SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-K

                    For the fiscal year ended April 30, 1997

                    SUBMITTED PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          ----------------------------

                              Cruise America, Inc.
                             11 West Hampton Avenue
                            Mesa, Arizona 85210-5258
                            Telephone: (602) 464-7300

                           Commission File No. 1-9471

                              I.R.S. No. 59-1403609

                         State of Incorporation: Florida

                          ----------------------------

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


Title of each class                    Name of each exchange on which registered
COMMON STOCK                                   AMERICAN STOCK EXCHANGE

            Securities registered pursuant to Section (g) of the Act:

                                    - NONE -

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports)  and (2) has been  subject to such  filing
requirements for the past 90 days.


YES            X               No
           ---------                     ---------

The aggregate market value of voting stock held by non-affiliates as of June 23,
1997, was approximately  $22,563,000.  As of June 23, 1997,  5,753,200 shares of
the  registrant's  Common Stock were outstanding of which 4,297,798 were held by
non-affiliates of the registrant.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

Information  contained in the Registrant's  proxy materials to be filed with the
Securities and Exchange  Commission has been  incorporated  by reference in Part
III of this Annual Report on Form 10-K.
<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                -----------------
<S>     <C>                                                                                                             <C>
ITEM                                                                                                                   PAGE
---------------------------------------------------------------------------------------------------------------------------


                                                           PART I

1.       Business.........................................................................................................1

2.       Properties.......................................................................................................4

3.       Legal Proceedings................................................................................................4

4.       Submission of Matters to a Vote of Security Holders..............................................................4


                                                           PART II

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

6.       Selected Financial and Operating Data............................................................................6

7.       Management's Discussion and Analysis of Financial Condition and Results of Operations............................7

8.       Financial Statements and Supplementary Data.....................................................................11

9.       Changes in and Disagreements With Accountants on Accounting and Financial Disclosure............................27


                                                          PART III

10.      Directors and Executive Officers of the Registrant..............................................................27

11.      Management Remuneration.........................................................................................27

12.      Security Ownership of Certain Beneficial Owners and Management..................................................27

13.      Certain Relationships and Related Party Transactions............................................................27


                                                           PART IV

14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................................28
</TABLE>
<PAGE>
                                     PART I

ITEM 1.           BUSINESS

This Annual  Report on Form 10-K  contains  "forward-looking  statements"  which
involve  risks and  uncertainties.  The  Company's  actual  results could differ
materially from those anticipated in the forward-looking  statements as a result
of certain  factors,  including  those set forth in  Exhibit  99 of this  Annual
Report on Form 10-K.

General

Cruise  America,  Inc.  believes  it is one of the  largest  companies  in North
America specializing in the rental and sale of Recreational  Vehicles (RVs). The
Company  began sales and rental  operations in Miami,  Florida in 1972,  with an
initial  strategy to locate rental centers in metropolitan  gateway cities which
are  destinations  for large  numbers of domestic and  international  travelers.
Since that time, the Company has  established 91 additional  rental and/or sales
locations  across the United States and Canada.  At April 30, 1997,  the Company
operated a total of 16 Hub offices, 76 Satellite offices,  and a rental fleet of
2,810 recreational vehicles across North America.

RV rentals  provide the consumer with the benefits of use without the burdens of
ownership, and make Recreational Vehicle vacations available to a broad range of
consumers. RVs combine transportation, lodging, and cooking facilities at a cost
which the Company  believes  provides an  economical  alternative  to automobile
travel and related hotel and restaurant  expenses.  Additionally,  technological
advances,  including more aerodynamic  design,  lighter weight  construction and
fuel-efficient engines, have substantially increased the fuel-efficiency of RVs.
The Company also rents and sells motorcycles from selected locations.

Besides rentals,  the Company sells new and used RVs (including vehicles retired
from the rental fleet) from its Hub offices.  The sales effort is marketed under
the name RV DEPOT and for the year ended April 30, 1997 represents approximately
44% of total revenue.

The amounts of revenues,  income and  identifiable  assets  attributable  to the
Company's foreign  operations is set forth in Note 10 to Consolidated  Financial
Statements included elsewhere in this Form 10-K.

Cruise America Rental System

Cruise  America  rents  a  wide  variety  of RVs at  each  of its 16 Hub  and 76
Satellite  offices across North America.  The Company's peak rental fleet in the
year  ended  April  30,  1997  consisted  of  3,773  RVs,  of which  2,631  were
motorhomes,  861 were truck  campers,  158 were  motorcycles  and 123 were sport
utility  vehicles,  vans and buses. The majority of vehicles  available for rent
were current model, one or two year old vehicles.

Cruise America's RVs include a wide range of sizes up to 31 feet. Cruise America
motorhomes  and truck  campers are fully self  contained  with  kitchen and bath
facilities,   heat  and  air  conditioning  as  well  as  comfortable   sleeping
arrangements.  Most  motorhomes  have electric  generators and microwave  ovens.
Cruise  America  motorhomes and truck campers are as easy to drive as a car with
no special license  requirements.  All motorhomes and truck campers are equipped
with automatic  transmission,  power  steering and power brakes.  Most also have
cruise control.

Over the years, the Company's use of rental vehicles that can easily be disposed
of after the peak summer rental season has increased significantly.  The Company
also began in the Spring of 1993 to purchase  motorhomes  that are designed such
that the coach portion can be easily  removed from the old chassis and placed on
a new  chassis.  These two  changes in the rental  fleet are  designed to reduce
maintenance  and holding  costs and increase  the service life of the  vehicles.
Virtually  the entire  rental fleet is now made up of these  specially  designed
RVs.

The Company  purchases  its rental fleet from several  manufacturers,  including
Chevrolet,  Ford, Fleetwood,  Damon, Four Winds,  Winnebago,  Honda, Triumph and
individual  Harley-Davidson  dealers.  The Company  believes it enjoys excellent
relationships  with its  suppliers,  most of which  have been  suppliers  to the
Company for many years.
                                        1
<PAGE>
The Company believes,  if the need arose, that it could equip its fleet with RVs
from other suppliers without any material adverse effect on its operations. Most
of the  Company's  rental  vehicles  are  pledged as  security  under  financing
agreements with banks and other financial institutions.

Subject  to  certain  deductible  amounts  and  retention  limits,  the  Company
maintains coverage to insure against claims based upon personal injury, property
damage  and  loss of  Company  property  in  connection  with its  business  and
operations.  In light of current  insurance costs and the Company's  experience,
the Company believes that its policy limits provide sufficient  coverage and the
deductible amounts are reasonable.

Hub Offices

At April 30,  1997,  the Company  operated  Hub offices from 16 locations in the
United  States  and  Canada.   Each  office  consists  of  full  service  rental
operations,  new,  used and  fleet RV  sales,  fleet  maintenance,  and  vehicle
storage. In addition,  each Hub office provides management and marketing support
and other services to the Satellite offices within its respective service area.

Among the factors which the Company  considers  significant  in the selection of
locations  for Hub  offices are  population,  demographics,  proximity  to major
airports,  vacation  destinations and favorable  economic  conditions within the
potential service area for the rental and sale of RVs.

Satellite Offices

At April 30, 1997,  the Company  operated 76 Satellite  rental  centers,  called
Dealers.  Dealers are independently  owned and operated businesses that contract
to  rent  the  Company's  RVs.  Typically,  the  Dealer  also  is  engaged  in a
complementary business such as car, truck or equipment rentals, or RV sales. The
Satellite  office  operator  provides the  facilities  and all personnel for the
rental operation and is paid a commission on the rental revenue  generated.  The
Company  provides  each  Dealer  with  vehicles,  maintenance,  service,  forms,
supplies, advertising and management support.

Fleet Planning and Management

Fleet management is accomplished through the coordination of reservations, fleet
purchasing,  fleet  distribution,  fleet  sales,  marketing  and  the  motorhome
rechassis/refurbish  operation.  Information derived from each of these areas is
used to establish a fleet plan designed to maximize vehicle utilization.

Reservation  information from local,  central and international  reservations is
used to schedule vehicle requirements and demands. This information is also used
to schedule routine  maintenance and to establish pricing and one-way surcharges
in order to control  vehicle  utilization  and  availability.  Expansion  of the
rental fleet and the timing of vehicle purchases, as well as the distribution of
rental  vehicles  among rental  centers,  are  determined  in part by historical
reservation  demand and anticipated  demand as expressed to management by travel
wholesalers and travel agents.

Vehicle  purchases  are  generally  scheduled so that new vehicles are delivered
according to anticipated  rental demand.  The Company encourages one-way vehicle
flow into the sunbelt  locations in the fall and into the snowbelt  locations in
the spring.

Vehicles  from  the  fleet  are  sold  at all Hub  locations.  Fleet  sales  are
controlled at the Company's  headquarters.  Because fleet sales are seasonal and
regionalized,  the  Company  maintains a wide  selection  of RVs during the peak
selling months in order to maximize sales.
                                        2
<PAGE>
Customer Service

The Company believes strongly in familiarizing the customer in all aspects of RV
usage.  Each customer is given a full  demonstration  prior to rental as well as
extensive  written  instructions.  Multilingual  personnel are retained at major
gateway  markets to assist foreign  language  speaking  customers.  On the road,
customers have access to 24-hour toll-free lines for assistance.

All vehicles are cleaned,  inspected and serviced prior to pickup,  and detailed
quality  control  procedures  are used to  assure  that  vehicles  are  properly
prepared and maintained. The Company makes available to rental customers luggage
storage, kitchen supplies and utensils, linens, airport pickup and maps.

Advertising and Promotion

The Company's  objective is to provide  quality  rental  services at competitive
prices  to both  domestic  and  international  customers.  Rental  services  are
marketed  directly to the consumer and through tour operators and travel agents.
The Company's  rental  marketing  program is designed to level out rental demand
throughout the year in order to maximize vehicle utilization.

The  Company's  rental  services are marketed  internationally  by  commissioned
general  sales  agents  and by  approximately  300 travel  wholesalers  in their
brochures and related travel media in  approximately  25 countries.  The Company
also engages in direct advertisement in several foreign markets.  Currently, the
Company's  rental  programs are featured in North  American  destination  travel
brochures published in many countries throughout the world.

The Company also promotes its rental programs  through travel agents,  airlines,
automobile  clubs and other targeted  marketing  groups.  The Company has been a
participating  sponsor in various fund raising and sporting events. In addition,
the Company offers special motorhome  vacations and discounted rates designed to
stimulate business in the off-season.

The Company also conducts a balanced domestic  advertising program for sales and
rentals, which includes  advertisements in telephone  directories,  print media,
industry trade media, local newspaper displays, classified advertising and other
select  publications.  To a lesser extent,  the Company  advertises on radio and
television  and through  direct mail  promotions.  The Company also promotes its
products  and services at RV shows,  travel  trade and consumer  shows and other
special events.

Reservations

The Company's  reservations  department  maintains  toll-free customer telephone
service  across the United  States and Canada.  The  international  reservations
department   receives,    confirms,   processes   and   invoices   international
reservations.  Domestically,  the reservations department also performs customer
credit  qualification   procedures  and  processes  travel  agent  requests  and
bookings.

Vehicle Service and Parts

The Company maintains or has access to fully-equipped service facilities at each
office to support its rental fleet.  In addition,  the Company's  Mesa,  Arizona
office  maintains a retail service  department,  which is equipped to handle the
repair of virtually  any type of RV. The parts  department  supports the rental,
sales and service functions of the Company, and also provides support to the Hub
and Satellite  rental centers by stocking parts that are not readily  available.
In addition,  the parts  department  stocks  accessory  items usually sold to RV
owners.  The parts  department  conducts  mail order  sales,  both  foreign  and
domestic,  for scarce or specialized RV parts.  Parts are sold at both wholesale
and retail.
                                        3
<PAGE>
Competition

The Company  believes it is one of the largest  companies in North  America that
specializes  in the  rental and sale of RVs.  The  Company  competes  with other
leisure and  vacation  activities,  many of which are more  visible and familiar
than the Company's  product.  The Company competes in the rental and sale of RVs
with several firms,  some of which operate in multiple  locations.  In addition,
there are local  competitors  that  operate  in  single  locations.  Significant
competitive factors in the RV rental and sales industry include price,  service,
reliability,  quality of  product,  convenience,  the  ability to offer  one-way
rentals and vehicle availability. The Company believes that it is competitive in
all of these categories.

Employees

As of April 30, 1997, the Company had 363 full-time  employees.  The Company has
no contracts or collective bargaining agreements with labor unions and has never
experienced  work stoppages.  The Company's  management  considers its relations
with employees to be excellent.


ITEM 2.           PROPERTIES

The Company's  principal  executive  offices are located in Mesa,  Arizona.  The
Company  owns  facilities  in Mesa,  Miami,  Denver,  and  Oakland,  subject  to
mortgages of $2,228,000.

The  Company  leases  its  facilities  at each of its other Hub  rental  centers
pursuant to operating leases expiring at various times through the year 2004.


ITEM 3.           LEGAL PROCEEDINGS

On May 14, 1987, one of the Company's  concession  operators commenced a lawsuit
entitled  Altman's  America,  et. al. v. American  Land Cruisers of  California,
Incorporated,  et. al. in the Superior  Court of the State of California for the
County of Los Angeles.  The action arose out of a claim for an alleged  wrongful
termination  by the  Company of a sublease  agreement.  This case has been tried
twice.  The first trial  resulted in a judgement in the amount of  approximately
3.5 million. That judgement was reversed on appeal and remanded for retrial. The
second trial resulted in judgements for the plaintiffs in the amount of $235,000
and a judgement  for the Company of $634,000,  which equaled a net judgement for
the Company of $399,000.  On July 18, 1996 the Appellate Court reduced the total
amount due to the Company by  approximately  $400,000  and remanded the case for
retrial. The Company intends to pursue all means to defeat the case.

The Company is a party to various  other claims,  legal  actions and  complaints
arising in the ordinary  course of business.  In the opinion of management,  the
disposition  of these  matters  will not have a material  adverse  effect on the
financial condition of the Company.


ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS

There were no matters  which were brought to a vote of security  holders  during
the fourth quarter of fiscal 1997.
                                        4
<PAGE>
                                     PART II

ITEM 5.           MARKET FOR REGISTRANT'S COMMON STOCK AND
                  RELATED STOCKHOLDER MATTERS

The Company's  Common Stock is traded on the American  Stock  Exchange under the
symbol RVR. The following table sets forth, for the periods indicated,  the high
and low sales prices as reported by the American Stock Exchange.


                                      1997                       1996
                              ----------------------     ----------------------
Quarter Ended                    High        Low            High        Low
-------------------------------------------------------------------------------
July 31, 1996 and 1995        8          6 1/8           5 3/8      4 3/8
October 31, 1996 and 1995     6 11/16    5 7/16          5 5/8      4 5/8
January 31, 1997 and 1996     5 5/8      4 7/8           5 15/16    4 15/16
April 30, 1997 and 1996       5 3/16     4 1/2           7 1/8      5 1/8

As of April 30, 1997, there were 216 holders of record,  not including  security
position listings.

The Company has not paid cash dividends since 1982. The Company anticipates that
for the foreseeable future its earnings will be retained for use in its business
and no cash dividends will be paid on its Common Stock. Declaration of dividends
in the future  will  remain  within the  discretion  of the  Company's  Board of
Directors,  which will review its dividend policy from time to time on the basis
of  the  Company's  financial  condition,   capital  requirements,   cash  flow,
profitability,  business  outlook and other  factors.  The Company  currently is
restricted  from paying cash dividends  under the terms of some of its financing
agreements. See Note 7 to the Consolidated Financial Statements.
                                        5
<PAGE>
ITEM 6.         SELECTED FINANCIAL AND OPERATING DATA
                (In thousands except per share data and Selected Operating Data)

The selected  consolidated  financial  data  presented  below under the captions
"Selected  Statement of Operations  Data" and "Selected  Balance Sheet Data" has
been derived from the consolidated  financial  statements of the Company,  which
have been  audited  by KPMG  Peat  Marwick  LLP,  independent  certified  public
accountants.   The  information   below  should  be  read  in  conjunction  with
"Management's  Discussion and Analysis of Consolidated  Financial  Condition and
Results of Operations" and the Consolidated  Financial Statements of the Company
(including the notes thereto).


<TABLE>
<CAPTION>
                                                              Year Ended April 30,
                                             -----------------------------------------------------

                                               1997        1996       1995      1994        1993
                                             -----------------------------------------------------
<S>                                          <C>         <C>        <C>        <C>         <C>   
Selected Statement of Operations
Data:

Rental Revenue                               $ 53,764     44,319     36,842     40,537      45,686
Sales                                          41,856     43,569     48,476     55,540      61,077
                                             --------    --------   -------    -------     -------
Total Revenue                                  95,620     87,888     85,318     96,077     106,763
Gross Profit from Operations                   33,968     29,535     27,037     21,108      26,273
Net Earnings (Loss)                          $  2,713      1,006        185     (3,101)       (800)
Earnings (Loss) Per Share                    $    .46        .17        .03       (.55)       (.14)
Shares Used in Calculation                      5,869      5,859      5,694      5,630       5,543

Selected Balance Sheet Data
(end of period):

Rental Vehicles, Net                         $ 73,965     63,518     51,315     46,474      70,755
Total Assets                                  107,224     95,695     89,378     89,762     105,372
Total Rental Vehicle Financing                 49,480     40,284     30,622     25,356      50,950
Long-Term Debt, excluding current
         installments                          13,771     19,412     23,892     28,432       8,937
Stockholders' Equity                         $ 26,064     23,462     22,329     22,064      24,761

Selected Operating Data:

Rental Fleet - Peak                             3,773      3,099      2,710      4,015       4,019
Rental Fleet - End of Period                    2,810      2,366      1,884      1,790       3,158
Total Rental Centers                               92         86         84         95          86
Rental Vehicles Sold                            1,538      1,692      1,494      1,807       2,111
Revenue Days1                                 571,903    462,783    370,144    456,256     477,745
</TABLE>

1  Revenue  days is  calculated  as the  total  number  of days  that all  fleet
   vehicles were rented during the period.
                                        6
<PAGE>
ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  CONSOLIDATED FINANCIAL CONDITION AND RESULTS
                  OF OPERATIONS

The following  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations contains "forward-looking  statements" which involve risks
and  uncertainties.  The Company's  actual results could differ  materially from
those  anticipated  in the  forward-looking  statements  as a result of  certain
factors,  including  those set forth in Exhibit 99 of this Annual Report on Form
10-K.  The  following  discussion  also should be read in  conjunction  with the
Company's Consolidated Financial Statements and Notes thereto included elsewhere
in this Annual Report on Form 10-K.

The Company's profits are derived principally from its rental business.  For the
years ended April 30, 1997 and 1996, 90% and 85%, respectively, of the Company's
gross profit from operations was from rentals. The Company's sales business also
contributes  to its  profits,  but the gross  margins in the sales  business are
substantially less than in the rental business.  The Company augments its rental
vehicle sales at retail with wholesale sales and has developed fleet  repurchase
arrangements  with fleet  manufacturers.  The  Company  has also  developed  the
ability to replace the chassis  portion of the motorhome fleet which extends the
vehicle's  life and reduces  the  Company's  reliance on sales to achieve  fleet
turnover. The rental business is seasonal,  with recreational travel and tourism
being  highest in the summer  months.  Rental  revenue in the summer months (May
through  October)  represents  the  majority of rental  revenue for the 12 month
operating  cycle.  Certain rental costs are variable such as  depreciation,  but
many rental costs are fixed such as interest, licenses and insurance. Because of
these seasonal  characteristics the Company  historically  reports net losses in
the months from  November  through  April and reports  net  earnings  during the
period  from  May  through  October.  Owing  to the  seasonality  of its  rental
business,  the results of any interim period are not  necessarily  indicative of
the results which might be expected for a full year.

Results of Operations

For the year ended  April 30, 1997  compared  to the year ended April 30,  1996.
Rental Revenue  increased 21% to $53,764,000 in 1997 from $44,319,000 in 1996. A
revenue day  increase of 24% was offset  slightly by a 2% decline in revenue per
day. A larger fleet along with an increase in vehicle  utilization  produced the
increase in revenue days.

Sales  decreased 4% to $41,856,000 in 1997 from  $43,569,000 in 1996.  Increased
rental  vehicle  sales were offset by declines  in new and used  vehicle  sales,
especially in the California market, due to a continuing  industry-wide slowdown
in demand.

Cost of Rentals as a percentage  of Rental  Revenue was 43% in 1997  compared to
44% in 1996. This  improvement was due to an increase in utilization,  offset in
part by a slight decline in rental rates.

Cost of Sales as a percentage  of Sales was 92% in 1997 compared to 90% in 1996.
The primary  cause of this  increase was an increase in the  percentage of lower
margin rental vehicle sales as a percentage of Total Sales.

Gross Profit from  Operations  as a percentage  of Total Revenue was 36% in 1997
compared  to 34% in 1996.  This  resulted  from  higher  margin  rental  revenue
increasing as a percentage of Total Revenue.

Interest  Expense was  $7,430,000  in 1997  compared to $7,279,000 in 1996, a 2%
increase.  This was due to higher average debt levels  partially offset by lower
average interest rates.

Selling,  General and Administrative  Expenses as a percentage of total revenues
was 24% in both 1997 and 1996.

Income Tax Expense in 1997  represented a 29% effective tax rate compared to 26%
in 1996. See note 6 to the Consolidated Financial Statements.
                                        7
<PAGE>
For the year ended  April 30, 1996  compared  to the year ended April 30,  1995.
Rental Revenue increased to $44,319,000 in 1996, from $36,842,000 in 1995, a 20%
increase.  A 25%  improvement in revenue days more than offset a 4% reduction in
revenue  per day.  The  improvement  in revenue  days was due to an  increase in
utilization as well as a larger fleet.

Sales in 1996 were  $43,569,000  compared to $48,476,000 in 1995, a 10% decline.
An  increase in rental  vehicle  sales was more than offset by a decrease in new
and used vehicle sales which have been affected by an industry-wide  slowdown in
demand beginning in fiscal 1995.

Cost of Rentals as a percentage  of Rental  Revenue was 44% in 1996  compared to
42% in 1995.  This slight  increase was due  primarily to a reduction in revenue
per day while variable costs increased with volume.

Cost of Sales as a percentage  of Sales was 90% in 1996 compared to 88% in 1995.
This increase was due to a shift in sales mix toward lower margin rental vehicle
sales and away from higher margin new and used vehicle sales.

Gross Profit from  Operations  as a percentage  of Total Revenue was 34% in 1996
compared to 32% in 1995. This improvement is due to an increase in higher margin
Rental Revenue as a percentage of Total Revenue.

Interest  Expense in 1996 was  $7,279,000  compared to  $6,035,000 in 1995, as a
result of higher interest rates and higher average debt levels.

Selling,  General and Administrative  Expenses were $20,897,000 in 1996 compared
to $20,779,000 in 1995.  This slight increase was mainly the result of personnel
costs related to the Company's  headquarters  operations.  Selling,  General and
Administrative  Expenses as a percentage of total  revenues was 24% in both 1996
and 1995.

Income tax expense in 1996  represented a 26% effective tax rate compared to 17%
in 1995. See note 6 to the consolidated financial statements.

Liquidity and Capital Resources

As of April 30, 1997, the Company had a working capital deficit in the amount of
$6,257,000. The Company's working capital, as presented,  includes a significant
amount of Rental  Vehicle  Financing.  The Company's  working  capital does not,
however,  include any of the related assets;  Rental  Vehicles,  even though the
Company historically sells a significant number of Rental Vehicles each year. If
the related assets were included in the presentation, the Company would not have
a working capital deficit.  The Company believes that,  during fiscal 1998, cash
generated  from  operations  and  financing  available  from  banks and  vehicle
manufacturers  will be  sufficient  for its capital  and  operating  needs.  The
Company  currently has lines of credit  totaling  $120,000,000 to finance rental
vehicle purchases, of which approximately  $71,000,000 is unused. Interest rates
on these  lines  range  from U.S.  prime to U.S.  prime  plus 2% for U.S.  based
vehicles and Canadian prime plus 1% for Canadian based vehicles.  The Company is
required  to make  monthly  principal  curtailments  of 1.5% of the  outstanding
balances of its lines of credit. It is anticipated that borrowings under current
financing  arrangements  will  increase  to finance the  purchase of  additional
rental  vehicles during the first quarter of fiscal year ended April 30, 1998 as
the Company  prepares for the peak summer rental season.  The Company  presently
anticipates  that  future  purchases  of new rental  vehicles  will be  financed
primarily with funds available under lines of credit from financial institutions
and manufacturers,  but the Company may seek additional debt or equity financing
in the future.

Recent Accounting Pronouncement

In February,  1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standard No. 128, "Earnings Per Share" ("Statement 128").
Statement 128  established  standards for computing and presenting  earnings per
share ("EPS"), and supersedes APB Opinion No. 15. Statement 128 replaces primary
EPS with basic EPS and  requires  dual  presentation  of basic and diluted  EPS.
Statement 128 is effective for annual and interim  periods ending after December
15, 1997. Earlier adoption is not permitted. After adoption all prior period EPS
data
                                        8
<PAGE>
shall be  restated  to conform to  Statement  128.  Basic and  diluted  EPS,  as
calculated under Statement 128 would have been $.47 and $.46 for the fiscal year
ended April 30, 1997.

Other Matters

The Company  believes that its business has not been  significantly  affected by
inflation.  The  Company  believes  that  increases  in the  cost of new  rental
vehicles  resulting  from  inflation  will be offset by higher resale values for
used rental  vehicles.  Historically,  increases  in  operating  costs have been
passed on to the consumer.  Higher interest rates and  construction  costs would
increase the cost of acquiring and opening new locations.

The Company's wholly owned subsidiary,  Cruise Canada,  Inc. was incorporated in
October 1987 and began operations in 1988.  Cruise Canada,  Inc. operated a peak
fleet of  approximately  1,038  vehicles  for the year ended April 30, 1997 from
four hub locations and one satellite location in Canada.  Financial  information
regarding  Canadian  operations  is  included  in  Note  10 to the  Consolidated
Financial Statements.
                                        9
<PAGE>
                          Independent Auditors' Report

The Board of Directors
Cruise America, Inc.:

We have audited the accompanying  consolidated balance sheets of Cruise America,
Inc.,  and  subsidiaries  as of  April  30,  1997  and  1996,  and  the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
each  of the  years  in the  three-year  period  ended  April  30,  1997.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Cruise  America,
Inc., and  subsidiaries  as of April 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  April  30,  1997,  in  conformity  with  generally  accepted   accounting
principles.



                                                      KPMG Peat Marwick LLP

Phoenix, Arizona
June 26, 1997
                                       10
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

                                   A S S E T S

<TABLE>
<CAPTION>
                                                                                                   April 30,
                                                                                ------------------------------------------------
Current Assets:                                                                      1997                             1996
                                                                                ------------------------------------------------
<S>                                                                             <C>                              <C>  
Cash and Cash Equivalents.....................................................  $         4,029                            2,341
Accounts Receivable, Net......................................................            5,897                            4,056
Inventories...................................................................           11,909                           11,752
Prepaid Expenses and Other Current Assets.....................................            1,067                              889
                                                                                ---------------                  ---------------
         Total Current Assets.................................................           22,902                           19,038
                                                                                ---------------                  ---------------

Rental Vehicles...............................................................           92,463                           79,094
Less Accumulated Depreciation.................................................           18,498                           15,576
                                                                                ---------------                  ---------------
         Net Rental Vehicles..................................................           73,965                           63,518
                                                                                ---------------                  ---------------

Property and Equipment........................................................           14,408                           17,426
Less Accumulated Depreciation.................................................            6,467                            6,916
                                                                                ---------------                  ---------------
         Net Property and Equipment...........................................            7,941                           10,510
                                                                                ---------------                  ---------------

Deposits and Other Assets.....................................................            2,416                            2,629
                                                                                ---------------                  ---------------
                                                                                $       107,224                           95,695
                                                                                ---------------                  ---------------
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       11
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      (In thousands except per share data)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                                   April 30,
                                                                                ------------------------------------------------
Current Liabilities:                                                                 1997                             1996
                                                                                ------------------------------------------------
<S>                                                                             <C>                              <C>  
Floor Plan Contracts..........................................................  $         3,665                            2,245
Current Installments of Rental Vehicle Financing..............................           13,014                           10,723
Current Installments of Long-Term Debt........................................            4,128                            3,023
Accounts Payable and Accrued Expenses.........................................            2,704                            1,980
Customer Deposits.............................................................            5,648                            4,605
                                                                                ---------------                  ---------------
         Total Current Liabilities............................................           29,159                           22,576
                                                                                ---------------                  ---------------

Rental Vehicle Financing, Excluding Current Installments......................           36,466                           29,561
Long-Term Debt, Excluding Current Installments................................           13,771                           19,412
Deferred Income Taxes.........................................................            1,764                              684

Stockholders' Equity:
Preferred Stock $1.00 par value; 1,000,000 shares authorized, none
issued or outstanding.........................................................               --                               --
Common Stock $.01 par value, 15,000,000 shares authorized,
5,753,000 and 5,740,000 issued and outstanding at April 30, 1997
and 1996, respectively........................................................               58                               57
Additional Paid-in Capital....................................................           24,993                           24,953
Retained Earnings (Deficit)...................................................            1,811                             (902)
Translation Adjustment........................................................             (798)                            (646)
                                                                                ---------------                  ---------------
         Total Stockholders' Equity...........................................           26,064                           23,462
Contingencies.................................................................
                                                                                ---------------                  ---------------
                                                                                $       107,224                           95,695
                                                                                ---------------                  ---------------
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       12
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands except per share data)

<TABLE>
<CAPTION>
                                                                                            Year Ended April 30,
                                                                          ---------------------------------------------------------
                                                                                1997                 1996                1995
                                                                          ---------------------------------------------------------
<S>                                                                       <C>                   <C>                 <C>   
Rental Revenue........................................................... $         53,764              44,319               36,842
Sales....................................................................           41,856              43,569               48,476
                                                                          ----------------      --------------      ---------------
         Total Revenue...................................................           95,620              87,888               85,318
                                                                          ----------------      --------------      ---------------

Cost of Rentals..........................................................           23,168              19,279               15,623
Cost of Sales............................................................           38,484              39,074               42,658
                                                                          ----------------      --------------      ---------------
         Total Costs.....................................................           61,652              58,353               58,281
                                                                          ----------------      --------------      ---------------

Gross Profit from Operations.............................................           33,968              29,535               27,037

Interest Expense.........................................................            7,430               7,279                6,035
Selling, General and Administrative Expenses.............................           22,741              20,897               20,779
                                                                          ----------------      --------------      ---------------

Earnings Before Income Taxes.............................................            3,797               1,359                  223
Income Tax Expense ......................................................            1,084                 353                   38
                                                                          ----------------      --------------      ---------------
Net Earnings ............................................................            2,713               1,006                  185
                                                                          ----------------      --------------      ---------------
Net Earnings per Share (Primary and Fully Diluted).......................              .46                 .17                  .03
                                                                          ----------------      --------------      ---------------
Shares Used in Calculation...............................................            5,869               5,859                5,694
                                                                          ----------------      --------------      ---------------
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       13
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)

                    YEARS ENDED APRIL 30, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
                                      Common Stock                                               
                              --------------------------       Additional      Retained               
                                Number                          Paid-in        Earnings            Translation
                               of Shares       Amount           Capital       (Deficit)             Adjustment          Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>             <C>                <C>               <C>                 <C>   
Balance April 30, 1994.......       5,694             57             24,815             (2,093)              (715)          22,064
                              -----------    -----------     --------------     --------------    ---------------    -------------
Translation Adjustment
for Foreign Operations.......          --             --                 --                 --                 80               80
Net Earnings.................          --             --                 --                185                 --              185
                              -----------    -----------     --------------     --------------    ---------------    -------------
Balance April 30, 1995.......       5,694             57             24,815             (1,908)              (635)          22,329
                              -----------    -----------     --------------     --------------    ---------------    -------------
Exercise of Stock Options....          46             --                138                 --                 --              138
Translation Adjustment
for Foreign Operations.......          --             --                 --                 --                (11)             (11)
Net Earnings.................          --             --                 --              1,006                 --            1,006
                              -----------    -----------     --------------     --------------    ---------------    -------------
Balance April 30, 1996.......       5,740             57             24,953               (902)              (646)          23,462
                              -----------    -----------     --------------     --------------    ---------------    -------------
Exercise of Stock Options....          13              1                 40                 --                 --               41
Translation Adjustment
for Foreign Operations.......          --             --                 --                 --               (152)            (152)
Net Earnings.................          --             --                 --              2,713                 --            2,713
                              -----------    -----------     --------------     --------------    ---------------    -------------
Balance April 30, 1997.......       5,753             58             24,993              1,811               (798)          26,064
                              -----------    -----------     --------------     --------------    ---------------    -------------
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       14
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                              Year Ended April 30,
                                                                             ------------------------------------------------------
                                                                                 1997                1996                 1995
                                                                             --------------      -------------        -------------
<S>                                                                          <C>                 <C>                  <C>
Cash Flows from Operating Activities:
      Net Earnings.........................................................  $       2,713               1,006                  185
      Depreciation and Amortization........................................         13,474              11,675                9,453
      Deferred Income Taxes................................................          1,084                 372                   44
      Gain on Sale of Rental Vehicles......................................         (1,286)             (1,448)              (1,122)
      Gain on Sale of Property and Equipment...............................           (479)                 --                 (108)
      Increase in Net Accounts Receivable..................................         (1,841)               (495)                (697)
      Decrease (Increase) in Inventories...................................           (157)              5,483                4,365
      (Decrease) Increase in Floor Plan Contract...........................          1,420               1,536               (4,622)
      Increase (Decrease) in Accounts Payable and Accrued Expenses.........            724                 (62)                (149)
      Decrease in Income Taxes Payable.....................................             --                 (20)                  (5)
      Increase (Decrease) in Customer Deposits.............................          1,043              (1,775)               2,012
      Other, Net...........................................................           (551)               (336)                  51
                                                                             -------------       -------------        -------------
      Net Cash Provided by Operating Activities............................         16,144              15,936                9,407
                                                                             -------------       -------------        -------------
Cash Flows from Financing Activities:
      Proceeds from Rental Vehicle Borrowing...............................         57,924              46,651               41,628
      Repayment of Rental Vehicle Borrowing................................        (48,728)            (36,989)             (36,362)
      Repayment of Long-Term Borrowing.....................................         (4,536)             (4,529)              (3,195)
      Exercise of Stock Options............................................             41                 138                   --
                                                                             -------------       -------------        -------------
      Net Cash Provided by Financing Activities............................          4,701               5,271                2,071
                                                                             -------------       -------------        -------------
Cash Flows from Investing Activities:
      Purchase of Rental Vehicles..........................................        (52,033)            (46,986)             (34,058)
      Proceeds from Rental Vehicle Sales...................................         30,280              25,471               21,797
      Purchase of Property and Equipment...................................           (598)               (632)                (195)
      Proceeds from Sale of Property and Equipment.........................          2,981                   1                  245
      (Increase) Decrease in Deposits and Other Assets.....................            213                 189                 (437)
                                                                             -------------       -------------        -------------
      Net Cash Used in Investing Activities................................        (19,157)            (21,957)             (12,648)
                                                                             -------------       -------------        -------------
Increase (Decrease) in Cash and Cash Equivalents...........................          1,688                (750)              (1,170)
Cash and Cash Equivalents Beginning of Year................................          2,341               3,091                4,261
                                                                             -------------       -------------        -------------
Cash and Cash Equivalents End of Year......................................  $       4,029               2,341                3,091
                                                                             -------------       -------------        -------------
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       15
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    YEARS ENDED APRIL 30, 1995, 1996 AND 1997

1.    Summary of Significant Accounting Policies

(a)   Organization and Principles of Consolidation

The consolidated  financial  statements  include the accounts of Cruise America,
Inc.  (the   "Company")  and  its  wholly  owned   subsidiaries   which  operate
Recreational Vehicle rental and sales centers throughout North America.

All significant intercompany transactions have been eliminated in consolidation.

(b)   Inventories

Inventories  of new and used  vehicles  held for sale are valued at the lower of
cost or market using specific  identification.  Parts and accessories are valued
at the lower of cost (first-in, first-out basis) or market.

(c)   Rental Vehicles, Property and Equipment and Depreciation

Property  and  Equipment  are  stated  at cost.  Depreciation  of  property  and
equipment is provided using the  straight-line  method over the estimated useful
lives of the assets.  Repairs and  maintenance  on property  and  equipment  are
charged to operations as costs are incurred.  Costs  incurred for major renewals
and  betterments  are  capitalized.  Gains and losses on sales of  property  and
equipment are recorded in Selling, General and Administrative expenses.

Rental  Vehicles  are  stated  at  cost,  net  of  volume  purchase   discounts.
Depreciation  of rental vehicles is based on either mileage or the straight line
method  depending on the category of vehicle.  Repairs and maintenance on rental
vehicles  are charged to  operations  as costs are  incurred and are included in
Cost of Rentals.

(d)   Income Taxes

The Company and its Subsidiaries file consolidated U.S. Federal and State income
tax returns. Cruise Canada, Inc., a foreign corporation,  files Canadian Federal
and Provincial income tax returns.

Income taxes are accounted for under the asset and  liability  method.  Deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases and operating
loss and tax credit  carryforwards.  Deferred  tax assets  and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment date.

(e)   Cash Equivalents

The  Company   considers  all  highly  liquid  debt  instruments  with  original
maturities of three months or less to be cash equivalents.
                                       16
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(f)   Reclassifications

For comparative purposes, certain amounts have been reclassified to conform with
April 30, 1997 financial statement presentation.

(g)   Revenue Recognition

Rental Revenue is recognized as earned, on an accrual basis.  Revenue from sales
operations  is  recognized  as earned at the time of delivery of a vehicle or at
the time service is performed.

(h)   Vendor Allowances

In addition to volume purchase discounts  received from motorhome  manufacturers
which are  recorded  as a  reduction  to  vehicle  cost,  the  Company  receives
advertising  subsidies  and marketing  allowances  from certain  vendors.  These
subsidies  and  allowances  are recorded as earned as a reduction to the related
costs.

(i)   Finance Commissions

The Company discounts retail installment receivables related to the sale of new,
used and rental  vehicles with financial  institutions  on a nonrecourse  basis.
Finance income is recorded on an accrual basis and is included in Sales revenue.
Under the terms of the arrangements  with some of these financial  institutions,
the Company is contingently  liable to repay a portion of such finance income in
the event of prepayment or repossession.

(j)   Foreign Currency

The  Company's  foreign  operation  uses the local  currency  as its  functional
currency. The impact of currency fluctuation is included in stockholders' equity
as a translation adjustment. The Company recognizes transaction gains and losses
on intercompany loans and debt arrangements denominated in currencies other than
the  Subsidiary's  functional  currency.  These gains and losses are reported in
Selling, General and Administrative expenses.

(k)   Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit  risk  consisted  primarily  of trade  receivables.  Credit risk on trade
receivables is minimized as a result of the large and diversified  nature of the
Company's  customer  base.  Although  the Company  receives  significant  vendor
allowances from manufacturers, there have been no credit losses related to these
suppliers.

(l)   Self Insurance

The Company  participates  in insurance  programs  that  contain a  self-insured
retention.  The Company estimates its liability for the self-insured portions of
the risks covered by such programs and accrues appropriate amounts.

(m)   Stock-Based Compensation

The Company  applies APB Opinion No. 25 in accounting for its stock options and,
accordingly,  no compensation  cost has been recognized for its stock options in
the financial statements.  Had the Company determined compensation cost based on
the fair value at the grant date for its stock  options  under SFAS No. 123, the
impact on the Company's net earnings would not have been material.
                                       17
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(n)   Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

The  Company  adopted  the  provisions  of  SFAS  No.  121,  Accounting  for the
Impairment of Long-Lived  Assets and Long-Lived Assets to be Disposed Of, on May
1, 1996. The Statement requires that long-lived assets and certain  identifiable
intangibles   be  reviewed  for  impairment   whenever   events  or  changes  in
circumstances  indicate the carrying  amount of an asset may not be recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows  (undiscounted  and without
interest)  expected to be generated by the asset.  If such assets are considered
to be impaired,  the  impairment  to be  recognized is measured by the amount by
which the  carrying  amount of the assets  exceed the fair value of the  assets.
Assets to be disposed of are  reported  at the lower of the  carrying  amount or
fair  value  less  costs  to sell.  Adoption  of this  Statement  did not have a
material impact on the Company's financial position,  results of operations,  or
liquidity.

(o)   Use of Estimates

Management  of the  Company  has  made a number  of  estimates  and  assumptions
relating  to the  reporting  of assets and  liabilities  and the  disclosure  of
contingent  assets and  liabilities  to  prepare  these  consolidated  financial
statements in conformity with generally accepted accounting  principles.  Actual
results could differ from those estimates.

(p)   Earnings Per Share

Earnings per share computations are based upon the earnings applicable to common
shares and the average number of shares of common stock outstanding and dilutive
common stock equivalents (stock options) outstanding.

(q)   Fair Value of Financial Instruments

Statement  of Financial  Accounting  Standards  No. 107 (SFAS 107)  "Disclosures
about Fair Value of Financial  Instruments"  requires that the Company  disclose
estimated fair values for its financial statements.

      Cash  and  Cash  Equivalents,  Receivables,  Accounts   Payable,   Accrued
      Liabilities and Customer Deposits
      The carrying  amount  approximates  fair value  because of the  short-term
      maturity of these instruments.

      Floor Plan Contracts, Rental Vehicle Financing and Long-Term Debt
      The carrying  value of the Company's debt  approximates  fair value as the
      present value of future cash flows of each  instrument  approximate  rates
      currently   offered  to  the  Company  for  similar  debt  instruments  of
      comparable maturities by the Company's lenders.
                                       18
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.    Inventories and Floor Plan Contracts

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                  April 30,
                                                                  -----------------------------------------
                                                                        1997                    1996
                                                                  -----------------------------------------
<S>                                                               <C>                     <C>  
New Vehicles....................................................  $          5,289                    4,676
Used Vehicles...................................................             3,222                    4,304
Parts, Accessories, Kits and Other..............................             3,398                    2,772
                                                                  ----------------        -----------------
                                                                           $11,909                   11,752
                                                                  ----------------        -----------------
</TABLE>

All new vehicles  that are  financed,  are pledged as security  under floor plan
contracts with banks and other financial institutions.  Floor plan contracts are
due upon the sale of the related  vehicle or one year.  Interest  rates on floor
plan contracts are at U.S. prime (8.5% at April 30, 1997) plus .25% at April 30,
1997 and 1996.  Interest  expense on floor plan contracts  amounted to $265,000,
$257,000  and  $483,000  for the  years  ended  April 30,  1997,  1996 and 1995,
respectively.

Unused floor plan contracts as of April 30, 1997 were approximately $2,000,000.

3.    Rental Vehicle Financing

Most rental  vehicles are pledged as security under  financing  agreements  with
banks and other  financial  institutions.  The  following is a summary of rental
vehicle financing (in thousands):
<TABLE>
<CAPTION>
                                                                                                        April 30,
                                                                                          -------------------------------------
                                                                                               1997                   1996
                                                                                          -------------------------------------
<S>                                                                                       <C>                     <C>   
Various Notes under rental vehicle lines of credit; interest rates ranging from 
      U.S. prime (8.5% at April 30, 1997) to U.S. prime plus 2%, to Canadian 
      prime plus 1%; due in monthly installments, expiring at various times 
      through April 2001 or at the time of sale of the related vehicle..................  $       49,480                 40,284
Less Current Installments...............................................................          13,014                 10,723
                                                                                          --------------          -------------
Rental Vehicle Financing, Excluding Current Installments................................  $       36,466                 29,561
                                                                                          --------------          -------------
</TABLE>

Interest  expense on rental  vehicle  financing was  $5,144,000,  $4,546,000 and
$2,807,000 for the years ended April 30, 1997, 1996 and 1995, respectively.

The Company's rental vehicle lines of credit are renewed annually. Unused rental
vehicle lines of credit as of April 30, 1997 were approximately $71,000,000.
                                       19
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.    Property and Equipment

A summary of property and equipment, at cost, less accumulated  depreciation and
amortization, follows (in thousands):
<TABLE>
<CAPTION>
                                                                   April 30,                          
                                                       ---------------------------------       ------------------------------------
                                                           1997                1996                   Estimated Useful Lives
                                                       ----------------------------------      ------------------------------------
<S>                                                    <C>                 <C>                     <C>
Land.................................................  $       4,520               5,952
Buildings and Improvements...........................          4,107               5,822                  15 - 20 years
Service Vehicles.....................................            110                 117                   3 - 5 years
Shop Equipment.......................................            835                 864                     5 years
Office Furniture and Equipment.......................          4,198               4,074                   5 - 10 years
Leasehold Improvements...............................            638                 597           Amortized over life of lease
                                                       -------------       -------------
                                                       $      14,408              17,426
Less Accumulated Depreciation and Amortization.......          6,467               6,916
                                                       -------------       -------------
Net Property and Equipment...........................  $       7,941              10,510
                                                       -------------       -------------
</TABLE>

Depreciation  and  amortization  expense on property and equipment is charged to
selling, general and administrative expenses and amounted to $665,000,  $643,000
and $668,000 for the years ended April 30,  1997,  1996 and 1995,  respectively.
Gain on sale of property and  equipment  was $479,000 and $108,000 for the years
ended April 30, 1997 and 1995,  respectively, and is included as a reduction  of
selling, general and administrative expenses.

5.    Long-Term Debt

Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                           April 30,
                                                                           -----------------------------------------
                                                                                 1997                    1996
                                                                           -----------------------------------------
<S>                                                                        <C>                     <C>  
9.9% Unsecured Senior Notes due in annual installments of 
      $1,500,000 through May 15, 1998, plus interest, payable
      semi-annually......................................................  $          1,500                    3,000

9.0% Senior Notes due in annual installments of $2,857,143
      beginning March 15, 1996 through March 15, 2002, plus
      interest,   payable  semi-annually (effective interest rate
      9.375% net of discount)............................................            14,286                   17,143

Various notes ranging from 9% to 10.94% due in monthly
      installments expiring at various times through February
      2004 (a)...........................................................             2,228                    2,458
                                                                           ----------------        -----------------
Total Long-Term Debt.....................................................  $         18,014                   22,601
Less unamortized discount on 9.0% Senior Notes...........................               115                      166
Less current installments................................................             4,128                    3,023
                                                                           ----------------        -----------------
Long-Term Debt, excluding current installments...........................  $         13,771                   19,412
                                                                           ----------------        -----------------
</TABLE>
(a)   Secured by property  having a net book value of  approximately  $2,914,000
      and $5,356,000 at April 30, 1997 and 1996, respectively.
                                       20
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Aggregate maturities on long-term debt are as follows (in thousands):

          1998.............................          $ 4,128
          1999.............................            5,210
          2000.............................            2,874
          2001.............................            2,876
          2002.............................            2,878
          Thereafter.......................               48
                                             ---------------
                                      Total          $18,014
                                             ---------------

Interest  expense on  long-term  debt  amounted  to  $2,021,000, $2,476,000  and
$2,745,000 for the years ended April 30, 1997, 1996 and 1995, respectively.

At April  30,  1997,  the  Company  is in  compliance  with  all debt  covenants
associated with the various financing agreements outstanding.

6.    Income Taxes

Income tax expense is composed of the following (in thousands):
<TABLE>
<CAPTION>
                                                                                 Year Ended April 30,
                                                           ----------------------------------------------------------------
                                                                1997                    1996                     1995
                                                           ----------------------------------------------------------------
<S>                                                        <C>                     <C>                     <C>
Current Tax Expense:
      Federal.............................................       --                      --                       20
      State and Foreign...................................       --                      --                       --
                                                           ---------------         ---------------          ---------------
                                                                 --                      --                       20
                                                           ---------------         ---------------          ---------------
Deferred Tax Expense (Benefit):
      Federal.............................................  $  (200)                    126                      228
      State and Foreign...................................    1,284                     227                     (210)
                                                           ---------------         ---------------          ---------------
                                                              1,084                     353                       18
                                                           ---------------         ---------------          ---------------
Total Income Tax Expense..................................  $ 1,084                     353                       38
                                                           ---------------         ---------------          ---------------
</TABLE>
                                       21
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Income tax expense  attributable  to earnings  before income taxes for the years
ended April 30,  1997,  1996 and 1995,  differed  from the  amounts  computed by
applying  the U.S.  Federal  Income  Tax rate of 34  percent  as a result of the
following:
<TABLE>
<CAPTION>
                                                                                 Year Ended April 30,
                                                           ----------------------------------------------------------------
                                                                1997                    1996                     1995
                                                           ----------------------------------------------------------------
<S>                                                        <C>                     <C>                      <C>
Computed "expected" tax expense........................... $         1,275                     462                       76
State taxes, net of Federal benefit.......................             175                      63                       10
Foreign taxes in excess of expected tax rate..............             121                      20                      (21)
Change in valuation allowance.............................            (487)                   (170)                     (24)
Amortization of goodwill and life insurance...............              --                       1                      (11)
Other, net................................................              --                     (23)                       8
                                                           ---------------         ---------------          ---------------
                                                           $         1,084                     353                       38
                                                           ---------------         ---------------          ---------------
</TABLE>
At April 30, 1997, 1996 and 1995, the deferred income tax liability reflects the
impact of temporary differences between the amount of assets and liabilities for
financial  reporting  purposes  and  such  amounts  for tax  purposes.  The most
significant  type of  temporary  difference  that gives  rise to a deferred  tax
liability is tax over book depreciation, offset partially by tax over book gains
on the sale of assets.

The tax effects of temporary  differences and carryforwards which give rise to a
significant  portion of deferred tax assets and  liabilities  are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                              April 30,
                                                                   ----------------------------------------------------------------
                                                                        1997                    1996                    1995
                                                                   ----------------------------------------------------------------
<S>                                                                <C>                    <C>                     <C>  
Deferred Tax Assets:
      Net Operating Loss Carryforwards...........................  $         6,834                   8,544                    7,990
      Investment Tax Credit Carryforwards........................              540                     540                      540
      Alternative Minimum Tax Credit Carryforwards...............              106                     106                      106
                                                                   ---------------        ----------------        -----------------
      Total Gross Deferred Tax Assets............................            7,480                   9,190                    8,636
      Less Valuation Allowance...................................             (441)                   (928)                  (1,098)
                                                                   ---------------        ----------------        -----------------
      Net Deferred Tax Assets....................................            7,039                   8,262                    7,538
                                                                   ---------------        ----------------        -----------------
Deferred Tax Liability - Depreciation............................            8,803                   8,946                    7,850
                                                                   ---------------        ----------------        -----------------
      Net Deferred Tax Liability.................................  $         1,764                     684                      312
                                                                   ---------------        ----------------        -----------------
</TABLE>

Included in deferred income taxes for fiscal 1997 and 1996 are reductions in the
deferred tax asset valuation  allowance of $487,000 and $170,000,  respectively.
The  reductions  resulted  from three  successive  years of  operating  earnings
generated by the Company,  
                                       22
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


which  increased  the portion of the gross  deferred  tax asset that the Company
believes would more likely than not be realized.

At April 30, 1997,  the Company has net operating  loss  carryforwards  for U.S.
Federal income tax purposes of $17,492,000  which are available to offset future
U.S.  Federal  taxable  income,  if any,  through  2010.  Cruise  Canada has net
operating  loss  carryforwards  for  Canadian  Federal  income tax  purposes  of
$164,000 which are available to offset taxable income in Canada, if any, through
2003.

The Company also has investment tax credit  carryforwards for Federal income tax
purposes of approximately  $540,000 which are available to reduce future Federal
income taxes, if any, through 2001.

7.    Common and Preferred Stock

(a)   Common Stock

The  Company's  1987  Stock  Option  Plan has  500,000  shares of  common  stock
reserved,  and as of April 30, 1997, 419,100 options are outstanding at exercise
prices of $3.00 to $5.50 per share,  expiring at various times  through  October
2006.  Options may be granted  through  October 27, 1997, the date of the Plan's
expiration. Options are granted at fair market value as of the date of grant.

The following table summarizes the status of the Plan:
<TABLE>
<CAPTION>
                                                                         -------------------------------------------------
                                                                             Number of                       Option
                                                                              Options                         Price
                                                                         -------------------------------------------------
<S>                                                                      <C>                              <C> 
Outstanding at April 30, 1994 (all exercisable).........................           395,000                $ 4.75 - 8.00
      Granted...........................................................                --                     --
      Exercised.........................................................                --                     --
      Terminated........................................................             6,500                $    3.00
                                                                         -----------------
Outstanding at April 30, 1995 (all exercisable).........................           388,500                $    3.00
      Granted...........................................................                --                     --
      Exercised.........................................................            46,000                $    3.00
      Terminated........................................................                --                     --
                                                                         -----------------
Outstanding at April 30, 1996 (all exercisable).........................           342,500                $    3.00
      Granted...........................................................            90,000                $    5.50
      Exercised.........................................................            13,400                $    3.00
      Terminated........................................................                --                  --
                                                                         -----------------
Outstanding at April 30, 1997 (all but 45,000 exercisable)..............           419,100                $ 3.00 - 5.50
                                                                         -----------------
</TABLE>

On October  6, 1994,  the  Company  repriced  options  granted  pursuant  to the
Company's 1987 Stock Option Plan, at $3.00 per share, the fair value at the date
of repricing.

Currently,  the Company is  restricted  from issuing cash  dividends  and making
certain other  investments by a covenant to the 9.9% Unsecured  Senior Notes and
the 9% Senior Notes.  In  conjunction  with the issuance of the $20 million 9.0%
Senior  Notes in the fourth  quarter of fiscal 1994,  the Company  issued to the
note holders  immediately  exercisable  warrants to purchase  166,000  shares of
common stock at a per share price of $5.75,  which warrants  expire on March 15,
2002.
                                       23
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On March 8, 1989,  the Board of Directors of the Company  declared a dividend of
one preferred stock purchase right for each share of common stock outstanding on
March 23,  1989.  The  rights  become  exercisable  only after a person or group
acquires 20 percent or more, or makes a tender or exchange  offer for 30 percent
or more, of the Company's  common stock or is declared adverse to the Company by
the Board of  Directors.  When  exercisable,  each right  entitles the holder to
purchase,  at an exercise price of $20, one one-hundredth of a share of Series A
Junior Participating Preferred Stock or, under certain circumstances, securities
of the  Company  or the  acquiring  entity  having a market  value of twice  the
exercise price.  The rights expire on March 8, 1999, if not previously  redeemed
by the Company at a redemption price of $.01 per right.

(b)   Preferred Stock

Pursuant to the Company's  Articles of Incorporation,  the Board of Directors of
the  Company is  authorized  to issue in  series,  without  further  shareholder
approval,  1,000,000  shares of $1.00 par value  preferred  stock.  The Board of
Directors is authorized to fix the particular designations, powers, preferences,
rights  (including  voting  rights),  qualifications  and  restrictions  of each
series. The Board of Directors  designated 200,000 shares of the preferred stock
as Series A Junior  Participating  Preferred Stock for issuance upon exercise of
the rights described in paragraph (a), above.

8.    Sales

The following is a summary of sales and cost of sales (in thousands):
<TABLE>
<CAPTION>
                                                                                         Year Ended April 30,
                                                                   ----------------------------------------------------------------
                                                                        1997                    1996                    1995
                                                                   ----------------------------------------------------------------
<S>                                                                <C>                    <C>                     <C>   
Sales:
      Rental Vehicle Sales.......................................  $        30,280                  25,471                   21,797
      New Vehicles...............................................            5,690                   9,735                   13,826
      Used Vehicles..............................................            3,854                   6,082                   10,977
      Parts, Service, Accessories and Other......................            2,032                   2,281                    1,876
                                                                   ---------------        ----------------        -----------------
                                                                   $        41,856                  43,569                   48,476
                                                                   ---------------        ----------------        -----------------
Cost of Sales:
      Rental Vehicle Sales.......................................           28,994                  24,023                   20,674
      New Vehicles...............................................            4,951                   8,417                   11,686
      Used Vehicles..............................................            2,991                   4,907                    9,031
      Parts, Service, Accessories and Other......................            1,548                   1,727                    1,267
                                                                   ---------------        ----------------        -----------------
                                                                   $        38,484                  39,074                   42,658
                                                                   ---------------        ----------------        -----------------
Gross Profit.....................................................  $         3,372                   4,495                    5,818
                                                                   ---------------        ----------------        -----------------
</TABLE>

9.    Commitments

The Company leases its facilities at 11 of its locations under operating  leases
expiring at various  times  through  2004.  Rent  expense,  included in Selling,
General and Administrative  expenses, was $1,058,000,  $1,036,000 and $1,263,000
for the years ended April 30, 1997, 1996 and 1995, respectively.
                                       24
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Minimum annual rental commitments under these leases as of April 30, 1997 are as
follows (in thousands):

          1998.............................  $           974
          1999.............................              767
          2000.............................              515
          2001.............................              375
          2002.............................              301
          Thereafter.......................              235
                                             ---------------
                                      Total  $         3,167
                                             ---------------


10.   Other Matters

(a)   During 1984, the Company  entered into a redemption  agreement with Robert
      A. Smalley  (Chairman),  which  provides  that upon the death of Robert A.
      Smalley, the Company, upon the request of his personal representative will
      purchase up to  $1,000,000  of the common  stock of the  Company  from his
      estate at the  average  bid  price  for a period  of 60 days  prior to his
      death.  The obligation has been funded by an insurance  policy on the life
      of Robert A. Smalley in the amount of $1,000,000. The policy has been paid
      for by the Company and the premiums were approximately $40,000 for each of
      the policy years ended October 1997, 1996 and 1995.

(b)   On May 14, 1987,  one of the Company's  concession  operators  commenced a
      lawsuit entitled  Altman's  America,  et. al. v. American Land Cruisers of
      California,  Incorporated,  et. al. in the Superior  Court of the State of
      California for the County of Los Angeles.  The action arose out of a claim
      for  an  alleged  wrongful  termination  by  the  Company  of  a  sublease
      agreement.  This case has been tried twice.  The first trial resulted in a
      judgement in the amount of approximately $3.5 million.  That judgement was
      reversed on appeal and remanded for retrial.  The second trial resulted in
      judgements  for the  plaintiffs  in the amount of $235,000 and a judgement
      for the Company of $634,000, which equaled a net judgement for the Company
      of $399,000. On July 18, 1996 the Appellate Court reduced the total amount
      due to the Company by  approximately  $400,000  and  remanded the case for
      retrial. The Company intends to pursue all means to defeat the case.

      The Company is a party to various  claims,  legal  actions and  complaints
      arising in the ordinary course of business.  In the opinion of management,
      the  disposition of these matters will not have a material  adverse effect
      on the financial statements of the Company taken as a whole.

(c)   Foreign Operations

Included in the  consolidated  financial  statements  are the following  amounts
related to the Company's operations in Canada (in thousands):
<TABLE>
<CAPTION>
                                                                                         Year Ended April 30,
                                                                   ----------------------------------------------------------------
                                                                        1997                    1996                    1995
                                                                   ----------------------------------------------------------------
<S>                                                                       <C>                       <C>                      <C>   
Identifiable Assets..............................................         $ 19,244                  17,120                   12,644
Total Revenue....................................................           25,499                  19,163                   15,486
Earnings (Loss) Before Income Taxes..............................            2,952                     486                     (493)
Foreign Currency Transaction Gain (Loss).........................                4                     (30)                     (54)
</TABLE>
                                       25
<PAGE>
                      CRUISE AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.   Supplemental Disclosures of Cash Flow Information (in thousands):

<TABLE>
<CAPTION>
                                                                                         Year Ended April 30,
                                                                        1997                    1996                    1995
                                                                   ----------------------------------------------------------------
<S>                                                                 <C>                         <C>                      <C>  
Cash Paid During the Year for:
      Interest on Borrowings.....................................   $   7,396                   7,151                    6,304
</TABLE>
                                       26
<PAGE>
ITEM 9.         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE

There has been no change of accountants or reported  disagreements on any matter
of accounting  principles or  procedures  or financial  statement  disclosure in
fiscal 1997.


                                    PART III

ITEM 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                                        Age          Title
------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>                               
Robert A. Smalley                            73          Chairman of the Board of Directors
Randall Smalley                              47          President and Chief Executive Officer
Robert A. Smalley, Jr.                       48          Executive Vice President and Chief Operating Officer
Eric R. Bensen                               42          Chief Financial Officer and Secretary
</TABLE>

The information  regarding directors required by Item 401 of Regulation S-K will
be set forth in the  Company's  definitive  proxy  statement for the 1997 annual
meeting of  shareholders,  which will be filed with the  Securities and Exchange
Commission  not later than 120 days after April 30,  1997,  and is  incorporated
herein by this reference.

ITEM 11.        MANAGEMENT REMUNERATION

The information  required by Item 402 of Regulation S-K will be set forth in the
Company's   definitive   proxy   statement  for  the  1997  annual   meeting  of
shareholders,  which will be filed with the Securities  and Exchange  Commission
not later than 120 days after April 30, 1997, and is incorporated herein by this
reference.

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT

The  information  required  by Item 403 of  Regulation  S-K is set  forth in the
Company's   definitive   proxy   statement  for  the  1997  annual   meeting  of
shareholders,  which will be filed with the Securities  and Exchange  Commission
not later than 120 days after April 30, 1997, and is incorporated herein by this
reference.

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED PARTY
                TRANSACTIONS

Not applicable.
                                       27
<PAGE>
                                     PART IV

ITEM 14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                AND REPORTS ON FORM 8-K

(a)   Documents Filed as Part of this Report

      1.  The following  financial  statements are  incorporated by reference in
          Item 8:
<TABLE>
<CAPTION>
                                                                                                             Page in this
                                          Financial Statement                                                   Report
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                            <C> 
Independent Auditors' Report............................................................................          10
Consolidated Balance Sheets as of April 30, 1997 and 1996...............................................        11, 12
Consolidated Statements of Operations for each of the years in the three-year period ended
      April 30, 1997....................................................................................          13
Consolidated Statements of Stockholders' Equity for each of the years in the
      three-year period ended April 30, 1997............................................................          14
Consolidated Statements of Cash Flows for each of the years in the three-year period ended
      April 30, 1997....................................................................................          15
Notes to Consolidated Financial Statements..............................................................       16 - 26
</TABLE>

Information  required by other  schedules  has either been  incorporated  in the
financial  statements  and  accompanying  notes,  or is  not  applicable  to the
Company.
                                       28
<PAGE>
3.    The  following  exhibits  are filed with this  Report or  incorporated  by
      reference:


<TABLE>
<CAPTION>
                                                                                       Page Number or Incorporation by
                                                                                              Reference to the
   Exhibit                              Description                                         Document Listed Below
------------------------------------------------------------------------------------------------------------------------------
<C>           <C>                                                              <C>
3.1           Articles of Incorporation                                        Registration Statement No. 33-36643

3.2           Amended and Restated Bylaws                                      Current Report on Form 8-K, event of
                                                                               March 8, 1989

4.1           Note Agreement, dated May 1, 1988, between the                   December 31, 1988 Form 10-K
              Company and various holders

4.2           Rights Agreement dated as of March 8, 1989, between              Current Report on Form 8-K, event of
              the Company and Mellon Securities Trust Company                  March 8, 1989

4.3           Note and Warrant Purchase Agreement dated as of                  April 30, 1994 Form 10-K
              April 26, 1994 between the Company and Teachers
              Insurance and Annuity Association of America
              (includes forms of Note and Warrant Agreement)

10.1          Section 303 Stock Redemption Agreement, dated                    Registration Statement No. 33-6848,
              October 25, 1984, between the Company and Robert A.              effective August 13, 1986
              Smalley

10.2          Form of Indemnification Agreement between the                    March 31, 1989 Form 10-Q
              Company and its Directors and Executive Officers

10.3          Executive Compensation Plans and Arrangements:

10.3(a)       Form of Amended and Restated Employment                          April 30, 1996 Form 10-K
              Agreements between the Company and Robert A.
              Smalley, Robert A. Smalley, Jr., Randall S. Smalley,
              and Eric R. Bensen

10.3(b)       1987 Stock Option Plan                                           December 31, 1988 Form 10-K

22            Subsidiaries of the Registrant                                   April 30, 1993 Form 10-K

23            Consent of KPMG Peat Marwick LLP                                 31

99            Statement Regarding Forward-Looking Statements                   32
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended April 30, 1994.  NONE 
(c) The exhibits to this Report are listed in Item 14 (a) 3.
(d) The  financial  statement  schedules  required by  Regulation  S-X which are
excluded from the Annual Report to Stockholders by Rule 14a-3(b) (1). NONE
                                       29
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of Section 13 of the  Securities  Exchange Act of
1934,  Cruise  America,  Inc.,  has duly  caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                Cruise America, Inc.


                                                Randall Smalley
                                                --------------------------------
                                                By:   Randall Smalley, President


June 26, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been  signed on June 26,  1997,  by the  following  persons on behalf of the
registrant and in the capacities indicated.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
<S>                                            <C>
Signature                                       Title

Robert A. Smalley                               Chairman
------------------------------

Randall Smalley                                 Director, President and Chief Executive Officer
------------------------------

Robert A. Smalley, Jr.                          Director, Executive Vice President and Chief Operating Officer
------------------------------

Eric R. Bensen                                  Director, Vice President and Chief Financial Officer
------------------------------

Fred A. Mudgett                                 Director
------------------------------

Dr. Edward R. Annis                             Director
------------------------------
</TABLE>