $661,591,185 $606,474,128 $515,862,065 $394,023,774 

 Net income     33,062,608   24,762,624   29,630,813*  17,549,400   14,784,094

Net income per share: 
   Basic              1.93         1.44         1.94*        1.18         1.00
   Diluted            1.92         1.42         1.91*        1.17         1.00

Cash dividends
   per share           .20          .20         .185          .14          .12

At year end:

   Total 
     assets    268,476,286  259,062,026  227,447,572  150,248,757  125,021,282

   Long-term 
     debt       10,191,476   12,591,144   14,841,262   12,117,756    7,023,394

*Net income and net income per share for 1996 includes $2,293,893 and $.15, 
respectively, for the cumulative effect of an accounting change (see Note 2 
of Notes to Consolidated Financial Statements).

<PAGE> 8
Item 7.  Management's Discussion and Analysis of Financial Condition and     
         Results of Operations

The following discussion should be read in conjunction with the Selected 
Financial Data and the Consolidated Financial Statements.

OVERVIEW

The Company was founded in 1964 as a manufacturer of RVs and began 
manufacturing modular homes in 1982.  Since that time, the Company has 
evolved into a market leader in both business segments through a combination 
of internal growth and strategic acquisitions.  

The Company's new plant openings have been an important component of its 
internal growth strategy.  In May 1995, the Company opened a new modular 
housing plant in Tennessee and in May 1996, the Company expanded its modular 
housing production capacity with the construction of a new facility for the 
North Carolina housing operation.  The construction of a new modular housing 
facility in Ohio, which began in late 1997, became fully operational in 
July 1998.  Increases in production capacity in 1998 also included an addition
to the modular housing plant in Iowa.  In March 1996, the Company increased
its RV production capacity by opening a new fifth wheel and conventional 
travel trailer plant in Oregon. Additional travel trailer plants in Indiana
became operational in December 1996 and May 1997.  These additional plants
helped capitalize on the growing market share of value-priced travel trailers.
Construction began in 1998 for a new manufacturing facility in Indiana for
Class A motorhomes.  This new facility is expected to be operational in
May 1999.

The Company's business segments are cyclical and subject to certain seasonal 
demand cycles and changes in general economic and political conditions.  
Demand in the RV and modular housing industries generally declines during the
winter season, while sales and profits are generally highest during the 
spring and summer months.  Inflation and changing prices have had minimal 
direct impact on the Company in the past in that selling prices and material 
costs have generally followed the rate of inflation.

RESULTS OF OPERATIONS  
Comparison of 1998 to 1997

Consolidated net sales for 1998 were $756.0 million, an increase of 14.3% 
over the $661.6 million reported in 1997.  The Company's vehicle segment, 
which includes the parts and supply businesses, experienced a sales increase 
of 14.3%, while the modular housing segment increased by 14.2%. Sales 
increases in the vehicle segment are attributed to improvements in capacity 
utilization, as well as, additions to capacity and overall growth in the 
recreational vehicle market.  Increased capacity in the Company's housing
segment also resulted in continued sales growth.  The Company's RV and 
housing segments experienced increases in both the number of units sold and 
the average sales price per unit.  Historically, the Company's first and 
fourth quarters are the slowest for sales in both segments.  See Note 12 of
Notes to Consolidated Financial Statements for unaudited interim financial 
information.

<PAGE> 9
Gross profit for the year increased to $109.9 million, or 14.5% of net sales,
from $92.8 million, or 14.0% of net sales in 1997.  The increase in gross 
profit for 1998 was primarily attributable to the increase in net sales.  The
increase in the gross profit percentage represents higher gross margins from
improvements in 1998 over the higher expenses associated with capacity start-
up costs incurred in the vehicle segment and costs associated with the 
implementation of a 7-day work week production schedule at the Company's
largest housing facility in 1997.

Operating expenses, which include selling, delivery, general and 
administrative expenses, were $64.0 million, or 8.5% of net sales in 1998,
compared with $57.5 million, or 8.7% of net sales in 1997.  Selling and
delivery expenses were $36.0 million, or 4.8% of net sales, in 1998
compared with $31.6 million, and 4.8% in 1997.  As a percentage of net sales,
both selling and delivery expenses remained relatively unchanged.  The 
increase in the cost dollars of selling and delivery expense is substantially
due to increased sales.  General and administrative expenses were $28.0
million, or 3.7% of net sales in 1998, compared with $25.9 million, or 3.9%
of net sales in 1997.  The administrative cost percentage decrease is 
primarily the result of increasing the Company's bad debt expense in 1997 by 
approximately $1.5 million to reflect a slowdown in the overall van conversion
industry.  The higher administrative cost dollars for 1998 are associated with
three acquired dealerships and to the ongoing implementation of an enterprise
computer system.

Operating income was $45.9 million in 1998 compared with $35.3 million in 
1997, an increase of 30.3%.  This increase is consistent with the overall 
increase in gross profit of $17.2 million which was partially offset by the 
$6.5 million increase in operating expenses.  The Company's vehicle segment 
produced operating income of $36.1 million, or 5.8% of vehicle net sales, 
compared with operating income of $26.7 million, or 4.9% of vehicle net sales
in 1997.  The modular housing segment generated operating income of $11.4
million in 1998 and $9.7 million in 1997, or 8.7% and 8.5%, respectively, of 
housing net sales. 

Interest expense decreased in 1998 to $1.7 million from $2.5 million in 1997.
Investment income decreased to $4.8 million from $5.0 million in 1997.  The
decrease in interest expense is substantially due to the settlement of 
examinations by the Internal Revenue Service during 1997.  Interest expense
varies with the amount of long-term debt and the increase in cash surrender
value of life insurance contracts.  These life insurance contracts, which
were purchased a number of years ago, fund obligations under deferred
compensation agreements with executives and other key employees.  The interest
costs associated with deferred compensation obligations and with the 
borrowings against the cash surrender value of the insurance policies are
partially offset by increases in cash surrender values.  The slight decrease
in investment income was partially due to interest income from the favorable
settlement of open state income tax examinations in 1997.  The balance of the
decrease in investment income is due to decreased cash and temporary cash
investments which were used in investing activities throughout 1998 and the
open market purchase of common shares for the treasury.

The net gain on the sales of properties decreased to $46,302 in 1998 from
$137,246 in 1997.  The variance reflects the result of the amount of gain or
loss recognized upon the disposition of various small properties.  Assets are
continually analyzed and every effort is made to sell or dispose of properties
that are determined to be unproductive.

<PAGE> 10
Pretax income was $50.3 million in 1998 compared with $38.8 million in 1997,
an increase of 29.5%.  The Company's vehicle segment produced pretax income
of $36.2 million, or 5.8% of vehicle net sales, compared with pretax income of
$26.5 million, or 4.8% of vehicle net sales in 1997.  The modular housing
segment generated pretax income of $11.2 million in 1998 and $9.3 million in
1997, or 8.6% and 8.2%, respectively, of housing net sales (see Note 2 of 
Notes to Consolidated Financial Statements).

The provision for income taxes was $17.2 million for 1998 and $14.1 million
for 1997, representing an effective tax rate of 34.3%, and 36.2%, 
respectively.  The lower effective rate in 1998 resulted from a large amount 
of preferred stock dividend income subject to partial exclusion from taxation 
and an increase in nontaxable Company-owned life insurance proceeds.  The 
Company's effective tax rate also fluctuates based upon the states where 
sales occur and also with the level of export sales. 

Net income for the year ended December 31, 1998 was $33.1 million compared 
with $24.8 million for the prior year. 

Comparison of 1997 to 1996

Consolidated net sales increased $55.1 million, or 9.1% to $661.6 million in 
1997 from $606.5 million in 1996.  The Company's vehicle segment, which 
includes the parts and supply group of companies, experienced a net sales 
increase of 7.8% while the housing segment had a net sales increase of 15.5%.
Sales increases in the vehicle segment reflected continued market share gains
in all product categories.  The increased capacity in the Company's housing 
segment also resulted in continued sales growth, as well as, gains in market
share.  Both vehicles and housing experienced increases in unit sales and in 
the average sales price per unit during 1997. 

Gross profit was $92.8 million and was 14.0% of net sales in 1997 compared to
$88.5 million and 14.6% reported for 1996. The increase in gross profit for 
1997 was primarily due to the increase in net sales. The decrease in the 
gross profit percentage represented lower gross margins associated with the 
housing segment from the Tennessee plant and the North Carolina expansion, as
well as, implementation of a 7-day workweek at the housing operation in 
Indiana. 

Operating expenses, consisting of selling, delivery, general and 
administrative expenses, were $57.5 million and $48.8 million, or as a 
percentage of net sales, 8.7% and 8.1% for 1997 and 1996, respectively.  
Selling and delivery expenses were $31.6 million in 1997, or 4.8% of net 
sales, compared with $27.7 million, or 4.6% in 1996.  The slight increase in 
selling expense was primarily due to increased dealer volume sales incentives
attributable to increased sales in the housing segment.  As a percentage of
net sales, delivery expenses remained relatively unchanged.  General and
administrative expenses were $25.9 million in 1997, or 3.9% of net sales, 
compared with $21.1 million or 3.5% of net sales in 1996.  In 1997, general
and administrative expenses included a $1.5 million increase in the bad debt
expense reflecting the downturn in the van conversion industry.  The Company's
parts and supply group primarily supplies componets to this industry.

Operating income was $35.3 million in 1997 compared with $39.7 million in 
1996, a decrease of 11.1%.  This decrease was consistent with the 

<PAGE> 11
$4.2 million increase in gross profit and the overall increase of $8.7 
million in operating expenses.  The Company's vehicle segment produced 
operating income of $26.7 million, or 4.9% of vehicle net sales, compared 
with operating income of $29.9 million, or 5.9% of vehicle net sales in 1996.
The modular housing segment generated 1997 operating income of $9.7 million 
in both 1997 and 1996, or 8.5% and 9.8%, respectively, of housing net sales.  

Interest expense for 1997 increased to $2.5 million, or .4% of net sales, 
from $1.6 million, or .3% of net sales in 1996.  Investment income for 1997 
increased to $5.0 million from $1.6 million in 1996.  The increase in 
interest expense was substantially due to the settlement of examinations by 
the Internal Revenue Service during the year, and was mostly offset with an 
increase in investment income from the favorable settlement of state income 
tax examinations.  The balance of the increase in investment income was
basically due to increased cash and short-term investments which were
generated by operating activities throughout 1997 and the sale of 2,070,000
shares of common stock in November 1996.

The gain on sale of properties decreased to $137,000 for 1997 from $726,000 
for 1996.  

Pretax income for the year ended 1997 was $38.8 million compared with $41.5 
million for 1996.  The Company's vehicle segment produced $26.5 million and 
$30.3 million of pretax income in 1997 and 1996, respectively.  The housing 
segment produced pretax income of $9.3 million in 1997 and $9.5 million in 
1996 (see Note 2 of Notes to Consolidated Financial Statements).     

The provision for income taxes was $14.1 million for both 1997 and 1996, 
representing an effective tax rate of 36.2% and 34.1%, respectively.  The 
lower effective tax rate in 1996 was due to the reversals of federal and 
state income tax accruals of $250,000 and $550,000, respectively, resulting 
from favorable settlements of tax examinations.

Net income for the year ended December 31, 1997 was $24.8 million compared to
$29.6 million for 1996. The prior year was favorably impacted by a $2.3 
million cumulative effect of an accounting change for Company-owned life 
insurance.  See Note 10 of Notes to Consolidated Financial Statements.

Liquidity and Capital Resources

The Company generally relies on funds from operations as its primary source 
of working capital and liquidity.  In addition, the Company maintains an 
unsecured committed line of credit, which totaled $30 million at December 31,
1998, to meet its seasonal working capital needs.  There were no borrowings 
against this line of credit during 1998, 1997 and 1996.  The Company's 
operating activities and the sale of common stock in 1996 have been the 
principal source of cash flows in each of the last three years.  Operating
cash flows were $14.0 million, for each of these years, net income, 
adjusted by certain noncash items such as depreciation, was a significant
factor in generating operating cash flows.  In 1998, net income and 
depreciation were significantly offset by an $18.8 million increase in 
inventories.  This increase in inventories was directly related to the 14.3%
increase in annual sales, including an 11.0% increase in fourth quarter sales
volume, as well as, 

<PAGE> 12
the acquisition of three dealerships during 1998.  In 1997, an increase in 
accounts payable and other current liabilities was basically offset by 
increases in receivables.  In 1996, net income was utilized to fund the 
increased inventory levels associated with higher sales and production.  
Investing activities used cash of $42.1 million, $27.1 million and $15.7 
million in 1998, 1997 and 1996, respectively.  In 1998 and 1997, purchases of
marketable securities, net of sales, used $16.3 million and $15.5 million of
cash flows.  Acquisitions of businesses consumed cash of $9.0 million in 1998
(see Note 9 of Notes to Consolidated Financial Statements).  Otherwise the 
principal use of cash for investing activities in each of the last three 
years has been property, plant and equipment acquisitions.  Major capital 
expenditures during 1998 included acquisitions, construction of and additions
to production facilities for both the vehicle and housing segments, as well 
as the capitalized cost of hardware and software associated with the ongoing
implementation of an enterprise computer system.  Major capital expenditures 
during 1997 were acquisitions of production facilities for the vehicle
segment, including properties previously leased, and initiating the
construction of a new facility in Ohio for the housing segment.  Major capital
expenditures during 1996 included an expansion in North Carolina (financed in
part by a $5.0 million industrial revenue bond) for the housing segment and a
plant opening in Oregon for the vehicle segment.  In 1998, the principal use 
of cash flows from financing activities was the $16.8 million used to 
purchase common shares under the Company's share repurchase programs.  Other 
financing activities, which used cash in each of the years, were payments of 
long-term debt and cash dividends.  These negative cash flows were partially 
offset by the issuance of common shares under stock option and stock purchase
plans.  Financing cash flows for 1996 included $48 million of proceeds from a 
public sale of the Company's common shares and $5 million of proceeds from 
the industrial revenue bond mentioned above.  For a more detailed analysis of
the Company's cash flows for each of the last three years, see the 
Consolidated Statements of Cash Flows.  The Company's cash and temporary cash
investments at December 31, 1998 were $23.0 million, or a decrease of $48.4 
million from 1997.  The Company anticipates that available funds, together 
with anticipated cash flows generated from future operations and amounts 
available under its line of credit will be sufficient to fund the Company's 
planned capital expenditures and other operating cash requirements through
the end of 1999.  In addition, the Company has $31.3 million of marketable
securities, which are invested in public utility preferred stocks under a 
dividend capture program.  These marketable securities can be converted to 
cash in a short time period.

In 1998, working capital decreased $.6 million, from $140.3 million to $139.7
million. The $4.5 million decrease in current assets at December 31, 1998 
versus December 31, 1997 was primarily due to the decrease in cash. The $4.0 
million decrease in current liabilities is substantially due to decreases in 
trade payables. 
 
Year 2000

The Year 2000 issue relates to the way computer systems, software and some 
equipment define calendar dates; they could fail or make miscalculations due 
to interpreting a date including "00" to mean 1900, not 2000.  In 1997, the 
Company determined that certain of its computer software was originally 
programmed using two digits rather than four to define the applicable year.  
As a result, this software could have been unable to process transactions 
beyond December 31, 1999. If correction 

<PAGE> 13
or replacement of the software was not completed in a timely manner, the Year
2000 issue could have a material impact on the Company's operations and could
result in an interruption in, or failure of, certain normal business 
activities or operations.

The assessment phase of the Company's software, systems and equipment began 
in 1997.  It was initially determined that the systems most likely to be 
affected by the Year 2000 issue were the general accounting systems and 
payroll.   To remedy the Year 2000 issue with regard to these areas, the 
Company began devoting significant resources to replace the affected software
with a new enterprise computer system.  It was decided that this enterprise 
computer system should also be implemented for the manufacturing processes.
The Company estimates the implementation status of general accounting systems
and payroll to be 100% complete for the testing phase and approximately 95%
complete for the implementation phase at December 31, 1998.  As of this date,
the implementation status for manufacturing processes is estimated to be 
approximately 70% complete for the vehicle segment and approximately 50% 
complete for the housing segment. Full testing and implementation of the new 
computer system for all divisions of the Company is occurring on an ongoing 
basis throughout 1999 and is expected to be complete in adequate time to 
enable proper processing of transactions throughout the Company before 
January 1, 2000. 

The Company also initiated a senior management focus team in 1998 to identify
and review other possible business system failures that could occur and to 
assess the need for contingency plans.  The focus team is in the process of 
determining if the Company's equipment with embedded systems is Year 2000 
compliant.  The focus team does not believe the Company's equipment is, for 
the most part, calendar-date sensitive.  Nonetheless, it has initiated an 
inventory of all such equipment, including telecommunications equipment and
facilities.  Those business systems considered most critical to continued
operations are being given the highest priority.

The Company believes the key risk factors associated with Year 2000 are those
from outside the Company that it cannot directly control, such as the 
readiness of its key material suppliers, dealers, customers, financial 
institutions and public infrastructure suppliers. The Company relies on third
parties to provide goods and services necessary for the manufacture and 
distribution of its products.  The focus team is in the process of 
identifying and communicating with third-party suppliers about the status of
their compliance with Year 2000.  As of December 31, 1998, the Company has not
received sufficient response from its thrid-party suppliers to determine the 
status of their readiness.  The Company sells its products to numerous 
independent dealers.  Management believes the risk associated with Year 2000
compliance by the dealers is minimized since the risk is spread among the 
dealers.  Due to the uncertainty of the Year 2000 readiness of third parties,
the Company is currently unable to determine whether the consequences of
Year 2000 failures of third parties will have a material impact on the 
Company's operations.  While the Company is working diligently to obtain 
assurance from its mission critical third parties that they will be 
compliant, there can be no assurance that the systems of any third party on 
which the Company's operations rely will be timely compliant.  Nevertheless, 
the Company does not anticipate a material impact on its operations from 
direct interfaces with third parties. The focus team is in the process of
assessing the risk and the need to develop contingency plans to address
potential disruptions that could be caused by third parties.

<PAGE> 14
The Company believes the worst case scenario for Year 2000 issues would be 
the disruption or unavailability of utility services.  This could hinder or 
stop the performance of normal business functions, such as manufacturing and 
selling, and might disrupt retail demand. However, due to the multiple 
business locations of the Company, its manufacturing facilities, and its 
owned and independent retail outlets, normal business functions could 
continue at those locations where utility disruptions or unavailability did
not occur.  If they do occur, it is expected they will be temporary, and
some utility services may be available from remote locations, as through
electric grids.  The focus team is in the process of determining whether a
contingency plan is feasible to mitigate worst case disruptions.  

The worst case scenario could include halting of production due to the 
inability of a single source supplier to deliver a critical product or 
component.  The Company is implementing a contingency plan to identify 
replacement suppliers if a key supplier is unable to adequately assure the 
Company that it will be compliant, and to closely monitor inventory levels of
critical components.  The largest exposure appears to be the Company's 
interface with chassis manufacturers for order processing.  The Company 
believes these order processing systems to be Year 2000 compliant based on 
statements from representatives of the companies involved.  The chassis 
suppliers have also advised the Company that the chassis are Year 2000
compliant.  

Based on a review of its products by segment, vehicles and housing, the 
Company has determined that the products it has sold and will continue to 
sell should not require remediation to be Year 2000 compliant.  Accordingly, 
the Company does not believe that the Year 2000 presents a material exposure 
as it relates to the Company's products. 

The objective of the Company and each of its operating subsidiaries is to 
have all of their significant business systems, including those that affect 
facilities and manufacturing activities, functioning properly with respect to
Year 2000, before January 1, 2000. The total cost is currently estimated to 
be in excess of $5.0 million, of which approximately $3.4 million has been 
incurred as of December 31, 1998.  Of the amount incurred, $.8 million has 
been expensed and $2.6 million has been capitalized for new systems and 
equipment. All costs are being funded through operating cash flows.  These 
costs do not include any costs associated with the implementation of 
contingency plans. If determined to be feasible, the Company intends to 
create its contingency plans by September 1999.  
 
Forward Looking Statements

This annual report contains certain statements that are "forward-looking" 
statements within the meaning of Section 27A of the Securities Act of 1933 
and Section 21E of the Securities Exchange Act of 1934, as amended.  These 
forward looking statements involve risks and uncertainties, and are dependent
on factors which may include, but are not limited to, the availability of 
gasoline, which can impact sales of recreational vehicles; availability of 
chassis, which are used in the production of many of the Company's 
recreational vehicle products; interest rates, which affect the affordability
of the Company's products; and also on the state of the recreational vehicle
and modular housing industries in the United States.  Other factors affecting
forward-looking statements include competition in these industries and 

<PAGE> 15
the Company's ability to maintain or increase gross margins which are 
critical to the profitability whether there are or are not increased sales; 
and the Company's ability to make its software and equipment year 2000 
compliant.

At times, the Company's actual performance differs materially from its 
projections and estimates regarding the economy, the recreational vehicle and
housing industries and other key performance indicators.  Readers of this 
Report are cautioned that reliance on any forward-looking statements involves
risks and uncertainties.  Although the Company believes that the assumptions 
on which the forward-looking statements contained herein are reasonable, any 
of those assumptions could prove to be inaccurate given the inherent
uncertainties as to the occurrence or nonoccurrence of future events.  There 
can be no assurance that the forward-looking statements contained in this 
Report will prove to be accurate.  The inclusion of a forward-looking 
statement herein should not be regarded as a representation by the Company 
that the Company's objectives will be achieved. 
  

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, operations of the Company are exposed to 
fluctuations in interest rates.  These fluctuations can vary the costs of 
financing and investing yields.  The Company has not utilized its line of 
credit facilities during the past three years and, accordingly, changes in 
interest rates would only impact the Company's long-term debt.  At 
December 31, 1998, the Company had $12.3 million of long-term debt, 
consisting of industrial development revenue bonds and promissory notes, all 
of which have variable or floating rates.  The Company's marketable securities
consist of public utilities preferred stocks which pay quarterly fixed rate
dividends.  These financial instruments are subject to market risk in that
changes in interest rates would impact the market value of the preferred 
stocks.  As discussed in Note 1 of the Notes to Consolidated Financial
Statements, the Company utilizes U.S. Treasury bond future options as a 
protection against the impact of increases in interest rates on the fair value
of the Company's investments in these fixed rate preferred stocks. 
Outstanding options are marked to market with market value changes
recognized in current earnings.  The U.S. Treasury bond futures options
generally have terms ranging from 90 to 180 days.  Based on the Company's
overall interest rate exposure at December 31, 1998, including variable or
floating rate debt and derivatives used to hedge the fair value of fixed
rate preferred stocks, a hypothetical 10 percent change in interest rates
applied to the fair value of the financial instruments as of December 31,
1998, would have no material impact on earnings, cash flows or fair values of
interest rate risk sensitive instruments over a one-year period.

<PAGE> 16
Item 8.  Financial Statements and Supplementary Data

Index to Financial Statements                                  Page

Financial Statements:
   Report of Independent Accountants                            17
   Consolidated Balance Sheets at December 31, 1998 and 1997   18-19
   Consolidated Statements of Income and Retained Earnings
     for the years ended December 31, 1998, 1997 and 1996       20
   Consolidated Statements of Cash Flows for the years
     ended December 31, 1998, 1997 and 1996                    21-22
   Notes to Consolidated Financial Statements                  23-36

Financial Statement Schedule:
   II - Valuation and Qualifying Accounts for the years
     ended December 31, 1998, 1997 and 1996                      37

All other schedules are omitted because they are not applicable
or the required information is shown in the financial statements 
or notes thereto.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Coachmen Industries, Inc.:

In our opinion, the consolidated financial statements listed in the 
accompanying index present fairly, in all material respects, the financial 
position of Coachmen Industries, Inc. and its subsidiaries at December 31, 
1998 and 1997, and the results of their operations and their cash flows for 
each of the three years in the period ended December 31, 1998, in conformity 
with generally accepted accounting principles. In addition, in our opinion, 
the financial statement schedule listed in the accompanying index presents
fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.  These
financial statements and financial statement schedule are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our 
audits.  We conducted our audits of these statements in accordance with 
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the 
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for the
opinion expressed above.

As discussed in Note 10 to the consolidated financial statements, effective 
January 1, 1996 the Company changed its method of accounting for its 
investments in life insurance contracts.

                                     /s/ PricewaterhouseCoopers LLP
                                     -------------------------------
                                         PricewaterhouseCoopers LLP 

South Bend, Indiana
January 29, 1999

<PAGE> 17
Coachmen Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 1998 and 1997

Assets 
                                                1998           1997    

CURRENT ASSETS
  Cash and temporary cash investments       $ 23,009,502   $ 71,427,918
  Marketable securities                       31,279,433     15,852,718
  Trade receivables, less allowance for  
   doubtful receivables 1998 - $768,000
   and 1997 - $1,354,000                      27,584,551     25,212,595
  Other receivables                            1,838,171      2,980,257
  Refundable income taxes                      3,741,000      1,761,000   
  Inventories                                 93,349,453     68,416,006
  Prepaid expenses and other                   1,341,175      1,247,973
  Deferred income taxes                        3,268,000      3,040,000
    
    Total current assets                     185,411,285    189,938,467

PROPERTY AND EQUIPMENT, at cost
  Land and improvements                       11,016,684      9,041,817
  Buildings and improvements                  53,761,414     39,950,161
  Machinery and equipment                     19,712,798     16,874,788
  Transportation equipment                    11,175,667     10,159,168
  Office furniture and fixtures                8,850,146      5,712,961
  
                                             104,516,709     81,738,895

  Less, Accumulated depreciation              41,444,585     35,137,268

                                              63,072,124     46,601,627

OTHER ASSETS
  Real estate held for sale                    2,622,218      4,188,063
  Rental properties                            1,371,915      2,000,218
  Intangibles, less accumulated amortization
   1998 - $516,913 and 1997 - $516,469         4,553,105      4,927,807
  Deferred income taxes                          579,000        569,000
  Other                                       10,866,639     10,836,844

                                              19,992,877     22,521,932
    
    TOTAL ASSETS                            $268,476,286   $259,062,026

The accompanying notes are a part of the consolidated financial statements.

<PAGE> 18
Liabilities and Shareholders' Equity
                                                 1998          1997

CURRENT LIABILITIES
  Current maturities of long-term debt       $  2,125,175  $  2,258,519
  Accounts payable, trade                      18,997,193    22,818,303
  Accrued wages, salaries and commissions       4,357,878     4,876,790
  Accrued dealer incentives                     3,783,628     3,226,255
  Accrued warranty expense                      6,138,081     6,013,528
  Accrued income taxes                          1,509,429     1,529,543
  Accrued insurance                             1,862,811     2,319,518
  Other accrued liabilities                     6,943,999     6,633,762

    Total current liabilities                  45,718,194    49,676,218

LONG-TERM DEBT                                 10,191,476    12,591,144
OTHER                                           7,108,956     6,658,872

    Total liabilities                          63,018,626    68,926,234

COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS' EQUITY
  Common shares, without par value: authorized
   60,000,000 shares; issued 1998 - 20,842,568
   shares and 1997 - 20,689,214 shares          89,105,324   87,519,740
  Additional paid-in capital                     3,866,398    3,012,596
  Retained earnings                            145,613,994  115,984,289
  Treasury shares, at cost, 1998 - 4,257,985
    shares and 1997 - 3,387,648 shares         (33,128,056) (16,380,833)

    Total shareholders' equity                 205,457,660   190,135,792

    TOTAL LIABILITIES AND 
      SHAREHOLDERS' EQUITY                    $268,476,286  $259,062,026

<PAGE> 19
Coachmen Industries, Inc. and Subsidiaries
Consolidated Statements of Income and Retained Earnings
for the years ended December 31, 1998, 1997 and 1996

                                         1998         1997         1996

Net sales                            $756,029,526  $661,591,185 $606,474,128
Cost of goods sold                    646,118,708   568,836,172  517,966,127
 
    Gross profit                      109,910,818    92,755,013   88,508,001
 
Operating expenses:
  Selling and delivery                 35,973,828    31,605,666   27,719,131
  General and administrative           28,009,137    25,889,028   21,116,814

                                       63,982,965    57,494,694   48,835,945 

    Operating income                   45,927,853    35,260,319   39,672,056

Nonoperating income (expense):
  Interest expense                     (1,738,608)   (2,544,021)  (1,572,092)
  Investment income                     4,831,102     4,975,360    1,615,442
  Gain on sale of properties, net          46,302       137,246      726,023
  Other income, net                     1,223,959       996,720    1,041,401
     
                                        4,362,755     3,565,305    1,810,774
    Income before income taxes
      and cumulative effect
      of accounting change             50,290,608    38,825,624   41,482,830 

Income taxes                           17,228,000    14,063,000   14,146,000   

    Income before cumulative effect
      of accounting change             33,062,608    24,762,624   27,336,830

Cumulative effect of accounting
  change for Company-owned life
  insurance policies                       -             -         2,293,983

    Net income                         33,062,608    24,762,624   29,630,813
 
Retained earnings,
  beginning of year                   115,984,289    94,670,593   67,824,816

Cash dividends (per common share:
  1998 - $.20, 1997 - $.20 and
  1996 - $.185)                        (3,432,903)   (3,448,928)  (2,785,036)
 
Retained earnings, end of year       $145,613,994  $115,984,289 $ 94,670,593

Earnings per common share:
  Income before cumulative
    effect of accounting change:
      Basic                          $       1.93  $       1.44  $       1.79
      Diluted                                1.92          1.42          1.76
  Net income:        
      Basic                                  1.93          1.44          1.94
      Diluted                                1.92          1.42          1.91

The accompanying notes are a part of the consolidated financial statements.

<PAGE> 20
Coachmen Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
for the years ended December 31, 1998, 1997 and 1996

                                         1998          1997          1996
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                         $ 33,062,608  $ 24,762,624  $ 29,630,813
  Adjustments to reconcile net 
    income to net cash provided by 
    operating activities:
      Depreciation                      7,573,730     6,696,517     5,487,528
      Amortization and write-off of
        intangibles                       374,702       136,106       135,592
      Provision for (recovery of) 
        doubtful receivables             (175,085)    1,616,801       158,024
      Net realized and unrealized 
        losses on marketable 
        securities and derivatives        902,073       194,663          -
      Gain on sale of properties, net     (46,302)     (137,246)     (726,023)
      Gain on insurance settlement           -             -         (393,014)
      Cumulative effect of 
        accounting change                    -             -       (2,293,983)
      Increase in cash surrender value
        of life insurance policies       (955,983)   (1,017,007)   (1,087,678)
      Deferred income taxes              (238,000)      171,000      (240,000)
      Other                              (202,691)      236,388       113,666
      Changes in certain assets and 
        liabilities, net of effect 
        of acquisitions:    
          Receivables, excluding 
            current portion of notes   (1,545,151)   (7,280,485)     (875,253)
          Inventories                 (18,847,990)      394,046   (11,077,327)
          Prepaid expenses and other      (93,202)     (317,729)      640,248 
          Accounts payable, trade      (3,821,110)    8,285,355    (3,902,614)
          Income taxes - accrued 
            and refundable             (2,000,114)    1,005,492    (1,711,749)
          Other current liabilities        16,544     1,987,375     1,447,503
              Net cash provided by 
                operating activities   14,004,029    36,733,900    15,305,733

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from:
    Sale of marketable securities     152,125,749    36,534,842          -
    Sale of properties                  4,103,886     1,644,501       925,452
    Insurance settlement                     -             -        2,821,014
  Acquisitions of:
    Marketable securities            (168,454,538)  (52,082,223)         -
    Property and equipment            (22,196,199)  (14,202,539)  (14,919,168)
    Real estate held for sale and
      rental properties                      -             -       (1,861,458)
    Businesses                         (9,001,812)         -       (1,852,596)
  Collections (advances) on notes 
    receivable, net                        97,906       553,399    (1,136,340)
  Other                                 1,232,961       417,304       305,732 
              Net cash (used in)
                investing activities  (42,092,047)  (27,134,716)  (15,717,364)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from long-term debt               -             -        5,000,000
  Payments of long-term debt           (2,533,012)   (2,270,118)   (2,092,447)
  Sale of common stock, net of 
    offering expenses                        -             -       47,970,779
  Issuance of common shares under 
    stock option and stock 
    purchase plans                      1,585,584     1,271,698     1,126,061
  Tax benefit from stock 
    options exercised                     814,175       654,681       620,431
  Cash dividends paid                  (3,432,903)   (3,448,928)   (2,785,036)
  Purchases of common shares 
    for treasury                      (16,764,242)     (827,500)         -
              Net cash provided by 
               (used in) financing 
               activities             (20,330,398)   (4,620,167)   49,839,788 

<PAGE> 21
Consolidated Statements of Cash Flows (Concluded)
for the years ended December 31, 1998, 1997 and 1996

                                        1998           1997          1996
Increase (decrease) in cash and 
    temporary cash investments       (48,418,416)     4,979,017    49,428,157 

CASH AND TEMPORARY CASH INVESTMENTS
  Beginning of year                   71,427,918     66,448,901    17,020,744

  End of year                        $23,009,502   $ 71,427,918  $ 66,448,901

Supplemental disclosures of cash flow
  information:
    Cash paid during the year for:
      Interest                       $ 1,708,500   $  1,272,000  $  2,018,000 
      Income taxes                    19,070,700     13,142,000    15,628,000

The accompanying notes are a part of the consolidated financial statements.
                                           
<PAGE> 22
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

1.  NATURE OF OPERATIONS AND ACCOUNTING POLICIES.

Nature of Operations - Coachmen Industries, Inc. and its subsidiaries (the 
"Company") manufacture a full line of recreational vehicles and van 
conversions through seven divisions with manufacturing facilities located in 
Indiana, Georgia, Michigan and Oregon. These products are marketed through a 
nationwide dealer network. The Company's housing segment, with locations in 
Indiana, Iowa, North Carolina, Ohio and Tennessee, supply modular housing to 
builder/dealers in nineteen adjoining states.

Principles of Consolidation - The accompanying consolidated financial 
statements include the accounts of Coachmen Industries, Inc. and its 
subsidiaries, all of which are wholly owned.

Use of Estimates in the Preparation of Financial Statements - The preparation
of financial statements in conformity with generally accepted accounting 
principles requires management to make estimates and assumptions that affect 
the reported amounts of assets and liabilities and disclosure of contingent 
assets and liabilities at the date of the financial statements and the 
reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.

Revenue Recognition - Sales are recognized as revenue upon shipment.

Cash Flows and Noncash Activities - For purposes of the consolidated 
statements of cash flows, cash and temporary cash investments include cash, 
cash investments and any highly liquid investments purchased with original 
maturities of three months or less. In connection with business acquisitions 
in 1998, the Company assumed $800,000 of liabilities of the sellers (see 
Note 9). For each of the three years in the period ended December 31, 1998, 
the Company issued common shares with a market value of $56,646, $67,276 and
$55,665, respectively, in lieu of cash compensation. The Company recognizes a
tax benefit in additional paid-in capital from exercise of stock options (see
Note 6).

Concentrations of Credit Risk - Financial instruments which potentially 
subject the Company to credit risk consist primarily of cash and temporary 
cash investments and trade receivables.

At December 31, 1998 and 1997, cash and temporary cash investments include 
approximately $11.5 million and $42.8 million, respectively, invested in 
variable rate demand notes with a seven-day put option. In addition, cash and
temporary cash investments include $9.6 million and $28.1 million invested in
a money market mutual fund at December 31, 1998 and 1997, respectively.

The Company has a concentration of credit risk in the recreational vehicle 
industry, although there is no geographic concentration of credit risk. The 
Company performs ongoing credit evaluations of its customers' financial 
condition and sales to its recreational vehicle dealers are generally subject
to preapproved dealer floor plan financing whereby the Company is paid upon 
delivery or shortly thereafter. The Company generally requires no collateral 
from its customers. Future credit losses are provided for currently through
the allowance for doubtful receivables and actual credit losses are charged 
to the allowance when incurred.

<PAGE> 23
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.

Marketable Securities - Marketable securities consist of public utility 
preferred stocks which pay quarterly cash dividends. The preferred stocks are
part of a dividend capture program whereby preferred stocks are bought and 
held for the purpose of capturing the quarterly preferred dividend. The 
securities are then sold and the proceeds reinvested again in preferred 
stocks. The Company's dividend capture program is a tax planning strategy to 
maximize dividend income which is 70% excludable from taxable income under
the Internal Revenue Code and related state tax provisions.  As a result, a
dividend recapture program generally provides a higher after-tax return than
other short-term investment alternatives.  The Company accounts for its 
marketable securities under Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," which requires certain securities to be categorized as either
trading, available-for-sale or held-to-maturity.  The Company's marketable
securities at December 31, 1998 and 1997 are classified as availabale-for-
sale and, accordingly, are carried at fair value with net unrealized
appreciation (depreciation) recorded as a separate component of shareholders'
equity.  At December 31, 1998 and 1997, the cost of marketable securities
approximated their fair value and, accordingly, the Company recognized no
unrealized appreciation (depreciation).  The cost of securities sold is
determined by the specific identification method.

The Company utilizes U.S. Treasury bond futures options as protection against
the impact of increases in interest rates on the fair value of the Company's 
investments in marketable securities (fixed rate preferred stocks). The 
options are marked to market with market value changes recognized in the 
statements of income in the period of change.

Investment income consists of the following: 

                                       1998            1997           1996

  Interest income                   $3,184,394      $4,602,030     $1,615,442
  Dividend income on 
    preferred stocks                 2,548,781         567,993           -
  Net realized gains (losses) 
    on sale of preferred stocks       (119,806)        206,569           -
  Net realized losses on closed U.S.
    Treasury bond futures options     (596,691)       (401,232)          -
  Unrealized losses on open U.S.
    Treasury bond futures options     (185,576)           -              -   

       Total                        $4,831,102      $4,975,360     $1,615,442

Fair Value of Financial Instruments - The carrying amounts of cash and 
temporary cash investments, receivables and accounts payable approximated 
fair value as of December 31, 1998 and 1997, because of the relatively short 
maturities of these instruments. The carrying amount of long-term debt, 
including current maturities, approximated fair value as of December 31, 1998
and 1997, based upon terms and conditions currently available to the Company 
in comparison to terms and conditions of the existing long-term debt.  The
Company has investments in life insurance contracts to fund obligations under
deferred compensation agreements (see Note 7). At December 31, 1998 and 1997,
the carrying amount of these policies, which equaled their fair value, was 
$10.6 million and $9.9 million, respectively (cash surrender values of $24.3 
million and $22.6 million, net of $13.7 million and $12.7 million of policy 
loans, respectively).

<PAGE> 24
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued     

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.
    
At December 31, 1998, the carrying amounts of U.S. Treasury bond futures
options, which aggregated $131,485, represented fair value since these
futures options are marked to market at the end of each reporting period.

Inventories - Inventories are valued at the lower of cost (first-in, first-
out method) or market.

Property and Equipment - Depreciation is computed by the straight-line method
on the costs of the assets, at rates based on their estimated useful lives as
follows: land improvements 3-15 years; buildings and improvements 10-30 
years; machinery and equipment 3-10 years; transportation equipment 2-7 
years; and office furniture and fixtures 2-10 years.  Upon sale or retirement
of property and equipment, including real estate held for sale and rental 
properties, the asset cost and related accumulated depreciation is removed
from the accounts and any resulting gain or loss is included in income.

Real Estate Held For Sale - Real estate held for sale represents real 
properties which are carried at the lower of estimated realizable value or 
cost less accumulated depreciation. As of December 31, 1998 and 1997, the 
carrying value of real estate held for sale (and the related accumulated 
depreciation) aggregated $2,742,169 ($119,951) and $4,451,596 ($263,533), 
respectively.

Rental Properties - Rental properties represent owned facilities which are 
currently leased to others under lease agreements with expiring terms through
August 31, 2002. Certain of the lease agreements contain options for the 
lessee to renew the lease or purchase the facilities. Lease income for the 
years ended December 31, 1998, 1997 and 1996 aggregated $239,103, $302,931 
and $256,855, respectively. Future minimum annual lease income under these 
lease agreements is as follows: 1999 - $337,250, 2000 - $186,000, 2001 - 
$186,000 and 2002 - $124,000.  The rental properties are carried at cost less
accumulated depreciation, which is not in excess of net realizable value.  
The rental properties are depreciated by the straight-line method over the
estimated useful lives of the assets (15 - 20 years).  At December 31, 1998
and 1997, the cost of rental properties (and the related accumulated 
depreciation) aggregated $2,259,991 ($888,076) and $2,859,991 ($859,773),
respectively.

Intangibles - Intangibles represent the excess of cost over the fair value of
net assets of businesses acquired ("goodwill"), and are being amortized over 
a 40-year period by the straight-line method.

Evaluation of Impairment of Long-Lived Assets - In accordance with SFAS 
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived 
Assets to be Disposed Of," the Company evaluates the carrying value of long-
lived assets whenever significant events or changes in circumstances indicate
the carrying value of these assets may be impaired. The Company evaluates 
potential impairment of long-lived assets by comparing the carrying value of 
the assets to the expected net future cash inflows resulting from use of the 
assets.  During the year ended December 31, 1998, the Company determined 
because of recurring losses and a forecast of negative undiscounted future 
cash flows that the carrying value of goodwill of one of its Company-owned 
dealerships was impaired. Accordingly, the Company charged-off the $238,596 
of remaining unamortized goodwill.

<PAGE> 25
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Concluded.

Income Taxes - The provision for income taxes is based on income recognized 
for financial statement purposes and includes the effects of temporary 
differences between such income and that recognized for tax return purposes. 
Deferred tax assets and liabilities are established for the expected future 
tax consequences of events that have been included in the financial 
statements or tax returns using enacted tax rates in effect for the years in 
which the differences are expected to reverse.

Research and Development Expenses - Research and development expenses charged
to operations were approximately $4,706,000, $3,521,000 and $2,721,000 for 
the years ended December 31, 1998, 1997 and 1996, respectively.

Warranty Expense - The Company accrues an estimated warranty liability at the
time the warranted products are sold.

Stock-Based Compensation - The Company has adopted the disclosure only 
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," and, 
accordingly, accounts for its stock option plan under the provisions of 
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to 
Employees."

Comprehensive Income - The Company adopted the provisions of SFAS No. 130, 
"Reporting Comprehensive Income," effective January 1, 1998. The adoption of 
SFAS No. 130 had no impact on the Company's consolidated financial statements
since there are no components of comprehensive income that are not already 
included in net income.

Business Segments - In 1998, the Company adopted SFAS No. 131, "Disclosures 
about Segments of an Enterprise and Related Information." SFAS No. 131 
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business 
Enterprise," and changes how segments are defined for disclosure purposes to 
reflect the way internal information is used by management to make operating 
decisions and assess performance of the enterprise's reportable segments. The
adoption of SFAS No. 131 did not affect results of the operations or 
finanacial position but did affect the disclosure of segment information (see
Note 2).

New Accounting Pronouncement - On June 15, 1998, the Financial Accounting 
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments 
and Hedging Activities. SFAS No. 133 is effective for all fiscal quarters of 
fiscal years beginning after June 15, 1999 (January 1, 2000 for the Company).
SFAS No. 133 requires that all derivative instruments be recorded on the 
balance sheet at their fair value. Changes in the fair value of derivatives 
are recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company utilizes U.S. 
Treasury bond futures options, which are derivative instruments, and changes 
in market value are recognized in current earnings. Accordingly, management 
of the Company anticipates that, due to its limited use of derivative 
instruments and the fact that changes in fair value are currently recognized 
in earnings, that the adoption of SFAS No. 133 will not have a significant 
effect on the Company's financial statements.

<PAGE> 26
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

2. SEGMENT INFORMATION.

In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an 
Enterprise and Related Information". The Company has determined that its 
reportable segments are those that are based on the Company's method of 
internal reporting, which disaggregates its business by product category. The
Company's two reportable segments are: Vehicles (recreational, vans and 
specialized), including related parts and supplies, and Housing (modular). 
The Company evaluates the performance of its segments and allocates resources
to them based on pretax income.   The accounting policies of the segments are
the same as those described in Note 1 and there are no inter-segment revenues.
Differences between reported segment amounts and corresponding consolidated
totals represent corporate expenses for administrative functions and costs
or expenses relating to property and equipment that are not allocated to
segments.  

The table below presents information about segments used by the chief 
operating decision maker of the Company for the years ended December 31:

                                     1998            1997           1996
    Net sales:  
         Vehicles                $625,747,168    $547,540,761   $507,715,622 
         Housing                  130,282,358     114,050,424     98,758,506

           Consolidated total    $756,029,526    $661,591,185   $606,474,128

    Pretax income:
         Vehicles                $ 36,155,968    $ 26,489,637   $ 30,315,135
         Housing                   11,163,896       9,332,259      9,475,743
         Other reconciling items    2,970,744       3,003,728      1,691,952

           Consolidated total    $ 50,290,608    $ 38,825,624   $ 41,482,830

    Total assets:
         Vehicles                $141,657,538    $114,171,173   $109,701,864
         Housing                   38,948,016      30,161,106     31,406,963
         Other reconciling items   87,870,732     114,729,747     86,338,745

           Consolidated total    $268,476,286    $259,062,026   $227,447,572

The following specified amounts are included in the measure of segment pretax
income or loss reviewed by the chief operating decision maker:

                                     1998            1997          1996

    Interest expense:
         Vehicles                $    474,377    $    554,739   $    569,491
         Housing                      354,564         423,641        259,928
         Other reconciling items      909,667       1,565,641        742,673

            Consolidated total   $  1,738,608    $  2,544,021   $  1,572,092

    Depreciation:
         Vehicles                $  4,216,336    $  3,657,050   $  2,931,270
         Housing                    2,582,548       2,477,634      2,140,587
         Other reconciling items      774,846         561,833        415,671

           Consolidated total    $  7,573,730    $  6,696,517   $  5,487,528

<PAGE> 27
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

3.  INVENTORIES.

    Inventories consist of the following:
                                                     1998            1997

      Raw materials                              $29,691,805    $ 19,437,977
      Work in process                             11,511,459       9,327,308
      Finished goods                              52,146,189      39,650,721

        Total                                    $93,349,453    $ 68,416,006

4.  SHORT-TERM BORROWINGS.

At December 31, 1998 and 1997, the Company has an unsecured bank line of 
credit aggregating $30 million with interest on outstanding borrowings 
payable monthly at a rate of LIBOR plus a margin of .50% to .75%. There were 
no outstanding borrowings under this bank line of credit during 1998, 1997 
and 1996.

5:  LONG-TERM DEBT.

    Long-term debt consists of the following:
                                                    1998           1997
      Obligations under industrial development 
      revenue bonds, variable rates, with
      various maturities through 2011            $ 8,500,000    $ 9,807,836

      Promissory notes payable, issued or
      assumed in the acquisition of a business,
      principal payable in annual installments
      through January 2001, interest payable
      monthly at the prime rate (7.75% at
      December 31, 1998), unsecured                3,816,651      5,041,827

        Total                                     12,316,651     14,849,663

       Less, Current maturities                    2,125,175      2,258,519

        Long-term debt                           $10,191,476    $12,591,144

Aggregate maturities of long-term debt for each of the next five years ending
December 31 are as follows: 1999 - $2,125,175; 2000 - $1,825,174; 2001 - 
$1,766,302; 2002 - $400,000 and 2003 - $400,000.

In connection with four of its industrial development revenue bond 
obligations, the Company obtained, as a credit enhancement for the 
bondholders, irrevocable letters of credit in favor of the bond trustees. 
The agreements relating to these letters of credit contain, among other 
provisions, certain covenants relating to required amounts of working capital
and net worth and the maintenance of certain required financial ratios.

6. COMMON STOCK MATTERS AND EARNINGS PER SHARE.

Stock Offering

In November 1996, the Company completed a public stock offering consisting of
2,070,000 shares of its common stock at $24.50 per share. Net of underwriting
fees and offering expenses, proceeds to the Company aggregated $48 million.

<PAGE> 28
Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

6. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

Stock Award Program

On October 19, 1998, the Board of Directors approved a Stock Award Program 
which provides for the awarding to key employees of up to 109,000 shares of 
common stock from shares reserved under the Company's stock option plan. On 
December 1, 1998, the Company awarded 63,600 shares to certain employees, 
subject to the terms, conditions and restrictions of the award program. 
The shares are issuable in four annual installments of 25% beginning one year
from the date of grant. The Company will recognize compensation expense over
the term of the awards.

Stock Option Plan

The Company's stock option plan provides for the granting of options to 
eligible key employees to purchase common shares. Under terms of the plan, 
the Company may grant incentive stock options or non-qualified stock options.
The option price for options granted to key employees is an amount per share 
of not less than the fair market value per share on the date of granting the 
option. No such options may be exercised during the first year after grant, 
and are exercisable cumulatively in four installments of 25% each year 
thereafter.

The following table summarizes stock option activity:
                                                                   Weighted-
                                                                    Average
                                                   Number          Exercise
                                                 of Shares           Price

  Outstanding, January 1, 1996                     574,900          $ 6.95
   Granted                                         251,800           12.61   
   Canceled                                        (14,100)           7.65
   Exercised                                      (165,500)           5.88

 Outstanding, December 31, 1996                    647,100            9.36
   Granted                                         222,550           19.53
   Canceled                                        (47,700)          11.81
   Exercised                                      (147,425)           6.94

 Outstanding, December 31, 1997                    674,525           13.07
   Granted                                         176,900           24.46
   Canceled                                        (51,875)          11.05
   Exercised                                      (138,412)           9.19

 Outstanding, December 31, 1998                    661,138           16.77

Options outstanding at December 31, 1998 are exercisable at prices ranging   
from $6.44 to $27.13 per share and have a weighted average remaining 
contractual life of 2.74 years. The following table summarizes information 
about stock options outstanding at December 31, 1998.

<PAGE> 29
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

6. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

                            Options Outstanding         Options Exercisable
                                  Weighted-   
                       Number      Average  Weighted-   Number      Weighted-
                  Outstanding at  Remaining  Average Exercisable at  Average
      Range of      December 31, Contractual Exercise December 31,   Exercise 
   Exercise Price        1998       Life       Price       1998        Price    
        
   $ 6.44 -  9.00      138,700        .9      $ 8.01     114,600       $ 8.01
     9.01 - 15.00      120,975       2.1       11.03      60,488        11.03
    15.01 - 25.00      237,763       3.2       19.40      67,578        19.35
    25.01 - 27.13      163,700       4.1       24.62         250        27.13
                                                                        
                       661,138                           242,916

At December 31, 1997 and 1996, there were exercisable options to purchase 
209,181 and 178,638 shares at weighted-average exercise prices of $8.97 and 
$6.62, respectively. The weighted-average grant-date fair value of options 
granted during the years ended December 31, 1998, 1997 and 1996 was $6.99, 
$4.81 and $3.08, respectively. As of December 31, 1998, 423,625 shares were 
reserved for the granting of future stock options and awards, compared with 
612,250 shares at December 31, 1997.

Had the Company adopted the provisions of SFAS No. 123, "Accounting for 
Stock-Based Compensation," the Company's net income and net income per share 
would have been:
                                         1998         1997         1996

   Pro forma net income               $32,656,000  $24,533,000  $29,512,000
   Pro forma net income per share:
     Basic                                   1.91         1.42         1.93
     Diluted                                 1.89         1.41         1.90   

The pro forma amounts and the weighted-average grant-date fair-value of 
options granted were estimated using the Black-Scholes option-pricing model 
with the following assumptions:
                                            1998         1997        1996

   Risk free interest rate                  5.04%        6.00%       6.00%
   Expected life                         2.75 years   2.75 years   2.75 years
   Expected volatility                      37.9%        30.7%       30.7%
   Expected dividends                        1.0%         1.2%        1.2%

Stock Purchase Plan

The Company has an employee stock purchase plan under which a total of 
547,141 shares of the Company's common stock are reserved for purchase by 
full-time employees through payroll deductions, cash payments, or a 
combination of both at a price equal to 90% of the market price of the 
Company's common stock on the purchase date. As of December 31, 1998, there 
were 317 employees actively participating in the plan. Since its inception, a
total of 252,859 shares have been purchased by employees under the plan. 
Certain restrictions in the plan limit the amount of payroll deductions and
cash payments an employee may make in any one quarter.  There are also 
limitations as to the amount of ownership in the Company an employee may 
acquire under the plan.

<PAGE> 30
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

6. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted 
average number of shares of common stock outstanding during the period. 
Diluted earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding plus the dilutive effect
of stock options and stock awards. The number of shares used in the 
computation of basic and diluted earnings per share are as follows:

                                 1998           1997           1996

           Basic              17,131,846     17,238,353     15,280,578
           Diluted            17,260,768     17,401,402     15,494,731

   Changes in Common Shares, Additional Paid-In Capital and Treasury Shares
       
                                                    Additional
                                          Common      Paid-in      Treasury 
                                          Shares      Capital       Shares

     Balance, January 1, 1996          $37,151,202  $ 1,664,889  $(15,603,679)

     Sale of 2,070,000 common shares, 
        net of offering expenses        47,970,779         -             -

     Issuance of 9,472 common
        shares under employee
        stock purchase plan                152,646         -             -
 
     Issuance of 4,008 common
        shares from treasury                  -          28,423        27,242
                                        
     Issuance of 165,500 common
        shares upon the exercise 
        of stock options                   973,415         -             -

     Tax benefit from exercise
        of stock options                      -         620,431          -   

     Balance, December 31, 1996         86,248,042    2,313,743   (15,576,437)

     Issuance of 14,145 common
        shares under employee
        stock purchase plan                249,144         -             -

     Issuance of 3,348 common     
        shares from treasury                  -          44,172        23,104

     Issuance of 147,425 common
        shares upon the exercise
        of stock options                 1,022,554         -             -

     Acquisition of 50,000 common
        shares for treasury                   -            -         (827,500)

     Tax benefit from exercise
         of stock options                     -         654,681          -   

     Balance, December 31, 1997         87,519,740    3,012,596   (16,380,833)

<PAGE> 31
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

6. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Concluded.

                                                    Additional
                                          Common      Paid-in      Treasury 
                                          Shares      Capital       Shares
     Issuance of 14,942 common
        shares under employee
        stock purchase plan                312,949         -             -

     Issuance of 2,491 common
        shares from treasury                  -          39,627        17,019

     Issuance of 138,412 common
        shares upon the exercise
        of stock options                 1,272,635         -             -

     Acquisition of 872,828 common
        shares for treasury                   -            -      (16,764,242)

     Tax benefit from exercise
         of stock options                     -         814,175          -  

     Balance, December 31, 1998        $89,105,324  $ 3,866,398  $(33,128,056)

       Shareholder Rights Plan

On January 19, 1990, the Board of Directors adopted a shareholder rights plan
and declared a dividend distribution of one common share purchase right on 
each outstanding common share. Such rights only become exercisable, or 
transferable apart from the common shares, (i) ten days after a person or 
group of persons ("Acquiring Person") acquires or obtains the right to 
acquire beneficial ownership of 20% or more of the Company's common shares or
(ii) ten business days (or such later date established by the Board) following
the commencement of a tender offer or exchange offer for 20% or more of the
Company's common shares.  Upon the occurence of certain events and after the
rights become exercisable, each right would, subject to certain adjustments
and alternatives, entitle the rightholder to purchase the number of common
shares of the Company or the acquiring company having a market value of twice
the $15 exercise price of the right (except that the Acquiring Person would
not be able to purchase common shares of the Company on these terms).  The
rights are nonvoting, may be redeemed by the Company at a price of $.005 per
right at any time prior to the date on which an Aquiring Person acquires 20%
or more of the Company's common shares and expire February 15, 2000.

7. INCENTIVE AND DEFERRED COMPENSATION PLANS.

The Company has incentive compensation plans for its officers and other key 
management personnel. The amounts charged to expense for the years ended 
December 31, 1998, 1997 and 1996 aggregated $3,345,719, $2,870,270 and 
$2,662,668, respectively.

The Company has established a deferred compensation plan for executives and 
other key employees. The plan provides for benefit payments upon termination 
of employment, retirement, disability, or death. The Company recognizes the 
cost of this plan over the projected service lives of the participating 
employees based on the present value of the estimated future payments to be

<PAGE> 32
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

7. INCENTIVE AND DEFERRED COMPENSATION PLANS, Concluded.

made. The plan is funded by insurance contracts on the lives of the 
participants, and investments in insurance contracts (included in other 
assets) aggregated $10.6 million and $9.9 million as of December 31, 1998 and
1997, respectively. The deferred compensation obligations, which aggregated 
$7,323,221 and $6,913,896 as of December 31, 1998 and 1997, respectively, are
included in other non-current liabilities, with the current portion 
($335,351 and $341,514 at December 31, 1998 and 1997, respectively) included
in other accrued liabilities.  

All full-time employees of the Company (subject to certain eligibility 
restrictions) are eligible to participate in the Coachmen Assisted Retirement
For Employees (C.A.R.E.) program which provides a mechanism for each eligible
employee to establish an individual retirement account and receive matching 
contributions from the Company based on the amount contributed by the 
employee, the employee's years of service and the profitability of the 
Company. Company matching contributions charged to expense under the C.A.R.E.
program aggregated $856,689, $724,541 and $704,173 for the years ended 
December 31, 1998, 1997 and 1996, respectively.

8. INCOME TAXES.

    Income taxes are summarized as follows:

                                     1998         1997         1996
      Federal:
        Current                   $16,040,000  $12,765,000  $13,553,000
        Deferred                     (209,000)     150,000     (210,000)

                                   15,831,000   12,915,000   13,343,000
     
      State:
        Current                     1,426,000    1,127,000      833,000
        Deferred                      (29,000)      21,000      (30,000)

                                    1,397,000    1,148,000      803,000

          Total                   $17,228,000  $14,063,000  $14,146,000

    The following is a reconciliation of the provision for income taxes 
    computed at the federal statutory rate (35%) to the reported provision 
    for income taxes:
                                     1998         1997         1996
    Computed federal income tax 
      at federal statutory rate   $17,602,000  $13,589,000  $14,519,000
    Changes resulting from: 
      Increase in cash surrender
        value of life insurance
        contracts                    (245,000)    (356,000)    (381,000)
      Foreign Sales Corporation  
        subject to lower tax rate    (315,000)    (396,000)    (310,000)
      State income taxes, net of
        federal income tax benefit    908,000      746,000      522,000
      Preferred stock dividend
        exclusion                    (548,000)    (139,000)        -
      Other, net                     (174,000)     619,000     (204,000)

          Total                   $17,228,000  $14,063,000  $14,146,000 

<PAGE> 33
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

8. INCOME TAXES, Concluded.

    The components of the net deferred tax assets are as follows:             
                
                                                   1998          1997

         Current deferred tax asset (liability):
           Accrued warranty expense              $2,495,000    $2,455,000
           Receivables                              138,000      (126,000)
           Other                                    635,000       711,000
  
               Net current deferred
                 tax asset                       $3,268,000    $3,040,000

         Noncurrent deferred tax 
          asset (liability):
           Receivables                           $ (335,000)   $     -
           Deferred compensation                  2,929,000     2,765,000
           Property and equipment                (1,347,000)   (1,584,000)
           Intangible assets                       (668,000)     (612,000)

               Net noncurrent deferred
                 tax asset                       $  579,000    $  569,000 

9.  ACQUISITIONS.

On February 3, 1998, the Company acquired certain assets and the operations 
of three retail recreational vehicle dealerships, two located in Florida and 
one in Georgia. The assets acquired consisted of new and used unit 
inventories, parts inventories, real and personal property and other 
miscellaneous assets. The purchase price, which aggregated $9.8 million and 
approximated the fair value of the acquired assets, consisted of $9.0 million
in cash and the assumption of certain liabilities of the sellers. The 
acquisitions were accounted for as a purchase and the operating results of 
the acquired businesses are included in the Company's consolidated financial 
statements from the date of acquisition. Pro forma financial information has 
not been presented as it is not materially different from the Company's 
historical results.

In September 1996, the Company acquired a recreational vehicle dealership for
$1.9 million cash, which approximated the fair value of the acquired assets. 
The acquisition, which has been accounted for as a purchase, was immaterial 
to the Company's consolidated financial statements.

10. ACCOUNTING CHANGE.

Effective January 1, 1996, the Company changed its method of accounting for 
its investments in life insurance contracts which were purchased to fund 
liabilities under deferred compensation agreements with executives and other 
key employees. Prior to January 1, 1996, the Company accounted for its 
investments in life insurance contracts by capitalizing premiums under the 
ratable charge method (a method of accounting which was acceptable when the 
insurance contracts were originally acquired and continued to be acceptable
for contracts acquired prior to November 14, 1985). Effective January 1, 
1996, the Company changed to the cash surrender value method of accounting 
which is the preferred method under generally accepted accounting principles,
as this method more accurately reflects the economic value of the contracts. 
On January 1, 1996, the Company recorded a $2.3 million noncash credit for 
the cumulative effect of this accounting change ($.15 per share for both 
basic and diluted earnings per share for the year ended December 31, 1996)

        
<PAGE> 34
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

11: COMMITMENTS AND CONTINGENCIES.

Lease Commitments

The Company leases various manufacturing and office facilities under 
noncancelable agreements which expire at various dates through November 2006. 
Several of the leases contain renewal options and options to purchase and 
require the payment of property taxes, normal maintenance and insurance on the
properties.  Certain office and delivery equipment are also leased under 
various noncancelable agreements.  The above described leases are accounted
for as operating leases.

Future minimum annual lease commitments at December 31, 1998 aggregated
$1,088,000 and are payable as follows: 1999 - $426,000; 2000 - $317,000; 
2001 - $128,000; 2002 - $78,000; 2003 - $55,000 and thereafter - $84,000. 
Total rental expense for the years ended December 31, 1998, 1997 and 1996 
aggregated $1,149,000, $1,472,000 and $1,754,000, respectively.

Obligation to Purchase Consigned Inventories

The Company obtains vehicle chassis for its recreational and specialized 
vehicle products directly from automobile manufacturers under converter pool 
agreements. The agreements generally provide that the manufacturer will 
provide a supply of chassis at the Company's various production facilities   
under the terms and conditions as set forth in the agreement. Chassis are   
accounted for as consigned inventory until either assigned to a unit in the  
production process or 90 days have passed. At the earlier of these dates, the
Company is obligated to purchase the chassis and it is recorded as inventory.
At December 31, 1998 and 1997, chassis inventory, accounted for as consigned 
inventory, approximated $9.5 million and $12.6 million, respectively.

Repurchase Agreements

The Company is contingently liable to banks and other financial institutions 
on repurchase agreements in connection with financing provided by such 
institutions to most of the Company's independent dealers in connection with 
their purchase of the Company's recreational vehicle products. These 
agreements provide for the Company to repurchase its products from the 
financial institution in the event that they have repossessed them upon a 
dealer's default. Although the estimated contingent liability approximates 
$250 million at December 31,1998 ($190 million at December 31, 1997), the risk
of loss resulting from these agreements is spread over the Company's numerous
dealers and is further reduced by the resale value of the products 
repurchased. There have been no significant losses under these agreements in 
prior years.

Share Repurchase Programs

On May 1, 1997 the Board of Directors authorized the repurchase of up to one 
million shares of the Company's outstanding common stock and on October 19, 
1998 the Board of Directors authorized the repurchase of an additional one 
million shares. Shares may be purchased from time to time, depending on 
market conditions and other factors, on the open market or through privately 
negotiated transactions. As of December 31, 1998, the Company has acquired 
922,828 shares under the share repurchase programs.

<PAGE> 35
Coachmen Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements, Continued

11: COMMITMENTS AND CONTINGENCIES, Concluded.

Self-Insurance

The Company is self-insured for a portion of its product liability and 
certain other liability exposures. Depending on the nature of the claim and 
the date of occurrence, the Company's maximum exposure ranges from $250,000 
to $500,000 per claim. The Company accrues an estimated liability based on 
various factors, including sales levels and the amount of outstanding claims.
Management believes the liability recorded is adequate to cover the Company's
self-insured risk.

Litigation

The Company is involved in various legal proceedings which are ordinary    
routine litigations incidental to the industry and which are covered in whole
or in part by insurance. Management believes that any liability which may 
result from these proceedings will not be significant.


12: UNAUDITED INTERIM FINANCIAL INFORMATION.

    Certain selected unaudited quarterly financial information for the years
    ended December 31, 1998 and 1997 is as follows:

                                                1998
                                            Quarter Ended
                             March 31     June 30    September 30  December 31  
  
  Net sales                $175,637,459 $201,069,322 $202,593,063 $176,729,682
  Gross profit               23,376,389   30,194,890   31,015,143   25,324,396
  Net income                  6,299,415    9,323,024   10,186,544    7,253,625
  Net income per common
    share:
      Basic                         .36          .54          .59          .44
      Diluted                       .36          .53          .59          .43

                                                 1997
                                             Quarter Ended
                              March 31     June 30   September 30  December 31  

  Net sales                $158,105,811 $169,368,233 $174,885,358 $159,231,783
  Gross profit               20,335,371   23,239,398   26,423,429   22,756,815
  Net income                  4,419,034    6,429,629    7,593,252    6,320,709
  Net income per 
    common share:
      Basic                         .26          .37          .44          .37
      Diluted                       .25          .37          .44          .36


The sum of quarterly diluted earnings per share for the four quarters may not
equal annual diluted earnings per share due to changes in the diluted 
potential common shares.

<PAGE> 36
                               SCHEDULE II
                    VALUATION AND QUALIFYING ACCOUNTS

                    Balance At    Charged                 Balance
                    Beginning    To Costs   Deductions-   At End
Description         Of Period  And Expenses  Describe    Of Period

Allowance for doubtful
 receivables - deducted
 from trade receivables
 in the consolidated
 balance sheets:

 For the year ended
  December 31, 1998 $1,354,000 $ (175,000)$  (411,000) (A) $  768,000

 For the year ended
  December 31, 1997 $  919,000 $1,617,000 $(1,182,000) (A) $1,354.000 

 For the year ended
  December 31, 1996 $  844,000 $  158,000 $   (83,000) (A) $  919,000  

(A)  Write-off of bad debts, less recoveries.

<PAGE> 37
Item  9.  Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure 

Not Applicable

                                Part III.

Item 10.  Directors and Executive Officers of the Registrant

     (a)  Identification of Directors

Information for Item 10(a) is contained on page 3 of the Company's Proxy 
Statement dated March 22, 1999 and is incorporated herein by reference.

     (b)  Executive Officers of the Company

See "Executive Officers of the Registrant" on page 7.

Item 11.  Executive Compensation

Information for Item 11 is contained under the heading "Compensation of 
Executive Officers and Directors" in the Company's Proxy Statement dated 
March 22, 1999 and is incorporated herein by reference.
                                      
Item 12.  Security Ownership of Certain Beneficial Owners and Management

Information for Item 12 is contained on pages 2 and 3 of the Company's Proxy 
Statement dated March 22, 1999 and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

Not Applicable 

<PAGE> 38
                                Part IV.

Item 14.  Exhibits, Financial Statement
          Schedules, and Reports on Form 8-K

(a) The following financial statements and financial statement
schedule are included in Item 8 herein.
                                                            
 1. Financial Statements

    Report of Independent Accountants                            
    Consolidated Balance Sheets at 
      December 31, 1998 and 1997                                
    Consolidated Statements of Income and Retained Earnings
      for the years ended December 31, 1998, 1997 and 1996       
    Consolidated Statements of Cash Flows for the years 
      ended December 31, 1998, 1997 and 1996                    
    Notes to Consolidated Financial Statements                     

 2. Financial Statement Schedules

    Schedule II - Valuation and Qualifying Accounts for the
      years ended December 31, 1998, 1997 and 1996              

 3. Exhibits

    See Index to Exhibits 

(b) Reports on Form 8-K

No reports on Form 8-K were required to be filed during the last quarter of 
the period covered by this report.

<PAGE> 39
                               SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          COACHMEN INDUSTRIES, INC.

Date: March 26, 1999                          /s/ C. C. Skinner
                                         -----------------------------
                                                  C. C. Skinner
                                           (Chief Executive Officer)

                                              /s/ W. M. Angelo
                                         -----------------------------
                                                  W. M. Angelo
                                          (Vice President and Chief
                                             Accounting Officer)
                                                             
Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
Registrant and in the capacities as of March 26, 1999.

     /s/ C. C. Skinner                        s/s K. D. Corson
-------------------------------         ------------------------------
         C. C. Skinner                            K. D. Corson
           (Director)                             (Director)

      /s/ T. H. Corson                        /s/ W. P. Johnson 
-------------------------------         ------------------------------
          T. H. Corson                            w. P. Johnson
           (Director)                               (Director)
                                           
      /s/ R. J. Harring                      /s/  E. W. Miller
-------------------------------         ------------------------------
          R. J. Harring                           E. W. Miller
           (Director)                              (Director)

       /s/ P. G. Lux                         /s/  R. J. Deputy
-------------------------------         ------------------------------
           P. G. Lux                              R. J. Deputy
           (Director)                              (Director)

<PAGE> 40
                            INDEX TO EXHIBITS
                                                           
Number Assigned                                         
 In Regulation                                             
 S-K, Item 601             Description of Exhibit            

 
 (3)            No exhibit

 (4)            No exhibit

 (9)            No exhibit

(10)            No exhibit

(12)            No exhibit

(13)            No exhibit

(16)            No exhibit

(18)            No exhibit

(21)            Registrant and Subsidiaries of the Registrant

(22)            No exhibit

(23)            Consent of Independent Accountants

(24)            No exhibit

(27)            Financial Data Schedule (EDGAR filing only)

(99)            No exhibit