----

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**FORM      10-K**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934**

**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934**

**COACHMEN      INDUSTRIES, INC.**

*(Exact      name of registrant as specified in its charter)*

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

**2831      Dexter Drive, Elkhart, Indiana 46514**

*(Address      of principal executive offices) (Zip Code)*

**(574)      262-0123**

*Registrant's      telephone number, including area code)*

|   | **Common                Stock, Without Par Value,**            |                                                           |   |
|--------|----------------------------------------------------------------|----------------------------------------------------------------|--------|
|   | **and                associated Common Share Purchase Rights** | **New                  York Stock Exchange**                   |   |
|   | *(Title                of each class)*                         | *(Name                  of each exchange on which registered)* |   |

**None**

| Large                accelerated filer  ¨ |   | Accelerated                filer  x |   | Non-accelerated                filer  ¨ |
|----------------------------------------------------------|--------|-----------------------------------------------|--------|--------------------------------------------------------|

**Documents      Incorporated by Reference**

| Document                                                                                                                            | Parts                of Form 10-K into which the Document is                Incorporated |
|-------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|
|                                                                                                                                |                                                                                     |   |   |
| Portions                of the Proxy Statement for the Annual Meeting of                Shareholders to be held on May 3, 2007 | Part                III                                                                  |

----

----

**Part      I**

| **Item                1.** | **Business** |
|----------------------------|--------------|

**Recreational      Vehicle Segment**

**RV      Segment Products**

Note      12

**RV      Segment Marketing**

----

Note      12

**RV      Segment Business Factors**

**RV      Segment Competition and Regulation**

**Housing      Segment**

**Housing      Segment Products**

----

**Housing      Segment Marketing**

**Housing        Segment Business Factors**

----

**Housing      Segment Competition and Regulation**

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**General**

**(Applicable      to all of the Company's principal markets)**

**Business      Segments**

|                                 |   | 2006   |   | 2005    |   | 2004   |   |
|--------------------------------------|--------|--------|--------|---------|--------|--------|--------|
|                                 |   | Amount |   | %  |   | Amount |   | %  |   | Amount |   | %  |   |
|                                 |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Recreational                Vehicles |   | $      | 404.7  |    |   | 71.7   |   | $ | 522.2 |   |   | 74.3 |   | $ | 593.8 |   |   | 74.0 |   |
|                                 |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Housing                              |   |   | 159.7  |    |   | 28.3   |   |   | 180.2 |   |   | 25.7 |   |   | 208.6 |   |   | 26.0 |   |
|                                 |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                |   | $      | 564.4  |    |   | 100.0  |   | $ | 702.4 |   |   | 100.0 |   | $ | 802.4 |   |   | 100.0 |   |

Note      2

**Seasonality**

**Employees**

Notes      89

**Research      and Development**

| **Item                1A.** | **Risk                Factors** |
|-----------------------------|---------------------------------|

*(References      to "we", "us" or "our" in the following discussion refer to the      Company.)*

**Risks      Relating to Our Business**

**The      recreational vehicle and housing industries are highly competitive, and some      of      our competitors have significantly greater resources than us.**

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| ·   | traditional                site-built homebuilders, |
|--------------------|-----------------------------------------------------|

| ·   | other                system-built housing producers, and |
|--------------------|----------------------------------------------------------|

| ·   | manufactured                home producers. |
|--------------------|---------------------------------------------|

**Actions      taken pursuant to our restructuring plan may have an adverse impact      on our earnings and financial position. **

**The      ability to attract and retain qualified senior managers may adversely      affect our operating results. **

**The      recreational vehicle and housing businesses are cyclical, which can lead to      fluctuations in our operating results. **

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**Our businesses      are seasonal, leading to fluctuations in sales, production and operating results      at various times during the calendar year. **

**A      rise in the frequency and size of product liability, wrongful death, workers’compensation and other claims against us may result in a material adverse      effect on our business, operating results and financial condition.**

**Significant      warranty and “lemon law” claims against us may result in a material adverse      effect on our business, operating results and financial condition.**

**Increased      costs, including costs of component parts and labor may adversely      affect our profitability if such costs cannot be offset because of market      forces or price-protected contracts with builders. **

----

**Changes      to or increases in the regulations governing our businesses could have a      material impact on operating and financial results. **

| ·   | the                National Highway Traffic Safety Administration (NHTSA), |
|--------------------|----------------------------------------------------------------------------|

| ·   | the                Transportation Recall Enhancement, Accountability, and Documentation                Act                (TREAD), |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | state                lemon law statutes, |
|--------------------|------------------------------------------|

| ·   | laws                regulating the operation of vehicles on highways, |
|--------------------|-----------------------------------------------------------------------|

| ·   | state                and federal product warranty statutes, |
|--------------------|-------------------------------------------------------------|

| ·   | state                legislation protecting motor vehicle dealerships, and |
|--------------------|----------------------------------------------------------------------------|

| ·   | state                and local zoning laws and building codes. |
|--------------------|----------------------------------------------------------------|

**Changes      in favorable tax laws could adversely affect our results of operations.**

**We      may not be able to fully utilize our deferred tax assets. **

**Failure      to comply with environmental regulations could result in significantly increased      costs and capital expenditures. **

**Changes      in labor practices could adversely affect our labor costs and      profitability. **

----

**Reduced      availability of financing for our dealers or retail customers could      adversely affect revenues and margins. **

**Repurchase      agreements with floorplan lenders could result in increased costs.**

**High      inventories of recreational vehicles among dealers could continue to negatively      affect our sales volume and profit margins. **

**Fuel      shortages, or higher prices for fuel, could have a negative effect on sales      of      recreational vehicles. **

**Changes      in consumer preferences and our ability to effectively adapt to those      preferences may adversely affect revenues and profitability.**

**New      product introductions may result in unanticipated expenses resulting in reduced      earnings. **

----

**We depend      on a small group of suppliers for some of our components, and any business      interruption among these suppliers could adversely affect our production      costs and profitability. **

**The      consolidation of distribution channels within the RV industry could have a      material negative effect on revenues and profitability. **

**The      market for our Housing Segment is heavily concentrated in the Midwestern      United States, and a continued weakness in demand in that area could have a      material negative effect on revenues and profitability. **

**The      performance of our Housing Segment in new markets may adversely affect      revenues and profitability. **

| ·   | potential                inability to meet contract specifications and timetables for large-scale                projects, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | performance                  of our business partners and (sub) contractors on large-scale projects, |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | potential                increased liability from possible larger claims resulting from large-scale                projects, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | construction                of new products with significantly different designs from single-family                homes, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | compliance                with state and local building codes and zoning laws, and |
|--------------------|------------------------------------------------------------------------------------|

| ·   | production                scheduling to meet demand from existing builders and large projects. |
|--------------------|------------------------------------------------------------------------------------------------|

**Item      1B. **
**Unresolved      Staff Comments**

----

| **Item                2.** | Properties |
|----------------------------|------------|

|  Location                                               |   |  Acreage |   | No.                of Buildings |   | Building                Area(Sq.                Ft.) |   |
|--------------------------------------------------------------|--------|---------------|--------|---------------------------------|--------|------------------------------------------------------|--------|
|                                                         |   |          |   |                            |   |                                                 |   |
| **Properties                Owned and Used by Registrant:**  |   |          |   |                            |   |                                                 |   |   |   |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| **Recreational                Vehicle Group**                |   |          |   |                            |   |                                                 |   |   |   |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| Fitzgerald,                Georgia                           |   |          | 29.6   |                            |   | 5                                                    |   |   | 170,670 |   |
| Elkhart,                Indiana                              |   |          | 6.0    |                            |   | 1                                                    |   |   | 29,886 |   |
| Middlebury,                Indiana                           |   |          | 170.8  |                            |   | 27                                                   |   |   | 1,138,643 |   |
| Centreville,                Michigan                         |   |          | 105.0  |                            |   | 4                                                    |   |   | 84,865 |   |
| Subtotal                                                     |   |          | 311.4  |                            |   | 37                                                   |   |   | 1,424,064 |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| **Housing                Group**                             |   |          |   |                            |   |                                                 |   |   |   |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| Milliken,                Colorado                            |   |          | 23.0   |                            |   | 1                                                    |   |   | 151,675 |   |
| Decatur,                Indiana                              |   |          | 40.0   |                            |   | 2                                                    |   |   | 215,995 |   |
| Dyersville,                Iowa                              |   |          | 20.0   |                            |   | 1                                                    |   |   | 168,277 |   |
| Rutherfordton,                North Carolina                 |   |          | 37.8   |                            |   | 1                                                    |   |   | 169,177 |   |
| Zanesville,                Ohio                              |   |          | 23.0   |                            |   | 2                                                    |   |   | 129,753 |   |
| Rocky                Mount, Virginia                         |   |          | 39.6   |                            |   | 5                                                    |   |   | 199,693 |   |
| Subtotal                                                     |   |          | 183.4  |                            |   | 12                                                   |   |   | 1,034,570 |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| **Other**                                                    |   |          |   |                            |   |                                                 |   |   |   |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| Elkhart,                Indiana                              |   |          | 16.4   |                            |   | 3                                                    |   |   | 53,841 |   |
| Middlebury,                Indiana                           |   |          | 1.3    |                            |   | 2                                                    |   |   | 4,800 |   |
| Subtotal                                                     |   |          | 17.7   |                            |   | 5                                                    |   |   | 58,641 |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| Total                owned and used                          |   |          | 512.5  |                            |   | 54                                                   |   |   | 2,517,275 |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| **Properties                Leased and Used by Registrant:** |   |          |   |                            |   |                                                 |   |   |   |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| **Recreational                Vehicle Group**                |   |          |   |                            |   |                                                 |   |   |   |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| Chino,                California                             |   |          | 4.7    |                            |   | 3                                                    |   |   | 84,296 |   |
| Elkhart,                Indiana                              |   |          | 7.8    |                            |   | 1                                                    |   |   | 43,000 |   |
|                                                         |   |          |   |                            |   |                                                 |   |   |   |   |
| Total                leased and used                         |   |          | 12.5   |                            |   | 4                                                    |   |   | 127,296 |   |

----

| Location                                                                                          |   |   | Acreage |   |   | No.                ofBuildings |   |   | Building                Area(Sq.                Ft.) |   |
|---------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------------------------------|--------|--------|------------------------------------------------------|--------|
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Properties                Owned by Registrant and Leased to Others:**                      |   |   |    |   |   |                           |   |   |                                                 |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Other**                                                                                         |   |   |    |   |   |                           |   |   |                                                 |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| Crooksville,                Ohio                                                                  |   |   | 10.0    |   |   | 2                              |   |   | 39,310                                               |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| Total                owned and leased                                                             |   |   | 10.0    |   |   | 2                              |   |   | 39,310                                               |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Properties                Owned by Registrant and Available for Sale or                Lease:** |   |   |    |   |   |                           |   |   |                                                 |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Recreational                Vehicle Group**                                                     |   |   |    |   |   |                           |   |   |                                                 |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| Edwardsburg,                Michigan                                                              |   |   | 48.7    |   |   | 6                              |   |   | 203,870                                              |   |
| Subtotal                                                                                          |   |   | 48.7    |   |   | 6                              |   |   | 203,870                                              |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Housing                Group**                                                                  |   |   |    |   |   |                           |   |   |                                                 |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| Decatur,                Indiana                                                                   |   |   | 3.3     |   |   | 2                              |   |   | 86,310                                               |   |
| Rocky                Mount, Virginia                                                              |   |   | 5.0     |   |   | -                              |   |   | -                                                    |   |
| Subtotal                                                                                          |   |   | 8.3     |   |   | 2                              |   |   | 86,310                                               |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Other**                                                                                         |   |   |    |   |   |                           |   |   |                                                 |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| Middlebury,                Indiana                                                                |   |   | 164.0   |   |   | -                              |   |   | -                                                    |   |
| Subtotal                                                                                          |   |   | 164.0   |   |   | -                              |   |   | -                                                    |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| Total                owned and available for sale or lease                                        |   |   | 221.0   |   |   | 8                              |   |   | 290,180                                              |   |
|                                                                                              |   |   |    |   |   |                           |   |   |                                                 |   |
| **Total                Company**                                                                  |   |   | 756.0   |   |   | 68                             |   |   | 2,974,061                                            |   |

----

| **Item                3.** | **Legal                Proceedings** |
|----------------------------|--------------------------------------|

| **Item                4.** | **Submission                of Matters to a Vote of Security                Holders** |
|----------------------------|---------------------------------------------------------------------------------------|

----

**Executive      Officers of the      Registrant**

|                                  |                                                                                                                         |
|---------------------------------------|------------------------------------------------------------------------------------------------------------------------------|
| Name                                  | Position                                                                                                                     |
|                                  |                                                                                                                         |
| Richard                M. Lavers      | Chief                Executive Officer                                                                                       |
|                                  |                                                                                                                         |
| Colleen                A. Zuhl        | Chief                Financial Officer                                                                                       |
|                                  |                                                                                                                         |
| Michael                R. Terlep, Jr. | President,                CLI dba Coachmen RV Group and President, Coachmen Recreational Vehicle                Company, LLC |
|                                  |                                                                                                                         |
| Leslie                G. Thimlar      | Vice                President, Human Resources                                                                               |
|                                  |                                                                                                                         |
|                                  |                                                                                                                         |

----

**Part      II**

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

|                       |   | High                & Low Sales Prices |                         | Dividends                Declared |   |
|----------------------------|--------|--------------------------------------------|------------------------------|-----------------------------------|--------|
|                       |   | 2006                                       |                         | 2005                              |   | 2006 |   | 2005 |   |
|                       |   |                                       |                         |                              |   |   |   |   |   |   |   |   |   |
| 1st                Quarter |   | $                                          | 13.28                - 10.71 |                              | $      | 17.49                - $13.46 |   | $ | .06 |   | $ | .06 |   |
|                       |   |                                       |                         |                              |   |   |   |   |   |   |   |   |   |
| 2nd                Quarter |   |                                       | 11.95                - 10.30 |                              |   | 14.11                - 11.22 |   |   | .06 |   |   | .06 |   |
|                       |   |                                       |                         |                              |   |   |   |   |   |   |   |   |   |
| 3rd                Quarter |   |                                       | 12.16                - 8.90  |                              |   | 14.50                - 11.23 |   |   | .03 |   |   | .06 |   |
|                       |   |                                       |                         |                              |   |   |   |   |   |   |   |   |   |
| 4th                Quarter |   |                                       | 12.90                - 10.09 |                              |   | 12.63                - 10.76 |   |   | .03 |   |   | .06 |   |

Item      12

----

| **Item                6.** | **Selected                Financial Data** |
|----------------------------|--------------------------------------------|

|                                                                  |   |   |    |   |   |    |   |   |    |   |   |
|-----------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|
|                                                                  |   | 2006   |    | 2005   |   | 2004    |   | 2003   |    | 2002   |   |
|                                                                  |   |   |    |   |   |    |   |   |    |   |   |
| Net                sales                                              |   | $      | 564,382 |   | $      | 702,425 |   | $      | 802,346 |   | $      | 636,891 |   | $ | 582,921 |   |
| Gross                profit                                           |   |   | 49,421  |   |   | 55,960  |   |   | 112,826 |   |   | 92,395 |   |   | 88,585 |   |
| Net                income (loss) from continuing operations           |   |   | (33,215 | )      |   | (19,360 | )      |   | 14,258  |   |   | 8,443 |   |   | 11,926 |   |
| Discontinued                operations                                |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Loss                from operations of discontinued entities          |   |   | (795    | )      |   | (6,370  | )      |   | (659    | )      |   | (1,078 | ) |   | (1,997 | ) |
| Gain                (loss) on sale of assets of discontinued entities |   |   | 2,205   |   |   | (620    | )      |   | 1,735   |   |   | - |   |   | - |   |
| Income                (loss) from discontinued operations             |   |   | 1,410   |   |   | (6,990  | )      |   | 1,076   |   |   | (1,078 | ) |   | (1,997 | ) |
| Net                income (loss)                                      |   | $      | (31,805 | )      | $      | (26,350 | )      | $      | 15,334  |   | $      | 7,365 |   | $ | 9,929 |   |
|                                                                  |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Earnings                (loss) per share - Basic                      |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Continuing                operations                                  |   | $      | (2.12   | )      | $      | (1.24   | )      | $      | .92     |   | $      | .55 |   | $ | .74 |   |
| Discontinued                operations                                |   |   | .09     |   |   | (.45    | )      |   | .07     |   |   | (.07 | ) |   | (.12 | ) |
| Net                earnings (loss) per share - Basic                  |   |   | (2.03   | )      |   | (1.69   | )      |   | .99     |   |   | .48 |   |   | .62 |   |
|                                                                  |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Earnings                (loss) per share - Diluted                    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Continuing                operations                                  |   |   | (2.12   | )      |   | (1.24   | )      |   | .92     |   |   | .55 |   |   | .74 |   |
| Discontinued                operations                                |   |   | .09     |   |   | (.45    | )      |   | .07     |   |   | (.07 | ) |   | (.12 | ) |
| Net                earnings (loss) per share - Diluted                |   | $      | (2.03   | )      | $      | (1.69   | )      | $      | .99     |   | $      | .48 |   | $ | .62 |   |
|                                                                  |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Cash                dividends per share                               |   | $      | .18     |   | $      | .24     |   | $      | .24     |   | $      | .24 |   | $ | .22 |   |
|                                                                  |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| At                year-end:                                           |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
|                                                                  |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Working                capital (1)                                    |   | $      | 62,784  |   | $      | 93,308  |   | $      | 121,312 |   | $      | 95,963 |   | $ | 93,574 |   |
| Total                assets                                           |   |   | 243,134 |   |   | 322,816 |   |   | 357,723 |   |   | 310,688 |   |   | 293,195 |   |
| Long-term                debt                                         |   |   | 3,862   |   |   | 12,913  |   |   | 14,943  |   |   | 9,419 |   |   | 10,097 |   |
| Shareholders'                equity                                   |   |   | 160,331 |   |   | 193,803 |   |   | 224,418 |   |   | 211,151 |   |   | 209,426 |   |
| Book                value per share                                   |   | $      | 10.20   |   | $      | 12.30   |   | $      | 14.27   |   | $      | 13.58 |   | $ | 13.37 |   |
| Number                of employees                                    |   |   | 2,655   |   |   | 3,677   |   |   | 4,416   |   |   | 4,490 |   |   | 4,233 |   |

Note      11*Restructuring      Charges and*
*Discontinued      Operations*

----

| **Item                7.** | **Management's                Discussion and Analysis of Financial Condition and Results of                Operations** |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------|

**EXECUTIVE      SUMMARY**

**Intensive      Recovery Plan**

----

----

**Housing      Segment**

**Recreational      Vehicle Segment**

----

----

**RESULTS      OF OPERATIONS**

|                                                                                        |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   | Percentage                Change |     |
|--------------------------------------------------------------------------------------------------|---------|---------|--------------------------|-------------|----------|--------------------------|---------------|------------|--------------------------|----------|---------|---------------|---------|-------------|---------|--------|----------------------------------|----------|
|                                                                                             |    |    |                     | Percentage  |     |                     |          | Percentage |                     |     |    | Percentage    |    | 2006        |    | 2005   |                             |
|                                                                                             |    |    |                     | of          |     |                     |          | of         |                     |     |    | of            |    | to          |    | to     |                             |
|                                                                                             |    | 2006    | Net                Sales |        | 2005     | Net                Sales |          | 2004       | Net                Sales |     | 2005    |          | 2004    |        |
| Net                sales:                                                                   |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Recreational                vehicles                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Motorhomes                                                                                       |  $ | 266,246 |                     | 47.2        | %   | $                   | 350,876       |       | 50.0                |  %  |  $ |  421,325 |    |  52.5  |  % |   |  (24.1                      |  )% |  (16.7 | )% |
| Travel                trailers and fifth wheels                                                  |    | 118,375 |                     | 21.0        |     |                     |  149,263 |       |  21.2               |     |    |  143,253 |    |  17.9  |    |   |  (20.7                      | )        |  4.2 |   |
| Camping                trailers                                                                  |    | 13,549  |                     |  2.4   |     |                     |  15,152  |       |  2.2                |     |    |  22,776  |    |  2.8   |    |   |  (10.6                      | )        |  (33.5 | ) |
| Truck                campers                                                                     |    | -       |                     |  -     |     |                     |  -       |       |  -                  |     |    |  4       |    |  -     |    |   |  -                          |     |  (100.0 | ) |
| Parts                and supplies                                                                |    | 6,540   |                     |  1.2   |     |                     |  6,903   |       |  1.0                |     |    |  6,396   |    |  0.8   |    |   |  (5.3                       | )        |  7.9 |   |
| Total                recreational vehicles                                                       |    | 404,710 |                     |  71.7  |     |                     |  522,194 |       |  74.3               |     |    |  593,754 |    |  74.0  |    |   |  (22.5                      | )        |  (12.1 | ) |
| Housing                                                                                          |    | 159,672 |                     |  28.3  |     |                     |  180,231 |       |  25.7               |     |    |  208,592 |    |  26.0  |    |   |  (11.4                      | )        |  (13.6 | ) |
| Consolidated                total                                                                |    | 564,382 |                     |  100.0 |     |                     |  702,425 |       |  100.0              |     |    |  802,346 |    |  100.0 |    |   |  (19.7                      | )        |  (12.5 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Gross                profit:                                                                |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Recreational                vehicles                                                             |    | 13,620  |                     |  2.4   |     |                     |  15,307  |       |  2.2                |     |    |  57,723  |    |  7.2   |    |   |  (11.0                      | )        |  (73.5 | ) |
| Housing                                                                                          |    | 35,801  |                     |  6.3   |     |                     |  40,653  |       |  5.8                |     |    |  54,923  |    |  6.8   |    |   |  (11.9                      | )        |  (26.0 | ) |
| Other                reconciling items                                                           |    | -       |                     |  -     |     |                     |  -       |       |                     |     |    |  180     |    |  -     |    |   |  -                          |     |  (100.0 | ) |
| Consolidated                total                                                                |    | 49,421  |                     |  8.8   |     |                     |  55,960  |       |  8.0                |     |    |  112,826 |    |  14.1  |    |   |  (11.7                      | )        |  (50.4 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Operating                expenses:                                                          |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Delivery                                                                                    |    | 29,205  |                     |  5.2   |     |                     |  32,762  |       |  4.7                |     |    |  34,005  |    |  4.2   |    |   |  (10.9                      | )        |  (3.7 | ) |
| Selling                                                                                     |    | 23,230  |                     |  4.1   |     |                     |  28,320  |       |  4.0                |     |    |  28,620  |    |  3.6   |    |   |  (18.0                      | )        |  (1.0 | ) |
| General                and administrative                                                   |    | 21,328  |                     |  3.8   |     |                     |  30,794  |       |  4.4                |     |    |  31,543  |    |  3.9   |    |   |  (30.7                      | )        |  (2.4 | ) |
| Asset                impairments                                                            |    | -       |                     |  -     |     |                     |  1,076   |       |  0.2                |     |    |  -       |    |  -     |    |   |  (100.0                     | )        |  100.0 |   |
| Gain                on sale of assets, net                                                  |    | (8,689  | )                   |  (1.5  | )        |                     |  (163    | )     |  -                  |     |    |  (1,448  | )  |  (0.2  | )       |   |  n/m                        |     |  (88.7 | ) |
| Consolidated                total                                                                |    | 65,074  |                     |  11.5  |     |                     |  92,789  |       |  13.2               |     |    |  92,720  |    |  11.6  |    |   |  (29.9                      | )        |  0.1 |   |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Nonoperating                (income) expense                                                |    | 1,047   |                     |  0.2   |     |                     |  525     |       |  0.1                |     |    |  (745    | )  |  (0.1  | )       |   |  99.4                       |     |  (170.5 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Income                (loss) from continuing operations before income                taxes  |    | (16,700 | )                   |  (3.0  | )        |                     |  (37,354 | )     |  (5.3               | )        |    |  20,851  |    |  2.6   |    |   |  55.3                       |     |  (279.1 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Income                taxes (credit)                                                        |    | 16,515  |                     |  2.9   |     |                     |  (17,994 | )     |  (2.6               | )        |    |  6,593   |    |  0.8   |    |   |  (191.8                     | )        |  (372.9 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Net                income (loss) from continuing operations                                 |    | (33,215 | )                   |  (5.9  | )        |                     |  (19,360 | )     |  (2.8               | )        |    |  14,258  |    |  1.8   |    |   |  (71.6                      | )        |  (235.8 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Discontinued                operations:                                                     |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Loss                from operations of discontinued entities                                     |    | (795    | )                   |  (0.1  | )        |                     |  (6,370  | )     |  (0.9               | )        |    |  (659    | )  |  (0.1  | )       |   |  87.5                       |     |  (866.6 | ) |
| Gain                (loss) on sale of assets of discontinued entities                            |    | 2,205   |                     |  0.4   |     |                     |  (620    | )          |  (0.1               | )        |    |  1,735   |    |  0.2   |    |   |  455.6                      |     |  (135.7 | ) |
| Income                (loss) from discontinued operations                                        |    | 1,410   |                     |  0.2   |     |                     |  (6,990  | )     |  (1.0               | )        |    |  1,076   |    |  0.1   |    |   |  120.2                      |     |  (749.6 | ) |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
| Net                income (loss)                                                            |  $ | (31,805 | )                   |  (5.6  |  )% |  $                  |  (26,350 | )     |  (3.8               |  )% |  $ |  15,334  |    |  1.9   |  % |   |  (20.7                      | )%       |  (271.8 | )% |
|                                                                                             |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |
|  n/m                - not meaningful                                                        |    |    |                     |        |     |                     |          |       |                     |     |    |          |    |        |    |   |                             |     |   |   |

Note      11*Restructuring      Charges and*
*Discontinued      Operations*

----

|                                                                                                                                   |   | 2006   |    |  2005 |   | 2004   |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|------------|--------|--------|--------|
| Warranty                - additional expense incurred related to RV sidewall issues and lift                system recall (see Note 1) |   | $      | -       |       | $      | 14,000 |   | $ | - |   |
|                                                                                                                                   |   |   |    |       |   |   |   |   |   |   |
| (Gain)                loss on sale of assets:                                                                                          |   |   |    |       |   |   |   |   |   |   |
| **Continuing                operations:**                                                                                              |   |   |    |       |   |   |   |   |   |   |
| Tennessee                facility (All American)                                                                                       |   |   | (1,061  | )          |   | -      |   |   | - |   |
| Virginia                property                                                                                                       |   |   | (1,202  | )          |   | -      |   |   | - |   |
| Texas                property (Grapevine, TX)                                                                                          |   |   | (1,674  | )          |   | -      |   |   | - |   |
| Florida                property (Palm Shores, FL)                                                                                      |   |   | (1,180  | )          |   | -      |   |   | - |   |
| Michigan                property (Georgie Boy)                                                                                         |   |   | (650    | )          |   | -      |   |   | - |   |
| Indiana                property (various)                                                                                              |   |   | (815    | )          |   | -      |   |   | (1,448 | ) |
| Corporate                aircraft                                                                                                      |   |   | (1,792  | )          |   | -      |   |   | - |   |
| Other                                                                                                                                  |   |   | (315    | )          |   | (163   | )      |   | - |   |
| Total                                                                                                                                  |   |   | (8,689  | )          |   | (163   | )      |   | (1,448 | ) |
|                                                                                                                                   |   |   |    |       |   |   |   |   |   |   |
| **Discontinued                operations (see Note 11):**                                                                              |   |   |    |       |   |   |   |   |   |   |
| Miller                                                                                                                                 |   |   | (2,522  | )          |   | -      |   |   | - |   |
| Prodesign                                                                                                                              |   |   | (1,899  | )          |   | -      |   |   | - |   |
| All                American Homes - Kansas                                                                                             |   |   | 76      |       |   | 1,051  |   |   | - |   |
| Colfax                                                                                                                                 |   |   | -       |       |   | -      |   |   | (2,551 | ) |
| Total                                                                                                                                  |   |   | (4,345  | )          |   | 1,051  |   |   | (2,551 | ) |
|                                                                                                                                   |   |   |    |       |   |   |   |   |   |   |
| Total                (gain) loss on sale of assets                                                                                     |   |   | (13,034 | )          |   | 888    |   |   | (3,999 | ) |
|                                                                                                                                   |   |   |    |       |   |   |   |   |   |   |
| Asset                impairments:                                                                                                      |   |   |    |       |   |   |   |   |   |   |
| Miller                Building Systems                                                                                                 |   |   | -       |       |   | 7,895  |   |   | - |   |
| All                American Homes - Tennessee                                                                                          |   |   | -       |       |   | 1,077  |   |   | - |   |
| Other                                                                                                                                  |   |   | -       |       |   | 269    |   |   | - |   |
| Total                asset impairments                                                                                                 |   |   | -       |       |   | 9,241  |   |   | - |   |
|                                                                                                                                   |   |   |    |       |   |   |   |   |   |   |
| Legal                expense recoveries (see Note 12)                                                                                  |   |   | (3,620  | )          |   | (4,425 | )      |   | n/m |   |
|                                                                                                                                   |   |   |    |       |   |   |   |   |   |   |
| Litigation                reserve (see Note 12)                                                                                        |   | $      | n/m     |       | $      | 4,000  |   | $ | n/m |   |

----

**Comparison      of 2006 to 2005 **

**NET      SALES**

|                                                                                                                                                                                                                            |   |   |  Wholesale                Share    |    |   |  Retail                Share    |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------|---------|--------|-----------------------------------------------------|---------|
|                                                                                                                                                                                                                            |   |   | 2006                                                   |    |   |  2005                                          |    |   |  2006 |   |   |  2005 |   |
|                                                                                                                                                                                                                            |   |   |                                                   |    |   |                                                |    |   |   |   |   |   |   |
| Class              A Motorhomes                                                                                                                                                                                                 |   |   |  5.6                                              | %       |   |  7.6                                           | %  |   |  6.5 | %  |   |  7.9 | %  |
| Gasoline                                                                                                                                                                                                                        |   |   |  n/a                                              |    |   |  n/a                                           |    |   |  8.4 |   |   |  10.2 |   |
| Diesel                                                                                                                                                                                                                          |   |   |  n/a                                              |    |   |  n/a                                           |    |   |  4.7 |   |   |  5.5 |   |
| Class              C Motorhomes                                                                                                                                                                                            |   |   |  9.5                                              |    |   |  9.3                                           |    |   |  10.6 |   |   |  12.5 |   |
| Travel              Trailers                                                                                                                                                                                               |   |   |  3.0                                              |    |   |  4.4                                           |    |   |  2.7 |   |   |  4.0 |   |
| Fifth              Wheels                                                                                                                                                                                                  |   |   |  1.7                                              |    |   |  1.7                                           |    |   |  1.8 |   |   |  2.1 |   |
| Camping              Trailers                                                                                                                                                                                              |   |   |  8.6                                              |    |   |  10.0                                          |    |   |  8.1 |   |   |  9.9 |   |
| Total                                                                                                                                                                                                                           |   |   |  3.8                                              | %  |   |  4.9                                           | %  |   |  3.7 | %  |   |  4.9 | %  |
|                                                                                                                                                                                                                            |   |   |                                                   |    |   |                                                |    |   |   |   |   |   |   |
| n/a              - not available                                                                                                                                                                                           |   |   |                                                   |    |   |                                                |    |   |   |   |   |   |   |
|                                                                                                                                                                                                                            |   |   |                                                   |    |   |                                                |    |   |   |   |   |   |   |
| Wholesale                share based on wholesale unit shipment data as reported by the                Recreational Vehicle Industry Association.              |
| Retail                share based on data provided by Statistical Surveys, Inc.                                                                                |

**GROSS      PROFIT**

----

**OPERATING      EXPENSES**

**GAIN      ON THE SALE OF ASSETS, NET**

**OPERATING      LOSS**

**INTEREST      EXPENSE**

**INVESTMENT      INCOME**

Note      1

**PRE-TAX      LOSS**

Note      2

**INCOME      TAXES**

Note      10

----

**DISCONTINUED      OPERATIONS**

**NET      LOSS**

----

**Comparison      of 2005 to 2004 **

**NET      SALES**

|                                                                                                                                                |   | Wholesale                Share |   | Retail                Share |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------|-----------------------------|--------|
|                                                                                                                                                |   | 2005                           |   | 2004                        |   | 2005 |   | 2004 |   |
|                                                                                                                                                |   |                           |   |                        |   |   |   |   |   |
| Class                A Motorhomes                                                                                                                   |   |                           | 7.6    | %                           |   | 7.9 | % |   | 7.9 | % |   | 7.1 | % |
| Gasoline                                                                                                                                            |   |                           | n/a    |                        |   | n/a |   |   | 10.2 |   |   | 9.5 |   |
| Diesel                                                                                                                                              |   |                           | n/a    |                        |   | n/a |   |   | 5.5 |   |   | 4.4 |   |
| Class                C Motorhomes                                                                                                                   |   |                           | 9.3    |                        |   | 12.5 |   |   | 12.5 |   |   | 12.0 |   |
| Travel                Trailers                                                                                                                      |   |                           | 4.4    |                        |   | 4.4 |   |   | 4.0 |   |   | 4.3 |   |
| Fifth                Wheels                                                                                                                         |   |                           | 1.7    |                        |   | 2.1 |   |   | 2.1 |   |   | 2.4 |   |
| Camping                Trailers                                                                                                                     |   |                           | 10.0   |                        |   | 14.6 |   |   | 9.9 |   |   | 11.9 |   |
| Total                                                                                                                                               |   |                           | 4.9    | %                           |   | 5.8 | % |   | 4.9 | % |   | 5.4 | % |
|                                                                                                                                                |   |                           |   |                        |   |   |   |   |   |   |   |
| n/a                - not available                                                                                                                  |   |                           |   |                        |   |   |   |   |   |   |   |
|                                                                                                                                                |   |                           |   |                        |   |   |   |   |   |   |   |
| *Wholesale                share based on wholesale unit shipment data as reported by the                Recreational Vehicle Industry Association.* |
| *Retail                share based on data provided by Statistical Surveys,                Inc.*                                                    |
|                                                                                                                                                |   |                           |   |                        |   |   |   |   |   |   |   |

----

**GROSS      PROFIT**

**OPERATING      EXPENSES**

**OPERATING      LOSS**

**ASSET      IMPAIRMENT**

**GAIN      ON THE SALE OF ASSETS, NET**

**INTEREST      EXPENSE**

----

**INVESTMENT      INCOME**

Note      1

**PRE-TAX      INCOME (LOSS)**

Note      2

**INCOME      TAXES**

Note      10

**NET      INCOME (LOSS)**

**DISCONTINUED      OPERATIONS**

----

**Liquidity      and Capital Resources **

Note      5

Consolidated      Statements of Cash Flows

Note      12

----

**Principal      Contractual Obligations and Commercial Commitments **

|                                                             |    |  Payment                Period |
|------------------------------------------------------------------|---------|-------------------------------------|
|                                                             |    |  2007                          |   |   |  2008 |   |   |  2009 |   |   |  2010 |   |   |  2011 |   |   |  Thereafter |   |   |  Total |
|                                                             |    |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Credit              facility borrowings                    |  $ |  9,284.2                       |   |  $ |  - |   |  $ |  - |   |  $ |  - |   |  $ |  - |   |  $ |  - |   |  $ |  9,284.2 |
|  Long-term              debt                                |    |  1,077.4                       |   |   |  852.2 |   |   |  819.4 |   |   |  819.9 |   |   |  770.3 |   |   |  600.0 |   |   |  4,939.2 |
|  Floorplan              note payable                        |    |  4,156.4                       |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   |  4,156.4 |
|  Operating              leases                              |    |  1,068.4                       |   |   |  862.1 |   |   |  842.7 |   |   |  714.5 |   |   |  509.6 |   |   |  4.2 |   |   |  4,001.5 |
|  Deferred              compensation obligations             |    |  1,534.1                       |   |   |  531.2 |   |   |  403.1 |   |   |  636.4 |   |   |  450.2 |   |   |  5,701.7 |   |   |  9,256.7 |
|  Open              purchase orders and purchase obligations |    |  12,725.8                      |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   |  12,725.8 |
|  Interest              payments on long-term debt           |    |  184.7                         |   |   |  143.1 |   |   |  107.8 |   |   |  73.3 |   |   |  40.2 |   |   |  24.4 |   |   |  573.5 |
|  Total                                                      |  $ |  30,031.0                      |   |  $ |  2,388.6 |   |  $ |  2,173.0 |   |  $ |  2,244.1 |   |  $ |  1,770.3 |   |  $ |  6,330.3 |   |  $ |  44,937.3 |

|                                          |   |   | Total                Amounts |   |   | Amount                of Commitment |   |   | Expiration                Per Period |   |
|-----------------------------------------------|--------|--------|------------------------------|--------|--------|-------------------------------------|--------|--------|--------------------------------------|--------|
|                                          |   |   | Committed               |   |   | Less                Than One Year   |   |   | In                Excess of One Year |   |
|                                          |   |   |                         |   |   |                                |   |   |                                 |   |
| Letters                of credit              |   | $      | 4,989.0                      |   | $      | 4,989.0                             |   | $      | -                                    |   |
| Guarantees                                    |   |   | 5,260.6                      |   |   | 3,870.8                             |   |   | 1,389.8                              |   |
| Standby                repurchase obligations |   |   | 203,313.5                    |   |   | 187,131.8                           |   |   | 16,181.7                             |   |
| Chassis                pool obligations       |   |   | 11,362.0                     |   |   | 11,362.0                            |   |   | -                                    |   |
|  Total                                   |   | $      |  224,925.1              |   | $      | 207,353.6                      |   | $      | 17,571.5                        |   |

**Critical      Accounting Policies and Estimates**

Note      1

**Long-Lived      Assets **
**-      **
Note      11

*,      Goodwill and Other*
*Intangible      Assets*

**Revenue      Recognition -**

----

**Warranty      Reserves -**

**Litigation      and Product Liability Reserves -**
Note 12
Note      7

**Income      Taxes -**
*Accounting      for Income Taxes*

**New      and Pending Accounting Policies **

*New      Accounting Pronouncements*Note      1

----

**Forward-Looking      Statements **

| ·   | the                ability of the new management team to achieve desired                results; |
|--------------------|--------------------------------------------------------------------------------------------------|
| ·   | interest                rates, which affect the affordability of the Company's                products; |
|--------------------|---------------------------------------------------------------------------------------------------------|
| ·   | consumer                confidence and the availability of                credit; |
|--------------------|-----------------------------------------------------------------------------------|
| ·   | the                Company’s ability to utilize manufacturing resources efficiently; |
|--------------------|--------------------------------------------------------------------------------------------|
| ·   | the                Company’s ability to introduce new models that achieve consumer                acceptance; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|
| ·   | the                margins associated with the mix of products the Company sells in                a                particular period; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                availability of floorplan financing for the Company's recreational                vehicle                dealers and corresponding availability of cash to the                Company; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                availability and price of gasoline and diesel fuel, which can impact                the                sale of recreational vehicles; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                Company's dependence on chassis and other suppliers; |
|--------------------|-------------------------------------------------------------------------|
| ·   | potential                liabilities under repurchase agreements and guarantees; |
|--------------------|----------------------------------------------------------------------------------|
| ·   | consolidation                of distribution channels in the recreational vehicle industry; |
|--------------------|---------------------------------------------------------------------------------------------|
| ·   | legislation                governing the relationships of the Company with its recreational                vehicle                dealers, which may affect the Company’s options and liabilities in the                event of a general economic downturn; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                price volatility of materials used in production and the ability                to pass                on rapidly increasing costs of product components and raw materials                to end                buyers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                availability and cost of real estate for residential housing; |
|--------------------|----------------------------------------------------------------------------------|
| ·   | the                increased size and scope of work of military housing projects, and                other                major projects, as compared to the Company's traditional single-family                homes business, with increased reliance on third parties for performance                which could impact the Company;  |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                ability of the Housing Segment to perform in new market segments                where it                has limited experience; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                impact of performance on the valuation of intangible                assets; |
|--------------------|------------------------------------------------------------------------------------------------|
| ·   | the                supply of existing homes within the Company’s                markets; |
|--------------------|------------------------------------------------------------------------------------------------|
| ·   | the                impact of home values on housing demand; |
|--------------------|-------------------------------------------------------------|
| ·   | uncertainties                and timing with respect to sales resulting from recovery efforts                in the                Gulf Coast. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | adverse                weather conditions affecting home                deliveries; |
|--------------------|-------------------------------------------------------------------------------------|
| ·   | changing                government regulations, including those covering accounting standards; |
|--------------------|------------------------------------------------------------------------------------------------|
| ·   | environmental                matters or product warranties and recalls, which may affect costs                of                operations, revenues, product acceptance and profitability; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                state of the recreational vehicle and housing industries in the United                States; |
|--------------------|------------------------------------------------------------------------------------------------------------------|
| ·   | changes                in property taxes and energy costs; |
|--------------------|------------------------------------------------------------|
| ·   | changes                in federal income tax laws and federal mortgage financing                programs; |
|--------------------|-----------------------------------------------------------------------------------------------------------|
| ·   | competition                in the industries in which the Company                operates; |
|--------------------|--------------------------------------------------------------------------------------------|
| ·   | oil                supplies; |
|--------------------|------------------------------|
| ·   | further                developments in the war on terrorism and related international                crises; |
|--------------------|--------------------------------------------------------------------------------------------------------------|
| ·   | uncertainties                of matters in litigation and other risks and                uncertainties; |
|--------------------|---------------------------------------------------------------------------------------------------------|
| ·   | the                ability of the Company to generate taxable income in future years                to                utilize deferred tax assets and net operating loss carryforwards                that are                available; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                accuracy of the estimates of the costs to remedy the disclosed                recreational vehicle warranty issues; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                Company’s ability to increase gross margins which are critical whether or                not there are increased sales; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                Company’s use of incentives at either the wholesale or retail                level; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

----

**Item      7A.**
**Quantitative      and Qualitative Disclosures about Market Risk**

----

**Item      8.**
**Financial Statements and Supplementary      Data**

| **Index                to Financial Statements**                                                                                   | **Page** |
|------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                               |     |
| Financial                Statements:                                                                                               |     |
| Report                of Independent Registered Public Accounting                Firm                                              | 36       |
|                                                                                                                               |     |
| Report                of Independent Registered Public Accounting Firm                on Internal Control over Financial Reporting | 37       |
|                                                                                                                               |     |
| Consolidated                Balance Sheets at December 31, 2006 and                2005                                            | 38       |
|                                                                                                                               |     |
| Consolidated                Statements of Operations for                the years ended December 31, 2006, 2005 and 2004           | 39       |
|                                                                                                                               |     |
| Consolidated                Statements of Shareholders' Equity                for the years ended December 31, 2006, 2005 and 2004 | 40       |
|                                                                                                                               |     |
| Consolidated                Statements of Cash Flows for the years ended                December 31, 2006, 2005 and 2004           | 41       |
|                                                                                                                               |     |
| Notes                to Consolidated Financial                Statements                                                           | 42-66    |
|                                                                                                                               |     |
| Financial                Statement Schedule:                                                                                       |     |
| II                - Valuation and Qualifying Accounts for the years                ended December 31, 2006, 2005 and 2004          | 67       |

----

*Index*

**Report      of Independent Registered Public Accounting      Firm**

|   | /s/                Ernst & Young LLP |
|--------|------------------------------------------|

----

*Index*

**Report      of Independent Registered Public Accounting      Firm**

**On      Internal Control Over Financial Reporting**

** **

|   | /s/                Ernst & Young LLP |
|--------|------------------------------------------|

----

*Index*

**Coachmen      Industries, Inc. and      Subsidiaries**

**Consolidated      Balance Sheets**

|                                                                                                                                                          |   |   | 2006    |   |   | 2005       |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|------------|--------|
| **Assets**                                                                                                                                                    |   |   |    |   |   |       |   |
| CURRENT                ASSETS                                                                                                                                 |   |   |    |   |   |       |   |
| Cash                and cash equivalents                                                                                                                      |   | $      | 2,651   |   | $      | 2,780      |   |
| Trade                receivables, less allowance for doubtful receivables 2006 - $1,134                and                2005 - $1,240                       |   |   | 25,874  |   |   | 47,174     |   |
| Other                receivables                                                                                                                              |   |   | 2,332   |   |   | 1,969      |   |
| Refundable                income taxes                                                                                                                        |   |   | 10,820  |   |   | 10,284     |   |
| Inventories                                                                                                                                                   |   |   | 83,511  |   |   | 121,304    |   |
| Prepaid                expenses and other                                                                                                                     |   |   | 3,957   |   |   | 3,992      |   |
| Deferred                income taxes                                                                                                                          |   |   | -       |   |   | 11,421     |   |
| Assets                held for sale                                                                                                                           |   |   | 288     |   |   | 291        |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| Total                current assets                                                                                                                           |   |   | 129,433 |   |   | 199,215    |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| Property,                plant and equipment**,**                net                                                                                          |   |   | 57,018  |   |   | 67,581     |   |
| Goodwill                                                                                                                                                      |   |   | 16,865  |   |   | 17,383     |   |
| Cash                value of life insurance, net of loans                                                                                                     |   |   | 31,119  |   |   | 28,880     |   |
| Deferred                income taxes                                                                                                                          |   |   | -       |   |   | 4,279      |   |
| Other                                                                                                                                                         |   |   | 8,699   |   |   | 5,478      |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| TOTAL                ASSETS                                                                                                                                   |   | $      | 243,134 |   | $      | 322,816    |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| **Liabilities                and Shareholders' Equity**                                                                                                       |   |   |    |   |   |       |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| CURRENT                LIABILITIES                                                                                                                            |   |   |    |   |   |       |   |
| Short-term                borrowings                                                                                                                          |   | $      | 9,284   |   | $      | 12,276     |   |
| Accounts                payable, trade                                                                                                                        |   |   | 16,998  |   |   | 31,658     |   |
| Accrued                income taxes                                                                                                                           |   |   | 18      |   |   | 533        |   |
| Accrued                expenses and other liabilities                                                                                                         |   |   | 35,116  |   |   | 54,856     |   |
| Floorplan                notes payable                                                                                                                        |   |   | 4,156   |   |   | 4,361      |   |
| Current                maturities of long-term debt                                                                                                           |   |   | 1,077   |   |   | 2,223      |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| Total                current liabilities                                                                                                                      |   |   | 66,649  |   |   | 105,907    |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| Long-term                debt                                                                                                                                 |   |   | 3,862   |   |   | 12,913     |   |
| Deferred                income taxes                                                                                                                          |   |   | 4,524   |   |   | -          |   |
| Postretirement                deferred compensation benefits                                                                                                  |   |   | 7,768   |   |   | 10,182     |   |
| Other                                                                                                                                                         |   |   | -       |   |   | 11         |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| Total                liabilities                                                                                                                              |   |   | 82,803  |   |   | 129,013    |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| COMMITMENTS                AND CONTINGENCIES** **(Note                12)                                                                                |   |   |    |   |   |       |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| SHAREHOLDERS'                EQUITY                                                                                                                           |   |   |    |   |   |       |   |
| Common                shares, without par value: authorized 60,000 shares; issued 2006                - 21,156                shares and 2005 - 21,134 shares |   |   | 92,382  |   |   | 92,164     |   |
| Additional                paid-in capital                                                                                                                     |   |   | 7,648   |   |   | 6,465      |   |
| Unearned                compensation                                                                                                                          |   |   |  - |   |   |  (142 | )      |
| Accumulated                other comprehensive loss                                                                                                           |   |   | (10     | )      |   | (6         | )      |
| Retained                earnings                                                                                                                              |   |   | 119,623 |   |   | 154,246    |   |
| Treasury                shares, at cost, 2006 - 5,433 shares and 2005 - 5,375                shares                                                           |   |   | (59,312 | )      |   | (58,924    | )      |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| Total                shareholders' equity                                                                                                                     |   |   | 160,331 |   |   | 193,803    |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |
| TOTAL                LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                     |   | $      | 243,134 |   | $      | 322,816    |   |
|                                                                                                                                                          |   |   |    |   |   |       |   |

Notes      to Consolidated Financial Statements

----

*Index*

**Coachmen      Industries, Inc. and      Subsidiaries**

**Consolidated      Statements of Operations**

|                                                                                                                                                                  |   | 2006   |    | 2005   |   | 2004    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Net                sales                                                                                                                                              |   | $      | 564,382 |   | $      | 702,425 |   | $ | 802,346 |   |
| Cost                of sales                                                                                                                                          |   |   | 514,961 |   |   | 646,465 |   |   | 689,520 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Gross                profit                                                                                                                                           |   |   | 49,421  |   |   | 55,960  |   |   | 112,826 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Operating                expenses:                                                                                                                                    |   |   |    |   |   |    |   |   |   |   |
| Delivery                                                                                                                                                              |   |   | 29,205  |   |   | 32,762  |   |   | 34,005 |   |
| Selling                                                                                                                                                               |   |   | 23,230  |   |   | 28,320  |   |   | 28,620 |   |
| General                and administrative                                                                                                                             |   |   | 21,328  |   |   | 30,794  |   |   | 31,543 |   |
| Asset                impairments                                                                                                                                      |   |   | -       |   |   | 1,076   |   |   |  - |   |
| Gain                on sale of assets, net                                                                                                                            |   |   | (8,689  | )      |   | (163    | )      |   | (1,448 | ) |
|                                                                                                                                                                  |   |   | 65,074  |   |   | 92,789  |   |   | 92,720 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Operating                income (loss)                                                                                                                                |   |   | (15,653 | )      |   | (36,829 | )      |   | 20,106 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Nonoperating                (income) expense:                                                                                                                         |   |   |    |   |   |    |   |   |   |   |
| Interest                expense                                                                                                                                       |   |   | 3,829   |   |   | 3,168   |   |   | 1,794 |   |
| Investment                income                                                                                                                                      |   |   | (1,617  | )      |   | (2,182  | )      |   | (2,193 | ) |
| Other                (income) expense, net                                                                                                                            |   |   | (1,165  | )      |   | (461    | )      |   | (346 | ) |
|                                                                                                                                                                  |   |   | 1,047   |   |   | 525     |   |   | (745 | ) |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Income                (loss) from continuing operations before income taxes                                                                                           |   |   | (16,700 | )      |   | (37,354 | )      |   | 20,851 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Income                taxes (credit)                                                                                                                                  |   |   | 16,515  |   |   | (17,994 | )      |   | 6,593 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Net                income (loss) from continuing operations                                                                                                           |   |   | (33,215 | )      |   | (19,360 | )      |   | 14,258 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Discontinued                operations                                                                                                                                |   |   |    |   |   |    |   |   |   |   |
| Loss                from operations of discontinued entities (net                of tax credits of $(546), $(4,426) and $(303),                respectively)          |   |   | (795    | )      |   | (6,370  | )      |   | (659 | ) |
| Gain                (loss) on sale of assets of discontinued entities (net                of taxes (credits) of $2,140, $(431) and $816,                respectively) |   |   | 2,205   |   |   | (620    | )      |   | 1,735 |   |
| Income                (loss) from discontinued operations                                                                                                             |   |   | 1,410   |   |   | (6,990  | )      |   | 1,076 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Net                income (loss)                                                                                                                                      |   | $      | (31,805 | )      | $      | (26,350 | )      | $ | 15,334 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Earnings                (loss) per share - Basic                                                                                                                      |   |   |    |   |   |    |   |   |   |   |
| Continuing                operations                                                                                                                                  |   | $      | (2.12   | )      | $      | (1.24   | )      | $ | .92 |   |
| Discontinued                operations                                                                                                                                |   |   | .09     |   |   | (.45    | )      |   | .07 |   |
| Net                earnings (loss) per share                                                                                                                          |   |   | (2.03   | )      |   | (1.69   | )      |   | .99 |   |
| Earnings                (loss) per share - Diluted                                                                                                                    |   |   |    |   |   |    |   |   |   |   |
| Continuing                operations                                                                                                                                  |   |   | (2.12   | )      |   | (1.24   | )      |   | .92 |   |
| Discontinued                operations                                                                                                                                |   |   | .09     |   |   | (.45    | )      |   | .07 |   |
| Net                earnings (loss) per share                                                                                                                          |   |   | (2.03   | )      |   | (1.69   | )      |   | .99 |   |
|                                                                                                                                                                  |   |   |    |   |   |    |   |   |   |   |
| Number                of common shares used in the computation of earnings (loss) per                share:                                                           |   |   |    |   |   |    |   |   |   |   |
| Basic                                                                                                                                                                 |   |   | 15,633  |   |   | 15,551  |   |   | 15,483 |   |
| Diluted                                                                                                                                                               |   |   | 15,633  |   |   | 15,551  |   |   | 15,551 |   |

Notes      to Consolidated Financial Statements

----

*Index*

**Coachmen      Industries, Inc. and      Subsidiaries**

**Consolidated      Statements of Shareholders' Equity**

|                                                                                                                                |   |                               |    |         |         |   |          |       |               |     |               | Accumulated   |           |     |         |     |         |   |         |          |    |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|--------------|--------------|--------|---------------|------------|--------------------|----------|--------------------|---------------|----------------|----------|--------------|----------|--------------|--------|--------------|---------------|---------|
|                                                                                                                                |   |                               |    |         |         |   |          | Additional |               |     |               | Other         |           |     |         |     |         |   |         | Total         |    |
|                                                                                                                                |   | Comprehensive                      |    | Common       |         | Shares |          | Paid-In    |               | Unearned |               | Comprehensive |           | Retained |         | Treasury |         | Shares |         | Shareholders' |    |
|                                                                                                                                |   | Income                (Loss)  |    |  Number |  Amount |   |  Capital |       |  Compensation |     |  Income(Loss) |          |  Earnings |     |  Number |     |  Amount |   |  Equity |          |
|                                                                                                                                |   |                               |    |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |
| Balance                at January 1, 2004                                                                                           |   |                               |    |         |         | 21,086 |          |  $    | 91,539             |     |  $            | 7,616         |           |  $  | (1,136       | )        |  $      | 290    |         |  $       | 172,700 |   |   | (5,533 | ) |  $ | (59,858 | ) |  $ | 211,151 |   |
| Net                income                                                                                                           |   | $                                  | 15,334  |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | 15,334  |   |   | - |   |   | - |   |   | 15,334 |   |
| Net                unrealized loss on securities net                of taxes of $160                                                |   |                               | (262    | )            |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | (262   | )            |          | -       |   |   | - |   |   | - |   |   | (262 | ) |
| Net                unrealized gain on cash flow hedges                net of taxes of $39                                           |   |                               | 64      |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | 64     |         |          | -       |   |   | - |   |   | - |   |   | 64 |   |
| Total                comprehensive income                                                                                           |   | $                                  | 15,136  |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common shares upon the                exercise of stock options net                of tax benefit of $46 |   |                               |    |         |         | -      |          |       | -                  |     |               | 250           |           |     | -            |     |         | -      |         |          | -       |   |   | 34 |   |   | 199 |   |   | 449 |   |
| Issuance                of common shares under employee                stock purchase plan                                          |   |                               |    |         |         | 22     |          |       | 311                |     |               | -             |           |     | -            |     |         | -      |         |          | -       |   |   | - |   |   | - |   |   | 311 |   |
| Issuance                of common shares from                treasury                                                               |   |                               |    |         |         | -      |          |       | -                  |     |               | 1,028         |           |     | (564         | )        |         | -      |         |          | -       |   |   | 115 |   |   | 657 |   |   | 1,121 |   |
| Cash                dividends of $.24 per common                share                                                               |   |                               |    |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | (3,750  | ) |   | - |   |   | - |   |   | (3,750 | ) |
| Balance                at December 31, 2004                                                                                         |   |                               |    |         |         | 21,108 |          |       | 91,850             |     |               | 8,894         |           |     | (1,700       | )        |         | 92     |         |          | 184,284 |   |   | (5,384 | ) |   | (59,002 | ) |   | 224,418 |   |
|                                                                                                                                |   |                               |    |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                Income - 2005                                                                                          |   |                               |    |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                             |   | $                                  | (26,350 | )            |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | (26,350 | ) |   | - |   |   | - |   |   | (26,350 | ) |
| Reversal                of unrealized gain on securities                net of taxes of $116                              |   |                               | (188    | )            |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | (188   | )            |          | -       |   |   | - |   |   | - |   |   | (188 | ) |
| Net                unrealized gain on cash flow hedges                net of taxes of $57                                           |   |                               | 90      |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | 90     |         |          | -       |   |   | - |   |   | - |   |   | 90 |   |
| Total                comprehensive loss                                                                                             |   | $                                  | (26,448 | )            |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common shares upon the                exercise of stock options net                of tax benefit of $7  |   |                               |    |         |         | -      |          |       | -                  |     |               | 164           |           |     | -            |     |         | -      |         |          | -       |   |   | 28 |   |   | 165 |   |   | 329 |   |
| Issuance                of common shares under employee                stock purchase plan                                          |   |                               |    |         |         | 26     |          |       | 314                |     |               | -             |           |     | -            |     |         | -      |         |          | -       |   |   | - |   |   | - |   |   | 314 |   |
| Issuance                (cancellations) of common                shares from treasury                                               |   |                               |    |         |         | -      |          |       | -                  |     |               | (2,593        | )              |     | 1,558        |     |         | -      |         |          | -       |   |   | (19 | ) |   | (87 | ) |   | (1,122 | ) |
| Other                                                                                                                               |   |                               |    |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | 68      |   |   | - |   |   | - |   |   | 68 |   |
| Cash                dividends of $.24 per common                share                                                               |   |                               |    |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | (3,756  | ) |   | - |   |   | - |   |   | (3,756 | ) |
| Balance                at December 31, 2005                                                                                         |   |                               |    |         |         | 21,134 |          |       | 92,164             |     |               | 6,465         |           |     | (142         | )        |         | (6     | )            |          | 154,246 |   |   | (5,375 | ) |   | (58,924 | ) |   | 193,803 |   |
|                                                                                                                                |   |                               |    |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                Income - 2006                                                                                          |   |                               |    |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                             |   | $                                  | (31,805 | )            |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | (31,805 | ) |   | - |   |   | - |   |   | (31,805 | ) |
| Net                unrealized (loss) on cash flow hedges net of taxes of $3                                                         |   |                               | (4      | )       |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | (4     | )       |          | -       |   |   | - |   |   | - |   |   | (4 | )  |
| Total                comprehensive loss                                                                                             |   | $                                  | (31,809 | )            |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common shares upon the                exercise of stock options net                of tax benefit of $25 |   |                               |    |         |         | -      |          |       | -                  |     |               | 284           |           |     | -            |     |         | -      |         |          | -       |   |   | 64 |   |   | 376 |   |   | 660 |   |
| Issuance                of common shares under employee                stock purchase plan                                          |   |                               |    |         |         | 22     |          |       | 218                |     |               | -             |           |     | -            |     |         | -      |         |          | -       |   |   | - |   |   | - |   |   | 218 |   |
| Issuance                (cancellations) of common                    shares from treasury                                           |   |                               |    |         |         | -      |          |       | -                  |     |               | 899           |           |     | 142          |     |         | -      |         |          | -       |   |   | (122 | ) |   | (764 | ) |   | 277 |   |
| Cash                dividends of $.18 per common                share                                                               |   |                               |    |         |         | -      |          |       | -                  |     |               | -             |           |     | -            |     |         | -      |         |          | (2,818  | ) |   | - |   |   | - |   |   | (2,818 | ) |
| Balance                at December 31, 2006                                                                                         |   |                               |    |         |         | 21,156 |          | $          | 92,382             |     | $                  | 7,648         |           | $        | -            |     | $            | (10    | )            | $             | 119,623 |   |   | (5,433 | ) | $ | (59,312 | ) | $ | 160,331 |   |
|                                                                                                                                |   |                               |    |         |         |   |          |       |               |     |               |          |           |     |         |     |         |   |         |          |    |   |   |   |   |   |   |   |   |   |   |

Notes      to Consolidated Financial Statements

----

*Index*

**Coachmen      Industries, Inc. and      Subsidiaries**

**Consolidated      Statements of Cash Flows **

| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                                                            |   |   | 2006    |    |   | 2005    |   |   | 2004    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|---------|--------|---------|--------|--------|---------|--------|
| Net                income (loss)                                                                                                                |   | $      | (31,805 | )       | $      | (26,350 | )      | $      | 15,334  |   |
| Adjustments                to reconcile net income (loss) to net cash provided by (used in)                operating                activities: |   |   |    |    |   |    |   |   |    |   |
| Depreciation                                                                                                                                    |   |   | 6,533   |    |   | 8,554   |   |   | 9,402   |   |
| Provision                for doubtful receivables                                                                                               |   |   | 1,631   |    |   | 988     |   |   | 200     |   |
| Provision                for write-down of assets to net realizable value                                                                       |   |   | -       |    |   | 9,241   |   |   | -       |   |
| Net                realized and unrealized (gains) losses on marketable securities and                derivatives                               |   |   | (4      | )       |   | (311    | )      |   | 93      |   |
| (Gain)                loss on sale of properties and other assets, net                                                                          |   |   | (13,183 | )       |   | 1,592   |   |   | (4,305  | )      |
| Increase                in cash surrender value of life insurance policies                                                                      |   |   | (317    | )       |   | (1,142  | )      |   | (1,074  | )      |
| Deferred                income tax provision (benefit)                                                                                          |   |   | 20,224  |    |   | (13,198 | )      |   | (892    | )      |
| Tax                benefit from stock options exercised                                                                                         |   |   | 25      |    |   | 7       |   |   | 46      |   |
| Other                                                                                                                                           |   |   | 127     |    |   | (848    | )      |   | 2,696   |   |
| Changes                in certain assets and liabilities, net of effects of acquisitions                and                dispositions:        |   |   |    |    |   |    |   |   |    |   |
| Trade                receivables                                                                                                                |   |   | 16,642  |    |   | 12,883  |   |   | (15,076 | )      |
| Inventories                                                                                                                                     |   |   | 25,627  |    |   | 14,784  |   |   | (34,789 | )      |
| Prepaid                expenses and other                                                                                                       |   |   | (582    | )       |   | 152     |   |   | 478     |   |
| Accounts                payable, trade                                                                                                          |   |   | (13,150 | )       |   | (2,147  | )      |   | 3,319   |   |
| Income                taxes - accrued and refundable                                                                                            |   |   | (1,051  | )       |   | (11,986 | )      |   | 366     |   |
| Accrued                expenses and other liabilities                                                                                           |   |   | (15,750 | )       |   | 15,390  |   |   | 1,880   |   |
| Net                cash provided by (used in) operating activities                                                                              |   |   | (5,033  | )       |   | 7,609   |   |   | (22,322 | )      |
|                                                                                                                                            |   |   |    |    |   |    |   |   |    |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                                            |   |   |    |    |   |    |   |   |    |   |
| Proceeds                from sales of marketable securities                                                                                     |   |   | -       |    |   | 1,933   |   |   | 3,629   |   |
| Proceeds                from sale of properties and other assets                                                                                |   |   | 28,104  |    |   | 1,846   |   |   | 7,034   |   |
| Investments                in marketable securities and cash surrender value                                                                    |   |   | (2,574  | )       |   | (2,549  | )      |   | (2,582  | )      |
| Purchases                of property and equipment                                                                                              |   |   | (4,622  | )       |   | (5,696  | )      |   | (16,477 | )      |
| Other                                                                                                                                           |   |   | (517    | )       |   | 48      |   |   | (1,377  | )      |
| Net                cash provided by (used in) investing activities                                                                              |   |   | 20,391  |    |   | (4,418  | )      |   | (9,773  | )      |
|                                                                                                                                            |   |   |    |    |   |    |   |   |    |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                                                            |   |   |    |    |   |    |   |   |    |   |
| Proceeds                from short-term borrowings                                                                                              |   |   | 11,713  |    |   | 232     |   |   | 39,938  |   |
| Payments                of short-term borrowings                                                                                                |   |   | (14,910 | )       |   | (10,581 | )      |   | (17,952 | )      |
| Proceeds                from long-term debt                                                                                                     |   |   | 255     |    |   | 241     |   |   | 8,036   |   |
| Payments                of long-term debt                                                                                                       |   |   | (10,452 | )       |   | (2,243  | )      |   | (1,307  | )      |
| Proceeds                from borrowings on cash value of life insurance policies                                                                |   |   | -       |    |   | -       |   |   | 20,000  |   |
| Repay                borrowings against cash value of life insurance policies                                                                   |   |   | -       |    |   | -       |   |   | (5,000  | )      |
| Issuance                of common shares under stock incentive plans                                                                            |   |   | 878     |    |   | 643     |   |   | 760     |   |
| Tax                benefit from stock options exercised                                                                                         |   |   | (25     | )       |   | (7      | )      |   | (46     | )      |
| Cash                dividends paid                                                                                                              |   |   | (2,818  | )       |   | (3,756  | )      |   | (3,750  | )      |
| Purchases                of common shares for treasury                                                                                          |   |   | (129    | )       |   | -       |   |   | -       |   |
| Other                                                                                                                                           |   |   | 1       |    |   | 68      |   |   | -       |   |
| Net                cash provided by (used in) financing activities                                                                              |   |   | (15,487 | )       |   | (15,403 | )      |   | 40,679  |   |
| Increase                (decrease) in cash and cash equivalents                                                                                 |   |   | (129    | )       |   | (12,212 | )      |   | 8,584   |   |
|                                                                                                                                            |   |   |    |    |   |    |   |   |    |   |
| CASH                AND CASH EQUIVALENTS                                                                                                        |   |   |    |    |   |    |   |   |    |   |
| Beginning                of year                                                                                                                |   |   | 2,780   |    |   | 14,992  |   |   | 6,408   |   |
| End                of year                                                                                                                      |   | $      | 2,651   |    | $      | 2,780   |   | $      | 14,992  |   |
| Supplemental                disclosures of cash flow information:                                                                               |   |   |    |    |   |    |   |   |    |   |
| Cash                paid during the year for interest                                                                                           |   | $      | 1,383   |    | $      | 2,314   |   | $      | 1,460   |   |
| Cash                paid (refunded) during the year for income taxes                                                                            |   |   | (127    | )  |   | 2,240   |   |   | 7,114   |   |
| Operating                cash received related to insurance settlement                                                                          |   |   | 2,875   |    |   | 2,213   |   |   | -       |   |
| (Gain)                loss on sale of assets - Continuing operations                                                                            |   |   | (8,689  | )       |   | (163    | )      |   | (1,448  | )      |
| (Gain)                loss on sale of assets - Discontinued operations                                                                          |   |   | (4,345  | )       |   | 1,051   |   |   | (2,551  | )      |
| Provision                for write-down of assets to net realizable value - Continuing                operations                                |   |   | -       |    |   | 1,077   |   |   | -       |   |
| Provision                for write-down of assets to net realizable value - Discontinued                operations                              |   |   | -       |    |   | 8,164   |   |   | -       |   |

Notes      to Consolidated Financial Statements

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries**

**Notes      to Consolidated Financial Statements**

**1.   NATURE      OF OPERATIONS AND ACCOUNTING      POLICIES.**

**Nature      of Operations - **

**Principles      of Consolidation - **

**Use      of Estimates - **

**Revenue      Recognition - **

**Cash      Flows and Non-cash Activities - **

|                                                                                                                                              |   | 2006   |   | 2005   |   | 2004   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Issuance                (cancellations) of common shares, at market value, in lieu of cash                compensation                            |   | $      | 125    |   | $      | (1,122 | )      | $ | 1,121 |   |
| Notes                receivable received in connection with the sale of certain assets                (see                Note                11) |   |   | 5,920  |   |   | -      |   |   | 1,000 |   |

**Concentrations      of Credit Risk -**

|                                                                                           |   | 2006   |   | 2005   |   | 2004   |   |
|------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Interest                income                                                                 |   | $      | 474    |   | $      | 510    |   | $ | 143 |   |
| Increase                in cash value of life insurance policies                               |   |   | 1,138  |   |   | 1,116  |   |   | 1,148 |   |
| Dividend                income on preferred stocks                                             |   |   | 5      |   |   | 54     |   |   | 770 |   |
| Net                realized gains on sale of preferred stocks and bond funds                   |   |   | -      |   |   | 505    |   |   | 586 |   |
| Net                realized losses on closed U.S. Treasury bond futures                options |   |   | -      |   |   | (12    | )      |   | (55 | ) |
| Other                than temporary unrealized losses on preferred stocks                      |   |   | -      |   |   | -      |   |   | (390 | ) |
| Unrealized                gains (losses) on open U.S. Treasury bond futures options            |   |   | -      |   |   | 9      |   |   | (9 | ) |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                          |   | $      | 1,617  |   | $      | 2,182  |   | $ | 2,193 |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries**

**Notes      to Consolidated Financial Statements, Continued**

**1.         NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.**

**Fair      Value of Financial Instruments - **
Note      9

*Accounting      for Derivative Instruments and Hedging Activities*

**Inventories      - **

**Property,      Plant and Equipment -**

| Land                improvements                                                                     |   |   | 3-15                years  |   |
|------------------------------------------------------------------------------------------------------|--------|--------|----------------------------|--------|
| Buildings                and improvements                                                            |   |   | 10-30                years |   |
| Machinery                and equipment                                                               |   |   | 3-10                years  |   |
| Transportation                equipment                                                              |   |   | 2-7                years   |   |
| Office                furniture and fixtures, including capitalized computer                software |   |   | 2-10                years  |   |

**Long-Lived      Assets - **
Note      11

*,      Goodwill and Other*
*Intangible      Assets*

** **

| Goodwill                                             |   |   |   |
|------------------------------------------------------|--------|--------|--------|
| Balance                at January 1, 2005            | $      | 18,132 |   |
| Allocation                to discontinued operations |   | (749   | )      |
| Balance                at December 31, 2005          | $      | 17,383 |   |
| Allocation                to discontinued operations |   | (518   | )      |
| Balance                at December 31, 2006          | $      | 16,865 |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued**

**1.         NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.**

**Warranty      Expense - **

|                                                                                                              |   | 2006   |    | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
|                                                                                                                   |   |   |    |   |   |
| Balance                of accrued warranty at January 1                                                                |   | $      | 20,005  |   | $      | 10,140 |   |
|                                                                                                                   |   |   |    |   |   |   |   |
| Warranties                issued during the period and changes in liability for pre-existing                warranties |   |   | 21,598  |   |   | 34,771 |   |
|                                                                                                                   |   |   |    |   |   |   |   |
| Cash                settlements made during the period                                                                 |   |   | (30,504 | )      |   | (24,906 | ) |
|                                                                                                                   |   |   |    |   |   |   |   |
| Balance                of accrued warranty at December 31                                                              |   | $      | 11,099  |   | $      | 20,005 |   |

**Stock-Based      Compensation - **
Note      8

*Accounting      for Stock Issued to Employees*
*Accounting      for Stock-Based Compensation*
*Share-Based      Payment*

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**1.         NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.**

*Accounting      for Stock-Based Compensation*

|                                                                                                                                                                                         | 2005   |    | 2004   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|
|                                                                                                                                                                                         |   |    |   |   |
| Net                income (loss), as reported                                                                                                                                                | $      | (26,350 | )      | $      | 15,334 |   |
|                                                                                                                                                                                         |   |    |   |   |   |   |
| Add:                Stock-based compensation expense (credit) under variable plan included                in                earnings, net of taxes                                           |   | (865    | )      |   | 584 |   |
|                                                                                                                                                                                         |   |    |   |   |   |   |
| Deduct:                Total stock-based employee compensation (expense) credit determined                under                fair value method for                all awards, net of taxes |   | 761     |   |   | (739 | ) |
|                                                                                                                                                                                         |   |    |   |   |   |   |
| Pro                forma net income (loss)                                                                                                                                                   | $      | (26,454 | )      | $      | 15,179 |   |
|                                                                                                                                                                                         |   |    |   |   |   |   |
| Earnings                (loss) per share:                                                                                                                                                    |   |    |   |   |   |   |
|                                                                                                                                                                                         |   |    |   |   |   |   |
| Basic                - as reported                                                                                                                                                           |   | (1.69   | )      |   | .99 |   |
| Basic                - pro forma                                                                                                                                                             |   | (1.70   | )      |   | .98 |   |
|                                                                                                                                                                                         |   |    |   |   |   |   |
| Diluted                - as reported                                                                                                                                                         |   | (1.69   | )      |   | .99 |   |
| Diluted                - pro forma                                                                                                                                                           |   | (1.70   | )      |   | .98 |   |

**New      Accounting Pronouncements -**
*Accounting      for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109      *
*Accounting      for Income Taxes *

*Fair      Value Measurements*

**Research      and Development Expenses - **

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**1.         NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued.**

**Shipping      and Handling Costs - **
** **

|                                   |   |   | 2006   |   |   | 2005   |   |   | 2004   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Delivery                Expense        |   | $      | 29,205 |   | $      | 32,762 |   | $      | 34,005 |   |
| Percentage                of Net Sales |   |   | 5.2%   |   |   | 4.7%   |   |   | 4.2%   |   |

**Comprehensive      Income (Loss) -**

|                                             |   | UnrealizedGains                (Losses)on                Securities |   | UnrealizedGains                (Losses)on                Cash FlowHedges |   | AccumulatedOtherComprehensiveIncome(Loss) |   |
|--------------------------------------------------|--------|---------------------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                             |   |                                                                |   |                                                                     |   |                                      |   |   |
| Balances                at January 1, 2004       |   | $                                                                   | 450    |                                                                     | $      | (160                                      | )      | $ | 290 |   |
| Other                comprehensive income (loss) |   |                                                                | (262   | )                                                                        |   | 64                                        |   |   | (198 | ) |
|                                             |   |                                                                |   |                                                                     |   |                                      |   |   |   |   |
| Balances                at December 31, 2004     |   |                                                                | 188    |                                                                     |   | (96                                       | )      |   | 92 |   |
| Other                comprehensive income (loss) |   |                                                                | (188   | )                                                                        |   | 90                                        |   |   | (98 | ) |
|                                             |   |                                                                |   |                                                                     |   |                                      |   |   |   |   |
| Balances                at December 31, 2005     |   |                                                                | -      |                                                                     |   | (6                                        | )      |   | (6 | ) |
| Other                comprehensive income (loss) |   |                                                                | -      |                                                                     |   | (4                                        | )      |   | (4 | ) |
|                                             |   |                                                                |   |                                                                     |   |                                      |   |   |   |   |
| Balances                at December 31, 2006     |   | $                                                                   | -      |                                                                     | $      | (10                                       | )      | $ | (10 | ) |

**Volume-Based      Sales and Dealer Incentives - **

**Income      Taxes -**
*Accounting      for Income Taxes*

**Reclassifications      - **

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**2.   SEGMENT      INFORMATION.**

Note      1Note      11

|                                                            |   | 2006    |          | 2005    |    | 2004          |    |
|-----------------------------------------------------------------|--------|---------|---------------|---------|---------|---------------|---------|
| Net                sales:                                       |   |    |          |    |    |          |    |   |   |   |
| Recreational                vehicles                            |   |    |          |    |    |          |    |   |   |   |
| Motorhomes                                                      |   | $       | 266,246       |    | $       | 350,876       |    | $ | 421,325 |   |
| Travel                trailers and fifth wheels                 |   |    | 118,375       |    |    | 149,263       |    |   | 143,253 |   |
| Camping                trailers                                 |   |    | 13,549        |    |    | 15,152        |    |   | 22,776 |   |
| Truck                campers                                    |   |    | -             |    |    | -             |    |   | 4 |   |
| Parts                and supplies                               |   |    | 6,540         |    |    | 6,903         |    |   | 6,396 |   |
|                                                            |   |    |          |    |    |          |    |   |   |   |
| Total                recreational vehicles                      |   |    | 404,710       |    |    | 522,194       |    |   | 593,754 |   |
| Housing                                                         |   |    | 159,672       |    |    | 180,231       |    |   | 208,592 |   |
|                                                            |   |    |          |    |    |          |    |   |   |   |
| Consolidated                total                               |   | $       | 564,382       |    | $       | 702,425       |    | $ | 802,346 |   |
|                                                            |   |    |          |    |    |          |    |   |   |   |
| Gross                profit                                     |   |    |          |    |    |          |    |   |   |   |
| Recreational                vehicles                            |   | $       | 13,620        |    | $       | 15,307        |    | $ | 57,723 |   |
| Housing                                                         |   |    | 35,801        |    |    | 40,653        |    |   | 54,923 |   |
| Other                reconciling items                          |   |    | -             |    |    | -             |    |   | 180 |   |
| Total                                                           |   | $       | 49,421        |    | $       | 55,960        |    | $ | 112,826 |   |
|                                                            |   |    |          |    |    |          |    |   |   |   |
| Operating                expenses                               |   |    |          |    |    |          |    |   |   |   |
| Recreational                vehicles                            |   | $       | 38,996        |    | $  | 55,049        |    | $  | 47,051 |   |
| Housing                                                         |   |    | 33,152        |    |    | 43,335        |    |   | 45,530 |   |
| Other                reconciling items                          |   |    | (7,074        | )  |    | (5,595        | )  |   | 139 |   |
| Total                                                           |   | $  | 65,074        |    | $  | 92,789        |    | $  | 92,720 |   |
|                                                            |   |    |          |    |    |          |    |   |   |   |
| Operating                income (loss)                          |   |    |          |    |    |          |    |   |   |   |
| Recreational                vehicles                            |   | $  | (25,376       | )  | $  | (39,742       | )  | $  | 10,672 |   |
| Housing                                                         |   |    | 2,649         |    |    | (2,682        | )  |   | 9,393 |   |
| Other                reconciling items                          |   |    | 7,074         |    |    | 5,595         |    |   | 41 |   |
| Total                                                           |   | $  | (15,653       | )  | $  | (36,829       | )  | $  | 20,106 |   |
|                                                            |   |    |          |    |    |          |    |   |   |   |
| Pre-tax                income (loss) from continuing operations |   |    |          |    |    |          |    |   |   |   |
| Recreational                vehicles                            |   | $  | (25,383       | )  | $  | (40,760       | )  | $  | 10,628 |   |
| Housing                                                         |   |    |  2,665   |    |    |  (2,403  | )  |   |  9,834 |   |
| Other                reconciling items                          |   |    |  6,018   |    |    |  5,809   |    |   |  389 |   |
| Total                                                           |   | $  |  (16,700 | )  | $  |  (37,354 | )  | $  |  20,851 |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**2.         SEGMENT INFORMATION, Continued.**

|                                   |   |  2006 |    |  2005 |   |  2004 |   |
|----------------------------------------|--------|------------|---------|------------|--------|------------|--------|
| Total                assets            |   |       |    |       |   |       |   |   |   |   |
| Recreational                vehicles   |   | $          | 113,627 |       | $      | 152,501    |   | $ | 174,101 |   |
| Housing                                |   |       | 57,968  |       |   | 83,338     |   |   | 111,099 |   |
| Other                reconciling items |   |       | 71,539  |       |   | 86,977     |   |   | 72,523 |   |
| Total                                  |   | $          | 243,134 |       | $      | 322,816    |   | $ | 357,723 |   |
|                                   |   |       |    |       |   |       |   |   |   |   |
| Total                goodwill          |   |       |    |       |   |       |   |   |   |   |
| Recreational                vehicles   |   | $          | 3,872   |       | $      | 4,132      |   | $ | 4,132 |   |
| Housing                                |   |       | 12,993  |       |   | 13,251     |   |   | 14,000 |   |
| Total                                  |   | $          | 16,865  |       | $      | 17,383     |   | $ | 18,132 |   |

|                                   |   | 2006   |   | 2005   |   | 2004   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Interest                expense        |   |   |   |   |   |   |   |   |   |   |
| Recreational                vehicles   |   | $      | 840    |   | $      | 1,171  |   | $ | 135 |   |
| Housing                                |   |   | 281    |   |   | 339    |   |   | 212 |   |
| Other                reconciling items |   |   | 2,708  |   |   | 1,658  |   |   | 1,447 |   |
|                                   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                total      |   | $      | 3,829  |   | $      | 3,168  |   | $ | 1,794 |   |
|                                   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                           |   |   |   |   |   |   |   |   |   |   |
| Recreational                vehicles   |   | $      | 3,547  |   | $      | 3,515  |   | $ | 2,852 |   |
| Housing                                |   |   | 2,522  |   |   | 2,879  |   |   | 3,058 |   |
| Other                reconciling items |   |   | 453    |   |   | 709    |   |   | 1,687 |   |
|                                   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                total      |   | $      | 6,522  |   | $      | 7,103  |   | $ | 7,597 |   |

**3.         INVENTORIES.**

|                                 | December                31, |   | December                31, |   |
|--------------------------------------|-----------------------------|--------|-----------------------------|--------|
|                                 | 2006                        |   | 2005                        |   |
| Raw                materials         |                        |   |                        |   |   |   |
| Recreational                vehicles | $                           | 13,874 |                        | $      | 19,770 |   |
| Housing                              |                        | 6,065  |                        |   | 13,643 |   |
| Total                                |                        | 19,939 |                        |   | 33,413 |   |
|                                 |                        |   |                        |   |   |   |
| Work                in process       |                        |   |                        |   |   |   |
| Recreational                vehicles |                        | 15,661 |                        |   | 15,515 |   |
| Housing                              |                        | 3,466  |                        |   | 5,280 |   |
| Total                                |                        | 19,127 |                        |   | 20,795 |   |
|                                 |                        |   |                        |   |   |   |
| Improved                lots         |                        |   |                        |   |   |   |
| Housing                              |                        | 221    |                        |   | 261 |   |
| Total                                |                        | 221    |                        |   | 261 |   |
|                                 |                        |   |                        |   |   |   |
| Finished                goods        |                        |   |                        |   |   |   |
| Recreational                vehicles |                        | 35,079 |                        |   | 48,935 |   |
| Housing                              |                        | 9,145  |                        |   | 17,900 |   |
| Total                                |                        | 44,224 |                        |   | 66,835 |   |
|                                 |                        |   |                        |   |   |   |
| Total                                | $                           | 83,511 |                        | $      | 121,304 |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued**

**4.         PROPERTY, PLANT AND EQUIPMENT.**

|                                              |   | 2006   |    | 2005   |   |
|---------------------------------------------------|--------|--------|---------|--------|--------|
|                                              |   |   |    |   |   |
| Land                and improvements              |   | $      | 11,562  |   | $      | 13,255 |   |
| Buildings                and improvements         |   |   | 61,043  |   |   | 68,007 |   |
| Machinery                and equipment            |   |   | 24,798  |   |   | 31,468 |   |
| Transportation                equipment           |   |   | 14,310  |   |   | 16,279 |   |
| Office                furniture and fixtures      |   |   | 17,481  |   |   | 19,080 |   |
|                                              |   |   |    |   |   |   |   |
| Total                                             |   |   | 129,194 |   |   | 148,089 |   |
| Less,                accumulated depreciation     |   |   | 72,176  |   |   | 80,508 |   |
|                                              |   |   |    |   |   |   |   |
| Property,                plant and equipment, net |   | $      | 57,018  |   | $      | 67,581 |   |

**5.   SHORT-TERM      BORROWINGS.**

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**6.         LONG-TERM DEBT.**

|                                                                                                                                                                                                                                                                              |   | 2006   |   | 2005   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Term                Loan, variable rate (5.9% and 7.2% at December 31, 2006 and 2005,                respectively), maturities through 2009                                                                                                                                       |   | $      | -      |   | $      | 6,438 |   |
| Obligations                under industrial development revenue bonds, variable rates (effective                weighted-average interest rates of 4.1% and 3.7% at December 31,                2006 and                2005, respectively), with various maturities through 2015 |   |   | 4,350  |   |   | 8,035 |   |
| Obligations                under capital leases, interest imputed at rates ranging from 4.7%                to 5.4%,                with maturities through 2008                                                                                                                  |   |   | 292    |   |   | 663 |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Other                                                                                                                                                                                                                                                                             |   |   | 297    |   |   | - |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Subtotal                                                                                                                                                                                                                                                                          |   |   | 4,939  |   |   | 15,136 |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Less,                current maturities of long-term debt                                                                                                                                                                                                                         |   |   | 1,077  |   |   | 2,223 |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
| Long-term                debt                                                                                                                                                                                                                                                     |   | $      | 3,862  |   | $      | 12,913 |   |

*Accounting      for Derivative Instruments and Hedging Activities*
** **

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**7.   ACCRUED      EXPENSES AND OTHER      LIABILITIES.**

|                                                                                                                                                 |   | 2006   |   | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Wages,                salaries, bonuses and commissions                                                                                              |   | $      | 3,135  |   | $      | 3,156 |   |
| Dealer                incentives, including volume bonuses, dealer trips, interest                reimbursement, co-op advertising and other rebates |   |   | 4,140  |   |   | 4,284 |   |
| Warranty                                                                                                                                             |   |   | 11,099 |   |   | 20,005 |   |
| Insurance-products                and general liability, workers compensation, group health and                other                                 |   |   | 7,593  |   |   | 6,833 |   |
| Customer                deposits and unearned revenues                                                                                               |   |   | 3,865  |   |   | 10,029 |   |
| Litigation                                                                                                                                           |   |   | 345    |   |   |  3,740 |   |
| Interest                                                                                                                                             |   |   | 955    |   |   |  1,980 |   |
| Sales                and property taxes                                                                                                              |   |   | 1,226  |   |   |  1,948 |   |
| Other                current liabilities                                                                                                             |   |   | 2,758  |   |   | 2,881 |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |
| Total                                                                                                                                                |   | $      | 35,116 |   | $      | 54,856 |   |

**8.   COMMON      STOCK MATTERS AND EARNINGS PER SHARE.**

**Stock      Option Plan **

|                                                |   | Numberof                Shares |      | Weighted-AverageExercisePrice |   |
|-----------------------------------------------------|--------|--------------------------------|-----------|-------------------------------|--------|
| Outstanding,                January 1, 2004         |   |                           | 546       |                          | $      | 15.05 |   |
| Granted                                             |   |                           | -         |                          |   | - |   |
| Canceled                                            |   |                           | (184      | )                             |   | 20.52 |   |
| Exercised                                           |   |                           | (35       | )                             |   | 12.21 |   |
|                                                |   |                           |      |                          |   |   |   |
| Outstanding,                December 31, 2004       |   |                           | 327       |                          |   | 12.26 |   |
| Granted                                             |   |                           | -         |                          |   | - |   |
| Canceled                                            |   |                           | (15       | )                             |   | 14.69 |   |
| Exercised                                           |   |                           | (28       | )                             |   | 11.66 |   |
|                                                |   |                           |      |                          |   |   |   |
| Outstanding,                December 31, 2005       |   |                           | 284       |                          |   | 12.19 |   |
| Granted                                             |   |                           | -         |                          |   | - |   |
| Canceled                                            |   |                           | (71       | )                             |   |  13.60 |   |
| Exercised                                           |   |                           | (64       | )                             |   | 9.95 |   |
|                                                |   |                           |      |                          |   |   |   |
|  Outstanding,                December 31, 2006 |   |                           |  149 |                          | $      |  12.48 |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**8.         COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.**

|                                   |   |  Options                Outstanding   |   | Options                Exercisable   |
|----------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------|
|                                   |   |                                                 |   |                                           |   |   |   |   |   |   |
|  Range                of Exercise |   | Number                Outstanding at                 |   | Weighted-Average                Remaining      |   | Weighted-Average |   | Number                Exercisable at |   | Weighted-Average |
| Price                                  |   | December                31, 2006                     |   | Contractual                Life                |   | Exercise                Price |   | December                31, 2006 |   | Exercise                Price |
|                                   |   |                                                 |   |                                           |   |   |   |   |   |   |
|  $10.00                - $12.00   |   |  93                                             |   | 4.1                                            |   |  $10.21 |   | 91 |   |  $10.18 |
|  12.01                - 17.00     |   |  49                                             |   | 5.3                                            |   |                   15.95 |   | 47 |   |                   16.07 |
|  17.01                - 18.68     |   |  7                                              |   | 5.3                                            |   |                   18.68 |   | 7 |   |                   18.68 |
|                                   |   |                                                 |   |                                           |   |   |   |   |   |   |
|                                   |   |  149                                            |   |                                           |   |   |   | 145 |   |   |

**Stock      Award Programs**

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**8.         COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.**

|                                                |   | Numberof                Shares |     |
|-----------------------------------------------------|--------|--------------------------------|----------|
| Outstanding,                January 1, 2004         |   |                           | 86,700   |   |
| Granted                                             |   |                           | 99,600   |   |
| Forfeited                                           |   |                           | (17,190  | ) |
|                                                |   |                           |     |   |
| Outstanding,                December 31, 2004       |   |                           | 169,110  |   |
| Granted                                             |   |                           | 75,600   |   |
| Forfeited                                           |   |                           | (102,410 | ) |
|                                                |   |                           |     |   |
| Outstanding,                December 31, 2005       |   |                           | 142,300  |   |
| Granted                                             |   |                           | 110,000  |   |
| Forfeited                                           |   |                           | (252,300 | ) |
|                                                |   |                           |     |   |
|  Outstanding,                December 31, 2006 |   |                           | -        |   |

|                                                                 |   | Plan                Year |    |
|----------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                 |   | 2006                     |    | 2005 |   | 2004 |   |
|                                                                 |   |                     |    |   |   |   |   |   |   |   |
| Contingent                shares awarded                             |   |                     | 110,000 |   |   | 75,600 |   |   | 99,600 |   |
|                                                                 |   |                     |    |   |   |   |   |   |   |   |
| Shares                forfeited                                      |   |                     | 110,000 |   |   | 75,600 |   |   | 99,600 |   |
|                                                                 |   |                     |    |   |   |   |   |   |   |   |
| Contingent                shares outstanding as of December 31, 2006 |   |                     | **-**   |   |   | **-** |   |   | **-** |   |

**Stock      Purchase Plan **

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**8.         COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.**

**Earnings      Per Share **

|                                                                        |   | 2006   |    | 2005    |   | 2004    |   |
|-----------------------------------------------------------------------------|--------|--------|---------|---------|--------|---------|--------|
| Numerator:                                                                  |   |   |    |    |   |    |   |   |   |   |
| Net                income (loss) available to common stockholders           |   | $      | (31,805 | )  | $      | (26,350 | )      | $ | 15,334 |   |
| Denominator:                                                                |   |   |    |    |   |    |   |   |   |   |
| Number                of shares outstanding, end of period:                 |   |   |    |    |   |    |   |   |   |   |
| Weighted-average                number of common shares used in Basic EPS   |   |   | 15,633  |    |   | 15,551  |   |   | 15,483 |   |
| Stock                options and awards                                     |   |   | -       |    |   | -       |   |   | 68 |   |
| Weighted-average                number of common shares used in Diluted EPS |   |   | 15,633  |    |   | 15,551  |   |   | 15,551 |   |

**Shareholder      Rights Plan **

**Share      Repurchase Programs**

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**9.   COMPENSATION      AND BENEFIT      PLANS.**

**Incentive      Compensation **

**Deferred      Compensation **

**Supplemental      Deferred Compensation **

**Employee      Benefit Plans **

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**10.   INCOME      TAXES.**

|      |   |  2006 |   |  2005 |   |  2004 |   |
|----------------|--------|------------|--------|------------|--------|------------|--------|
| Federal:       |   |       |   |       |   |       |   |
| Current        |   | $          | (2,119 | )          | $      | (8,673     | )      | $ | 7,090 |   |
| Deferred       |   |       | 15,255 |       |   | (5,888     | )      |   | (1,587 | ) |
|           |   |       | 13,136 |       |   | (14,561    | )      |   | 5,503 |   |
| State:    |   |       |   |       |   |       |   |   |   |   |
| Current   |   |       | 448    |       |   | (2,964     | )      |   | 1,192 |   |
| Deferred  |   |       | 2,931  |       |   | (469       | )      |   | (102 | ) |
|           |   |       | 3,379  |       |   | (3,433     | )      |   | 1,090 |   |
|           |   |       |   |       |   |       |   |   |   |   |
| Total     |   | $          | 16,515 |       | $      | (17,994    | )      | $ | 6,593 |   |

|                                                                                                                                                |   |  2006 |   |  2005 |   |  2004 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|------------|--------|
| Computed                federal income tax at federal statutory rate                                                                                |   | $          | (5,845 | )          | $      | (13,074    | )      | $ | 7,298 |   |
| Changes                resulting from:                                                                                                              |   |       |   |       |   |       |   |   |   |   |
| Increase                in cash surrender value of life insurance contracts                                                                         |   |       | (370   | )          |   | (397       | )      |   | (395 | ) |
| Loss                on sale of stock of Miller Building Systems, Inc.                                                                               |   |       | (1,690 | )          |   | -          |   |   | - |   |
| Current                year state income taxes, net of federal income tax benefit                                                                   |   |       | (652   | )          |   | (1,942     | )      |   | 436 |   |
| Preferred                stock dividend exclusion                                                                                                   |   |       | -      |       |   | (9         | )      |   | (189 | ) |
| Extraterritorial                income exclusion                                                                                                    |   |       | -      |       |   | (71        | )      |   | (57 | ) |
| Tax                benefit on prior years' federal and state research and development                (R&D) credits                              |   |       | -      |       |   | (2,378     | )      |   | - |   |
| Tax                benefit of current years' federal R&D tax credit carryforward, AMT                credit carryforward and other credits |   |       | -      |       |   | (454       | )      |   | - |   |
| Decrease                in federal tax reserves, net of additional state tax                reserves                                                |   |       | 325    |       |   | 53         |   |   | (487 | ) |
| Valuation                allowance for NOL, AMT, deferred tax assets and general business                credits                                    |   |       | 24,360 |       |   | -          |   |   | - |   |
| Other,                net                                                                                                                           |   |       | 387    |       |   | 278        |   |   | (13 | ) |
|                                                                                                                                                |   |       |   |       |   |       |   |   |   |   |
| Total                                                                                                                                               |   | $          | 16,515 |       | $      | (17,994    | )      | $ | 6,593 |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**10.        INCOME TAXES, Continued.**

|                                                             |   | 2006    |          | 2005    |    |
|------------------------------------------------------------------|--------|---------|---------------|---------|---------|
| Current              deferred tax asset (liability):             |   |    |          |    |    |   |   |
| Accrued                warranty expense                          |   | $  |  3,484   |    | $  |  6,815 |   |
| Accrued                self-insurance                            |   |    |  2,137   |    |    |  1,900 |   |
| Inventories                                                      |   |    |  959     |    |    |  956 |   |
| Receivables                                                      |   |    |  431     |    |    |  471 |   |
| Prepaid                insurance                                 |   |    |  (564    | )  |    |  (602 | )  |
| Litigation                reserve                                |   |    |  131     |    |    |  1,421 |   |
| Other                                                            |   |    |  278     |    |    | 460  |   |
| Valuation                allowance                               |   |    |  (6,856  | )  |    |  - |   |
| Net              current deferred tax asset                      |   | $       |  -       |    | $  |  11,421 |   |
|                                                             |   |    |          |    |    |   |   |
| Noncurrent              deferred tax asset (liability):          |   |    |          |    |    |   |   |
| Deferred                compensation                             |   | $  |  3,548   |    | $  |  3,950 |   |
| Property                and equipment and other real estate      |   |    |  (1,823  | )  |    |  (636 | )  |
| Intangible                assets                                 |   |    |  (2,557  | )  |    |  (2,459 | )  |
| Notes                receivable                                  |   |    |  348     |    |    |  - |   |
| Federal                net operating loss carryforward credits   |   |    |  8,597   |    |    |  - |   |
| Alternative                minimum tax credit carryover          |   |    |  623     |    |    |  171 |   |
| Federal                research and development credit carryover |   |    |  1,102   |    |    |  420 |   |
| State                net operating loss carryforward credits     |   |    |  3,378   |    |    |  2,777 |   |
| Other                                                            |   |    |  135     |    |    |  56 |   |
| Valuation                allowance                               |   |    |  (17,875 | )  |    |  - |   |
| Net              noncurrent deferred tax asset (liability)       |   | $  |  (4,524  | )  | $  |  4,279 |   |

**11.  RESTRUCTURING      CHARGES AND DISCONTINUED      OPERATIONS.**

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**11.  RESTRUCTURING      CHARGES AND DISCONTINUED OPERATIONS, Continued.**

**Housing      Segment**

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued **

**11.**
**RESTRUCTURING      CHARGES AND DISCONTINUED OPERATIONS, Continued.**

|                                          |   | 2005   |   |
|-----------------------------------------------|--------|--------|--------|
| Cash                                          |   | $      | 242    |   |
| Accounts                and other receivables |   |   | 4,401  |   |
| Prepaid                Expenses               |   |   | 510    |   |
| Inventories                                   |   |   | 10,423 |   |
| Other                long-term assets         |   |   | 124    |   |
| Fixed                assets                   |   |   | 34     |   |
| Accounts                payable               |   |   | (1,777 | ) |
| Other                current liabilities      |   |   | (5,341 | ) |
|                                          |   |   |   |   |
| Net                assets held for sale       |   | $      | 8,616  |   |

**Recreational      Vehicle Segment**

|                                          |   | 2005   |   |
|-----------------------------------------------|--------|--------|--------|
| Accounts                and other receivables |   | $      | 781    |   |
| Prepaid                expenses               |   |   | 51     |   |
| Inventories                                   |   |   | 909    |   |
| Other                long-term assets         |   |   | 437    |   |
| Fixed                assets                   |   |   | 4,144  |   |
| Accounts                payable               |   |   | (116   | ) |
| Other                current liabilities      |   |   | (495   | ) |
|                                          |   |   |   |   |
| Net                assets held for sale  |   | $      | 5,711  |   |

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued**

**12. COMMITMENTS      AND CONTINGENCIES. **

**Lease      Commitments **

**Obligation      to Purchase Consigned Inventories **

**Repurchase      Agreements**

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries**

**Notes      to Consolidated Financial Statements, Continued**

**12.      COMMITMENTS AND CONTINGENCIES, Continued.**

**Corporate      Guarantees**

**Financing      Obligation**

**Self-Insurance      **

Note      7

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued**

**12.       COMMITMENTS AND CONTINGENCIES, Continued.**

**Change      of Control Agreements **

**Litigation      **

----

*Index*

**Coachmen      Industries, Inc. and Subsidiaries **

**Notes      to Consolidated Financial Statements, Continued**

**13.       UNAUDITED INTERIM FINANCIAL INFORMATION.**

|                                                                 |   | 2006                            |
|----------------------------------------------------------------------|--------|------------------------------------------------|
|                                                                 |   | Quarter                Ended    |
|                                                                 |   |  March                31                  |   |  June                30 |   |  September                30 |   |  December                31 |   |
|                                                                 |   |                                           |   |   |   |   |   |   |   |
| Net                Sales                                             |   | $                                              | 162,554 |   | $ | 155,321 |   | $ | 130,715 |   | $ | 115,792 |   |
| Gross                profit                                          |   |                                           | 14,642 |   |   | 15,987 |   |   | 13,065 |   |   | 5,727 |   |
| Net income                (loss) from continuing operations     |   |                                           | 404 |   |   | 480 |   |   | (2,733 | ) |   | (31,366 | ) |
| Net                profit (loss)                                |   |                                           | 2,910 |   |   | 304 |   |   | (3,516 | ) |   | (31,503 | ) |
| Net                profit (loss) per common share - Basic  |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                 |   |                                           | .03 |   |   | .03 |   |   | (.17 | ) |   | (2.01 | ) |
| Discontinuing                operations                         |   |                                           | .16 |   |   | (.01 | ) |   | (.05 | ) |   | (0.01 | ) |
|                                                                 |   |                                           | .19 |   |   | .02 |   |   | (.22 | ) |   | (2.02 | ) |
| Net                loss per common share - Diluted              |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                 |   |                                           | .03 |   |   | .03 |   |   | (.17 | ) |   | (2.01 | ) |
| Discontinuing                operations                              |   |                                           | .16 |   |   | (.01 | ) |   | (.05 | ) |   | (0.01 | ) |
|                                                                 |   |                                           | .19 |   |   | .02 |   |   | (.22 | ) |   | (2.02 | ) |
|                                                                 |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   | 2005                            |
|                                                                 |   | Quarter                Ended                   |
|                                                                 |   |                                           | March                31 |   |   | June                30 |   |   | September                30 |   |   | December                31 |   |
|                                                                 |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Net                sales                                        |   | $                                              | 192,249 |   | $ | 190,031 |   | $ | 180,168 |   | $ | 139,977 |   |
| Gross                profit                                          |   |                                           | 18,785 |   |   | 20,121 |   |   | 13,715 |   |   | 3,338 |   |
| Net                loss from continuing operations              |   |                                           | (953 | ) |   | (1,660 | ) |   | (6,175 | ) |   | (10,572 | ) |
| Net                loss                                         |   |                                           | (1,386 | ) |   | (1,470 | ) |   | (9,346 | ) |   | (14,148 | ) |
| Net                loss per common share - Basic                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                operations                            |   |                                           | (.06 | ) |   | (.10 | ) |   | (.40 | ) |   | (.68 | ) |
| Discontinuing                operations                         |   |                                           | (.03 | ) |   | .01 |   |   | (.20 | ) |   | (.23 | ) |
|                                                                 |   |                                           | (.09 | ) |   | (.09 | ) |   | (.60 | ) |   | (.91 | ) |
| Net                income (loss) per common share - Diluted     |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                operations                            |   |                                           | (.06 | ) |   | (.10 | ) |   | (.40 | ) |   | (.68 | ) |
| Discontinuing                operations                         |   |                                           | (.03 | ) |   | .01 |   |   | (.20 | ) |   | (.23 | ) |
|                                                                 |   |                                           | (.09 | ) |   | (.09 | ) |   | (.60 | ) |   | (.91 | ) |

----

*Index*

| **Item                9.** | **Changes                in and Disagreements with Accountants on Accounting and Financial                Disclosure** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------|

| **Item                9A.** | **Controls                and Procedures** |
|-----------------------------|--------------------------------------------|

**Conclusion      Regarding the Effectiveness of Disclosure Controls and Procedures**

**Management's      Report on Internal Control Over Financial Reporting **

|   | • | Pertain                to the maintenance of records that, in reasonable detail, accurately                and                fairly reflect the transactions and dispositions of the assets of                the                Company; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Provide                reasonable assurance that transactions are recorded as necessary                to permit                preparation of financial statements in accordance with generally                accepted                accounting principles, and that our receipts and expenditures are                being                made only in accordance with authorizations of management and directors;                and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Provide                reasonable assurance regarding prevention or timely detection of                unauthorized acquisition, use or disposition of our assets that could                have                a material effect on the financial statements. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

page 36

**Changes      in Internal Control Over Financial Reporting **

----

*Index*

**Part      III.**

| **Item                10.** | **Directors                and Executive Officers of the Registrant** |
|-----------------------------|-----------------------------------------------------------------------|

**(a)      Identification of Directors **

**(b)      Executive Officers of the Company **

Executive      Officers of the Registrant

**(c)      Beneficial Ownership Reporting Compliance **

**(d)      Code of Ethics **

**(e)      Audit Committee and Financial Expert of the Audit      Committee**

**(f)      Nominations for Director**

| **Item                11.** | **Executive                Compensation** |
|-----------------------------|-------------------------------------------|

| **Item                12.** | **Security                Ownership of Certain Beneficial Owners and Management** |
|-----------------------------|-----------------------------------------------------------------------------------|

----

*Index*

| Plan                Category                                          |   | #                of securitiesto                be issuedupon                exercise ofoutstanding                options, warrants                and rights |    | Weighted-averageexercise                price ofoutstanding                options,warrants                and rights |   | #                of securities remaining available for future issuance under equity                compensation plans |   |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|--------|
|                                                                  |   |                                                                                                                                                           |    |                                                                                                                  |   |                                                                                                                  |   |
| Equity                compensation plans approved by shareholders     |   |  $                                                                                                                                                        | 149,550 |                                                                                                                  | $      | 12.48                                                                                                                 |   | $ | 1,400,102 |   |
|                                                                  |   |                                                                                                                                                           |    |                                                                                                                  |   |                                                                                                                  |   |   |   |   |
| Equity                compensation plans not approved by shareholders |   |                                                                                                                                                           | -       |                                                                                                                  |   | -                                                                                                                     |   |   | - |   |
|                                                                  |   |                                                                                                                                                           |    |                                                                                                                  |   |                                                                                                                  |   |   |   |   |
| Total                                                                 |   |  $                                                                                                                                                        | 149,550 |                                                                                                                  | $      | 12.48                                                                                                                 |   | $ | 1,400,102 |   |

| **Item                13.** | **Certain                Relationships and Related Transactions** |
|-----------------------------|-------------------------------------------------------------------|

| **Item                14.** | Principal                Accountant Fees and Services |
|-----------------------------|-------------------------------------------------------|

**Part      IV.**

| **Item                15.** | **Exhibits                and Financial Statement                Schedule** |
|-----------------------------|-----------------------------------------------------------------------------|

| (a) | The                following Financial Statements and Financial Statement Schedule are                included in Item 8 herein. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

Reports      of Independent Registered Public Accounting      Firm

Consolidated      Balance Sheets at December 31, 2006 and 2005

Consolidated      Statements of Operations for the      years ended December 31, 2006, 2005 and 2004

Consolidated      Statements of Shareholders' Equity for      the years ended December 31, 2006, 2005 and 2004

Consolidated      Statements of Cash Flows for the years ended      December 31, 2006, 2005 and 2004

Notes      to Consolidated Financial Statements

** **

Schedule      II - Valuation and Qualifying      Accounts

Notes to the Consolidated      Financial Statements

Index      to Exhibits

----

*Index*

**SCHEDULE      II**

**VALUATION      AND QUALIFYING ACCOUNTS**

**(in      thousands)**

| Description                                                                |   | Balance                atBeginningof                Period |    | Additions                Chargedto                Costsand                Expenses |   | Payment                orUtilization |                      | Balance                at Endof                Period |     |
|----------------------------------------------------------------------------|--------|------------------------------------------------------------|---------|------------------------------------------------------------------------------------|--------|--------------------------------------|---------------------------|-------------------------------------------------------|----------|
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |
| **Fiscal                year ended December 31, 2006:**                    |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Allowance                for doubtful accounts:                            |   | $                                                          | 1,240   |                                                                               | $      | 1,631                                |                      | $                                                     | (1,737)  | (A) | $ | 1,134 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Product                warranty reserves:                                  |   | $                                                          | 20,005  |                                                                               | $      | 21,598                               |                 | $                                                     | (30,504) | (B)                (C) | $ | 11,099 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Repurchase                agreement and Corporate guarantee loss reserves: |   | $                                                          | 775     |                                                                               | $      | 356                                  |                      | $                                                     | (496)    |   | $ | 635 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Valuation                allowance against deferred tax assets:            |   | $                                                          |  - |                                                                               | $      |  24,731                         |                  (D) | $                                                     | -   |   | $ | 24,731 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| **Fiscal                year ended December 31, 2005:**                    |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Allowance                for doubtful accounts:                            |   | $                                                          | 919     |                                                                               | $      | 988                                  |                      | $                                                     | (667     | )                (A) | $ | 1,240 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Product                warranty reserves:                                  |   | $                                                          | 10,140  |                                                                               | $      | 34,771                               |   (C)           | $                                                     | (24,906  | )                (B) | $ | 20,005 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Repurchase                agreement and Corporate guarantee loss reserves: |   | $                                                          | 726     |                                                                               | $      | 225                                  |                      | $                                                     | (176     | ) | $ | 775 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| **Fiscal                year ended December 31, 2004:**                    |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Allowance                for doubtful accounts:                            |   | $                                                          | 1,208   |                                                                               | $      | 158                                  |                      | $                                                     | (447     | )                (A) | $ | 919 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Product                warranty reserves:                                  |   | $                                                          | 8,658   |                                                                               | $      | 22,189                               |                      | $                                                     | (20,707  | )                (B) | $ | 10,140 |   |
|                                                                       |   |                                                       |    |                                                                               |   |                                 |                      |                                                  |     |   |   |   |   |
| Repurchase                agreement and Corporate guarantee loss reserves: |   | $                                                          | 350     |                                                                               | $      | 564                                  |                      | $                                                     | (188     | ) | $ | 726 |   |

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

| (B) | Claims                paid, less recoveries. |
|-----|----------------------------------------------|

| (C) | Reflects                increase due to specific warranty issues which occurred in 2005,                primarily                camping trailer lift systems and                sidewall lamination issues within the RV                Segment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | Allowance                charged to Continuing Operations $24,360, Discontinued Operations                $371. |
|-----|-----------------------------------------------------------------------------------------------------------------|

----

*Index*

**SIGNATURES**

|                                              |   | COACHMEN                INDUSTRIES, INC. |   |
|---------------------------------------------------|--------|------------------------------------------|--------|
|                                              |   |                                     |   |
| Date:                March 5,                2007 |   |                                     |   |
|                                              |   |                                     |
|                                              |   |                                     |
|                                              |   | /s/                R. M. Lavers          |
|                                              |   | R.                M. Lavers              |
|                                              |   | (Chief                Executive Officer) |
|                                              |   |                                     |
|                                              |   |                                     |
|                                              |   |                                     |
|                                              |   | /s/                C. A. Zuhl            |
|                                              |   | C.                A. Zuhl                |
|                                              |   | (Chief                Financial Officer) |

| /s/                G. B. Bloom  |   | /s/                W. P. Johnson |
|---------------------------------|--------|----------------------------------|
| G.                B. Bloom      |   | W.                P. Johnson     |
| (Director)                      |   | (Director)                       |
|                            |   |                             |
|                            |   |                             |
|                            |   |                             |
| /s/                R. J. Deputy |   | /s/                P. G. Lux     |
| R.                J. Deputy     |   | P.                G. Lux         |
| (Director)                      |   | (Director)                       |
|                            |   |                             |
|                            |   |                             |
|                            |   |                             |
| /s/                J. A. Goebel |   | /s/                E. W. Miller  |
| J.                A. Goebel     |   | E.                W. Miller      |
| (Director)                      |   | (Director)                       |
|                            |   |                             |
|                            |   |                             |
|                            |   |                             |
| /s/                D. W. Hudler |   |                             |
| D.                W. Hudler     |   |                             |
| (Director)                      |   |                             |
|                            |   |                             |

----

*Index*

**INDEX      TO EXHIBITS**

| Number                AssignedIn                RegulationS-K,                Item 601 | Description                of Exhibit                                                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (3)(a)(i)                                                                              | Articles                of Incorporation of the Company as amended on May 30, 1995 (incorporated                by reference to Exhibit 3(i) to the Company's Annual Report on Form                10-K                for the fiscal year ended December 31, 1995).                                                                                                        |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (3)(a)(ii)                                                                             | Articles                of Amendment to Articles of Incorporation (incorporated by reference                to                Exhibit 4.2 to the Company's Form S-3 Registration Statement, File                No.                333-14579).                                                                                                                              |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (3)(b)                                                                                 | By-Laws                as modified through September 9, 2005 (incorporated by reference                to the                Company's Form 8-K filed September 15, 2005).                                                                                                                                                                                             |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (4)(a)                                                                                 | Credit                Agreement dated as of June 30, 2003 among Coachmen Industries, Inc.,                the                Lenders named therein, and Bank One, Indiana, N.A. (incorporated                by                reference to Exhibit 4(a) to the Company's Quarterly Report on Form                10-Q                for the quarter ended June 30, 2003). |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (4)(b)                                                                                 | Stockholder                Rights Agreement (incorporated by reference to Exhibit 1 to Form                8-A dated                January 5, 2000).                                                                                                                                                                                                                       |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (4)(c)                                                                                 | Loan                and Security Agreement dated as of August 2, 2006 among Coachmen                Industries, Inc., the Lenders named therein and LaSalle Business                Credit,                LLC (incorporated by reference to Exhibit 4 to the Company’s Form 8-K                filed August 3, 2006).                                                |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (4)(d)                                                                                 | Amendment                No. 1 to Loan and Security Agreement dated as of August 2, 2006 among                Coachmen Industries, Inc., the Lenders named therein and LaSalle                Business                Credit, LLC.                                                                                                                                          |
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |
| (4)(e)                                                                                 | Amendment                No. 2 to Loan and Security Agreement dated as of August 2, 2006 among                Coachmen Industries, Inc., the Lenders named therein and LaSalle                Business                Credit, LLC.                                                                                                                                          |

| *(10)(a)       | Executive                Benefit and Estate Accumulation Plan, as amended and restated effective                as                of September 30, 2000 (incorporated by reference to Exhibit 10(a)                to the                Company's Annual Report on Form 10-K for the fiscal year ended December                31, 2001).                                         |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(b)       | 2000                Omnibus Stock Incentive Program (incorporated by reference to Exhibit                A to                the Company's Proxy Statement dated March 27, 2000 for its Annual                Meeting                in 2000).                                                                                                                                     |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(b)(i)    | Resolution                regarding Amendment of 2000 Omnibus Stock Incentive Program adopted                by the                Company's Board of Directors on July 27, 2000 (incorporated by reference                to Exhibit 10(b)(i) to the Company's Annual Report on Form 10-K for                the                fiscal year ended December 31, 2001).             |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(c)       | Form                of Change in Control Agreements for certain executive officers (Tier                1)                (incorporated by reference to Exhibit 10(c) to the Company's Annual                Report                on Form 10-K for the fiscal year ended December 31,                2000).                                                                       |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(d)       | Form                of Change in Control Agreements for certain executive officers (Tier                2)                (incorporated by reference to Exhibit 10(d) to the Company's Annual                Report                on Form 10-K for the fiscal year ended December 31,                2000).                                                                       |
|  *(10)(e) |  Coachmen                Industries, Inc. Supplemental Deferred Compensation Plan (Amended                and                Restated as of January 1, 2003) (incorporated by reference to Exhibit                10(e) to the Company's Annual Report on Form 10-K for the fiscal                year                ended December 31, 2004).                               |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(f)       | Executive                Annual Performance Incentive Plan effective January 1, 2002 (incorporated                by reference to Exhibit 10(f) to the Company's Annual Report on Form                10-K                for the fiscal year ended December 31, 2002).                                                                                                            |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(g)       | Long                Term Incentives Performance Based Restricted Stock Plan effective                January                1, 2003 (incorporated by reference to Exhibit 10(g) to the Company's                Annual Report on Form 10-K for the fiscal year ended December 31,                2002).                                                                            |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| *(10)(h)       | Form                of Restricted Stock Agreement under the Coachmen Industries, Inc.                Long                Term Incentives Performance Based Restricted Stock Plan (incorporated                by                reference to Exhibit 10(h) to the Company's Annual Report on Form                10-K for                the fiscal year ended December 31, 2004). |
|           |                                                                                                                                                                                                                                                                                                                                                                               |
| (10)(i)        | Loan                and Security Agreement dated as of August 2, 2006 among Coachmen                Industries, Inc., the Lenders named therein and LaSalle Business                Credit,                LLC (included in Exhibit 4(c)).                                                                                                                                         |
|           |                                                                                                                                                                                                                                                                                                                                                                               |

----

*Index*

| (10)(j) | Amendment                No. 1 to Loan and Security Agreement dated as of August 2, 2006 among                Coachmen Industries, Inc., the Lenders named therein and LaSalle                Business                Credit, LLC (included in Exhibit 4(d)).                |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                         |
| (10)(k) | Amendment                No. 2 to Loan and Security Agreement dated as of August 2, 2006 among                Coachmen Industries, Inc., the Lenders named therein and LaSalle                Business                Credit, LLC (included in Exhibit                4(e)). |

| (10)(l)                          | Closing                Documents and Contract on Sale of Real Estate in                Tennessee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(m)                          | Form                of the 2006 Restricted Stock Award Agreement and listing of the maximum                number of shares each Executive Officer may earn under the Agreements                (incorporated by reference to Exhibit 10(a) to the Company's Quarterly                Report on Form 10-Q for the quarter ended March 31,                2006).                                                                                                                                                                                                                                                                                                                          |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(n)                          | Entry                into a Material Definitive Stock Purchase Agreement for the Sale                of Miller                Building Systems, Inc. (incorporated by reference to Exhibit 10 to                the                Company’s Form 8-K filed April 4, 2006).                                                                                                                                                                                                                                                                                                                                                                                                        |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(o)                          | Entry                into a Material Definitive Stock Purchase Agreement for the Sale                of Cessna                1994 Citation Jet (incorporated by reference to Exhibit 10 to the                Company's Form 8-K filed June 2, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(p)                          | Program                Agreement and related Repurchase Agreement dated as of May 10, 2004                between Textron Financial Corporation and certain subsidiaries of                Coachmen                Industries, Inc. (incorporated by reference to Exhibit 10.2 to the                Company's Quarterly Report on Form 10-Q for the quarter ended September                30, 2004).                                                                                                                                                                                                                                                                                   |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *(10)(q)                         | Summary                of Life Insurance and Long Term Disability Benefits for                Executives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *(10)(r)                         | Description                of Non-management Director Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *(10)(s)                         | Summary                of 2005 Performance Metrics under the Company's Executive Annual                Performance Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(t)                     | Mentor                Protégé Agreement between Coachmen Industries, Inc. and The Warrior Group,                Inc. (incorporated by reference to Exhibit 10.1 to the Company's                Current                Report on Form 8-K filed August 19, 2005).                                                                                                                                                                                                                                                                                                                                                                                                         |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(u)   (10)(v) | Entry                into a Material Definitive Stock Purchase Agreement for the Sale                of Palm                Shores, Brevard County, Florida property (incorporated by reference                to                Exhibit 10 to the Company's Form 8-K filed June 30, 2006). Severance                and Early Retirement Agreement and General Release of All Claims                dated                October 23, 2006 among Coachmen Industries, Inc. and Claire C. Skinner                (incorporated by reference to Exhibit 10(a) to the Company's Quarterly                Report on Form 10-Q for the quarter ended September 30,                2006). |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)(w)                          | Form                of the 2006 Restricted Stock Award Agreement and listing of the maximum                number of shares each Executive Officer may earn under the Agreements                (incorporated by reference to Exhibit 10(a) to the Company's Quarterly                Report on Form 10-Q for the quarter ended September 30,                2006).                                                                                                                                                                                                                                                                                                                      |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (11)                             | No                Exhibit - See Consolidated                Statements of Operations                and Note                8                of                Notes to Consolidated Financial Statements, contained                herein.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (14)                             | Code                of Ethics (incorporated by reference to Exhibit 14 to the Company's                Annual                Report on Form 10-K for the fiscal year ended December 31,                2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (21)                             | Registrant                and Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (23)                             | Consent                of Ernst & Young LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (31.1)                           | Rule                13a-14(a) Certification of Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (31.2)                           | Rule                13a-14(a) Certification of Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (32)                             | Section                1350 Certification of Chief Executive Officer and Chief Financial                Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

----