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United States

Securities and Exchange Commission

Washington, D.C. 20549



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FORM 10-K



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|x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 3, 2004.
|- | -------------------------------------------------------------------------------------------------------------------------------



or



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period fromto.
|- | --------------------------------------------------------------------------------------------------------------------------



Commission File number: 0-22048



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STARCRAFT CORPORATION

(Exact name of
registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Indiana                                                        |  | 34-1817634                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



Post Office Box
1903, 1123 South Indiana Avenue, Goshen, Indiana 46526

(Address of principal executive offices)



Registrants telephone number, including area code: (574) 534-7827



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



None



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



Common Stock, without par value

Common Share Purchase Rights

(Title
of Class)



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



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of 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



Indicate by check mark whether
the registrant is an accelerated, filer (as defined in rule 12b-2 of the Act).    Yes ̈No  x



The aggregate market value of the issuers voting common stock held by non-affiliates, as of October 3, 2004, was $31,135,000.



The number of shares of the registrants common stock, without par value, outstanding as of December 1, 2004, was
8,968,691 shares.



Documents Incorporated by Reference



|         |  |                                                          
|-------- |  | ---------------------------------------------------------
|Document |  | Part of Form 10-K into Which the Document is Incorporated
|None.    |  |                                                          
|         |  |                                                          



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##### Table of Contents

STARCRAFT CORPORATION

Form 10-K

Index



|         |  |                                                                                       |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|         |  | PART I                                                                                |  |   
|         |  |                                                                                      
|Item 1.  |  | Business                                                                              |  | 3 
|Item 2.  |  | Properties                                                                            |  | 6 
|Item 3.  |  | Legal Proceedings                                                                     |  | 7 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 7 
|         |  |                                                                                      
|         |  | PART II                                                                               |  |   
|         |  |                                                                                      
|Item 5.  |  | Market for Registrants Common Equity and Related Stockholder Matters                 |  | 7 
|Item 6.  |  | Selected Financial Data                                                               |  | 9 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 10
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 19
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 20
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 41
|Item 9A. |  | Controls and Procedures                                                               |  | 41
|Item 9B. |  | Other Information                                                                     |  | 41
|         |  |                                                                                      
|         |  | PART III                                                                              |  |   
|         |  |                                                                                      
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 42
|Item 11. |  | Executive Compensation                                                                |  | 45
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 50
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 52
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 52
|         |  |                                                                                      
|         |  | PART IV                                                                               |  |   
|         |  |                                                                                      
|Item 15. |  | Exhibits and Financial Statement Schedules.                                           |  | 54
|         |  |                                                                                      
|         |  | Signatures                                                                            |  | 55



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PART I



ITEM 1. BUSINESS



OVERVIEW



Starcraft Corporation, an Indiana corporation founded in 1990, including
Tecstar, LP, Tecstar Manufacturing Canada Limited, and Wheel to Wheel, LLC (the Company or Starcraft), is a second-stage manufacturer of motor vehicles, primarily pick-up trucks and sport utility vehicles. The business also
has engineering and design capabilities for concept vehicles, and distributes automotive accessories through a dealer network. The Company became a public company in July 1993, and its shares are currently trading on the NASDAQ SmallCap Market under
the ticker symbol STCR.



BACKGROUND



Starcraft traces its name to 1903 when Star Tank Company was founded in
Goshen, Indiana as a maker of metal farm equipment, then became a leading manufacturer of aluminum boats and recreational vehicles and, finally, led the automotive conversion industry by producing luxury van conversions for middle and upper income
consumers. In January 1991, the Company purchased certain of the assets of the automotive and recreational vehicle divisions, including intellectual property, from a group of companies in a consolidated bankruptcy proceeding. Starcraft
simultaneously sold the recreational vehicle assets to a third party.



In July 1994, a Starcraft subsidiary acquired substantially all of the assets of Imperial Industries, Inc., another conversion vehicle manufacturer. In February 1997, another Starcraft subsidiary purchased the assets of National Mobility
Corporation in Elkhart, Indiana, a manufacturer of vehicles for the mobility impaired. In February 1998, a Starcraft subsidiary started manufacturing and marketing commercial shuttle buses. In May 2001, the Starcraft subsidiary sold its van
conversion business, and in August 2001, the other Starcraft subsidiary sold the bus and mobility business. The results of the sale of these two businesses are recorded in the Companys financial statements as discontinued operations in fiscal
2001.



In October 1998, the Company, with a partner, Wheel to
Wheel, Inc. (Wheel to Wheel), started an OEM Automotive Supply business now known as Tecstar, L.P. The primary purpose of this business is to provide final exterior and interior assemblies on vehicles directly to the OEM automobile
manufacturers. In May 2002, Starcraft and Wheel to Wheel started Tecstar Manufacturing Canada Limited (Tecstar Canada), an OEM Automotive Supply business similar to Tecstar, L.P. We refer to Tecstar, L.P. and Tecstar Canada collectively
as Tecstar. In October 2003, the Company, along with Wheel to Wheel, started Tarxien Automotive Products Limited (Tarxien), an OEM compliant painting and plastic injection molding business.



In January 2004, the Company acquired Wheel to Wheel, its partner in Tecstar
and Tarxien. As a result, the Company owns directly or indirectly 100% of the equity interests in Tecstar and Wheel to Wheel.



SUBSEQUENT EVENT



On November 23, 2004, the Company entered into an Agreement and Plan of Merger whereby Quantum Fuel Systems Technologies Worldwide Inc.
(Quantum) will acquire all of the outstanding shares of Starcraft Corporation in a tax-free stock-for-stock exchange valued at approximately $185 million at announcement, including the assumption of debt and other consideration. Under
the terms of the definitive Agreement and Plan of Merger, each Starcraft shareholder will receive 2.341 shares of Quantum common stock for every share of Starcraft common stock. Refer to Item 7 for additional detail regarding this proposed merger.



BUSINESS



In 1998, the Company started a new operation with Wheel to Wheel to supply conversion vehicle type products directly to OEM
automotive customers as a Tier 1 automotive supplier named Tecstar. In 2002, the



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Company invested in a similar operation in Tecstar Canada, Oshawa, Ontario, Canada with Wheel to Wheel. In January 2004, the Company acquired Wheel to Wheel
and now directly or indirectly owns 100% of Tecstar. Tecstars business is OEM automotive supply and is the primary driver of the Companys financial results. All of Tecstars OEM Automotive Supply sales in 2004, 2003 and 2002 were to
General Motors Corporation (GM) and its subsidiaries.



Tecstars strategy is to provide OEMs with faster time to market, less costly, high quality exterior and interior appearance packages. At October 3, 2004, Tecstar operated four manufacturing facilities in close proximity to the
OEM vehicle assembly plants. Each facility is QS 9001 registered. Tecstar also operates a parts distribution operation supplying parts for the H2 Hummer to OEM dealers, and wheels for trucks and SUVs to OEM dealers.



Tecstar receives vehicle chassis from the OEM and adds certain appearance
items such as ground effects, wheels and badging. Chassis are provided by the OEM on a drop-ship basis and are not included in the sales of the Company. After completing the final appearance assembly work, the vehicles are placed back into the
normal OEM distribution stream. The vehicles carry the full OEM warranty and are marketed directly by the OEM through its dealerships. Tecstar engineers and validates the products to OEM standards. Programs range from two to five years and are
backed by contractual agreements with the OEM. A summary of contract lengths and sales is included in Managements Discussion and Analysis of Financial Condition and Results of Operations, Item 7 of this report. Tecstar provides a limited
warranty of its products to the OEM, which is substantially the same as the OEM warranty provided to the OEMs retail customers.



The major domestic market for Tecstars products is highly competitive. Competition is based primarily on price, product engineering and performance,
technology, quality and overall customer service, with the relative importance of such factors varying among products. Tecstars global competitors include a large number of other well-established independent manufacturers.



The Companys sales are directly impacted by the size of the automotive
industry and GMs market share. Further, GM periodically reduces production or closes plants for several months for model changeovers. During the fourth quarter of fiscal year 2000 and continuing into the second quarter of fiscal 2001, one of
the Companys manufacturing facilities was substantially shut down as a result of a GM vehicle model changeover. This adversely affected the Companys 2000 and 2001 financial results. The facility was back in production in the third
quarter of fiscal 2001. Accordingly, a decline in sales in the automotive market or in GMs automotive sales, or production cutbacks and plant shut downs for model changeovers by GM, could have an adverse impact on the Companys sales and
profits. Sales are subject to long-term contracts with GM, which, at its option, may extend or reduce the terms of such contracts depending upon market conditions and chassis manufacturing plans. Continued sales and growth of this segment is subject
to the Companys ability to continue to satisfactorily perform and to obtain such contracts over time.



At October 3, 2004, Tecstars backlog of firm orders was $4.8 million compared with a backlog of $4.3 million at September 28, 2003. The increase in
backlog is primarily due to the addition of the Ontario, Canada operation in 2003. Tecstar utilizes an internal sales force and independent manufacturer representatives to market and sell its services.



PATENTS AND TRADEMARKS



Other companies have manufactured conversion vehicles, boats, motor homes and other recreational vehicles under the name
Starcraft. In 1991 Starcraft acquired certain of the assets of the van conversion business, and recreational vehicle business, from a group of companies in a consolidated bankruptcy proceeding. The sale included intellectual property
rights. Starcraft immediately sold the recreational vehicle assets to an unrelated RV company. Prior to the 1991 sale to Starcraft, another corporation in the boating industry had purchased marine business assets and related intellectual property,
and independently registered the Starcraft



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mark and related trademarks for use with boats and marine products. Starcraft has no control over the quality of boats produced and sold under the
Starcraft mark. Starcraft retains ownership of Starcraft and related registered marks for use with automotive products, recreational vehicle products, conversion vans, shuttle buses and mobility vans. It licenses the use of
the Starcraft brand to the owners of the Starcraft RV business, as well as the owners of the former conversion vehicle and bus and mobility businesses. While license agreements reserve some control over the quality of licensees
products, Starcraft does not have control over a licensees business operations. The amended license agreement for the owner of the conversion vehicle business requires payment of a license fee of $100 for each conversion vehicle unit sold for
the calendar year 2005, and thereafter, provided, however, for calendar years 2007 and 2008 a guaranteed minimum license fee of $146,500 for year 2007 and $70,700 for 2008 shall be due.



MANUFACTURING



OEM second stage manufacturing facilities have been established in Louisiana, Texas and New Jersey in the United States and in Oshawa, Ontario, Canada.
The New Jersey facility will be shutdown the first quarter of fiscal 2005. All facilities are located near GM assembly plants. Tecstar also has an engineering center, corporate office and parts distribution operations near Detroit, Michigan. In
addition, Tecstar operates a tooling and plastics manufacturer in Rochester Hills, Michigan and a paint and injection plastics molder in Ontario, Canada. Wheel to Wheel operates an administrative, engineering and concept vehicle development facility
in Troy, Michigan and also has a powertrain facility in Madison Heights, Michigan.



Substantially all components for the business are purchased from outside suppliers. The Company does supply various painted parts and plastic parts internally from its Canadian paint facility and its plastics
manufacturer in Rochester Hills. The primary raw material used in the components is plastic, which the Company believes is readily available from several sources. One of Tecstars primary plastics vendors has experienced some financial
difficulties. To date, minimal supply problems have been encountered. However, to mitigate any potential supply disruptions, Tecstar has established relationships with additional suppliers. The Companys products are generally produced to firm
orders and are designed and engineered by the Company. However, from time to time the Company may experience delays in delivery of certain components or materials from suppliers.



SAFETY AND REGULATION



The manufacture, distribution and sale of the Companys products are subject to governmental regulations in the United States at the federal, state
and local levels. The most extensive regulations are promulgated under the National Traffic and Motor Vehicle Safety Act, which, among other things, empowers the National Highway Traffic Safety Administration (NHTSA) to require a
manufacturer to remedy certain defects related to motor vehicle safety or vehicles that fail to conform to all applicable federal motor vehicle safety standards.



Federal Motor Vehicle Safety Standards are promulgated by the NHTSA. Many of the Companys components are affected by
these standards. The Company engages various testing companies, which also perform testing for NHTSA, to test certain of the Companys components. The Company believes that its components subject to these standards meet or exceed applicable
standards. Promulgation of additional safety standards in the future could require the Company to incur additional testing and engineering expenses which could adversely affect the Companys results of operations. NHTSA can require automotive
manufacturers to recall products. The Company has not experienced any material recalls.



The Companys international sales are subject to foreign tariffs and taxes, changes in which are difficult to predict and which can adversely affect sales. Starcrafts products must also comply with
government safety standards imposed in its foreign markets.



Both federal and state authorities have various environmental control standards relating to air, water and noise pollution that affect the business and operations of the Company. The Company believes that it has



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complied in all material respects with applicable environmental regulations and standards and does not currently expect that any failure of compliance will
have any material adverse effect on the Company.



Like other
automotive manufacturers, the Company may be subject to claims that its products caused or contributed to damage or injury sustained in vehicle accidents or may be required to recall products deemed to contain defects related to motor vehicle
safety. Any such claims in excess of the Companys insurance coverage or material product recall expenses could adversely affect the Companys financial condition and results of operations.



EMPLOYEES



As of October 3, 2004, the Company employed 601 people. Of these, 434 were production line associates and 167 were salaried
sales, engineering and administrative staff. In addition to its employee personnel, Tecstar utilized 91 contract laborers in its plants. During peak production periods, the Company may increase its work force. Historically, the available labor force
has been adequate to meet such periodic requirements. The Company considers its relationships with its personnel to be satisfactory.



ITEM 2. PROPERTIES



The following
table summarizes the Companys properties as of October 3, 2004:



|                         |  |                  |  |                |  |                      |  |                                                 
|------------------------ |  | ---------------- |  | -------------- |  | -------------------- |  | ------------------------------------------------
|Location                 |  | Size of Facility |  | Owned orLeased |  | Lease Term Remaining |  | Type of Operation                               
|Goshen, Indiana          |  | 5,000 s.f.       |  | Leased         |  | 5 Years              |  | Executive and Administrative Offices            
|                         |  |                  |  |               
|Goshen, Indiana          |  | 10,000 s.f.      |  | Owned          |  | N/A                  |  | Parts warehouse, Offices and Manufacturing      
|                         |  |                  |  |               
|Shreveport, Louisiana    |  | 38,000 s.f.      |  | Leased         |  | 4 Years              |  | Manufacturing and Assembly                      
|                         |  |                  |  |               
|Haslett, Texas*          |  | 200,000 s.f.     |  | Leased         |  | 3 Years              |  | Manufacturing and Assembly                      
|                         |  |                  |  |               
|Bridgewater, NJ          |  | 38,000 s.f.      |  | Leased         |  | Month-to-Month       |  | Manufacturing and Assembly                      
|                         |  |                  |  |               
|Madison Heights, MI      |  | 40,000 s.f.      |  | Leased         |  | 2 Years              |  | Offices, Engineering and Production Development 
|                         |  |                  |  |               
|Livonia, MI              |  | 25,000 s.f.      |  | Leased         |  | 3 Years              |  | Parts Warehouse and Offices                     
|                         |  |                  |  |               
|Oshawa, Ontario, Canada  |  | 79,000 s.f.      |  | Leased         |  | 8 Years              |  | Manufacturing and Assembly                      
|                         |  |                  |  |               
|Rochester Hills, MI      |  | 24,000 s.f.      |  | Leased         |  | 5 Years              |  | Tooling and RIM plastics manufacturing          
|                         |  |                  |  |               
|Vaughan, Ontario, Canada |  | 67,000 s.f.      |  | Leased         |  | 3 Years              |  | Paint and injection molding manufacturing       
|                         |  |                  |  |               
|Walled Lake, MI          |  | 20,000 s.f.      |  | Leased         |  | 2 Years              |  | Engineering and specialty car manufacturing     
|                         |  |                  |  |               
|Troy, MI                 |  | 45,000 s.f.      |  | Owned          |  | N/A                  |  | Engineering, administration and concept vehicles
|                         |  |                  |  |               
|Madison Heights, MI      |  | 50,000 s.f.      |  | Leased         |  | 6 Years              |  | Engine assembly and modification                
|                         |  |                  |  |               
|Troy, MI                 |  | 13,000 s.f.      |  | Leased         |  | 1 Year               |  | Engineering services                            

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|* | The Haslett, Texas lease is ten years with an option to cancel at five years.
|- | -----------------------------------------------------------------------------



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ITEM 3. LEGAL PROCEEDINGS



The
Company does not anticipate that any pending legal proceeding to which it is party will have any material adverse effect on its financial condition or results of operations. The Company maintains product liability insurance which it currently
considers adequate.



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



None.



PART II



ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



Starcrafts common stock is quoted on the NASDAQ SmallCap Market. As of October 3, 2004, there were 53 shareholders of record of Starcrafts
common stock. The Company believes its shares are owned beneficially by approximately 2,287 beneficial owners.



The following table sets forth the high and low daily sales prices for Starcraft common stock for the periods indicated as quoted on the NASDAQ.



|                   |  |      |       |     |   |      
|------------------ |  | ---- | ----- | --- | - | -----
|Quarter Ended      |  | High |       | Low
|December 29, 2002  |  | $    | 7.62  |     | $ | 5.76 
|March 30, 2003     |  |      | 12.73 |     |   | 5.62 
|June 29, 2003      |  |      | 23.76 |     |   | 8.66 
|September 28, 2003 |  |      | 37.30 |     |   | 17.62
|December 28, 2003  |  |      | 41.90 |     |   | 24.84
|March 28, 2004     |  |      | 34.76 |     |   | 12.17
|June 27, 2004      |  |      | 15.92 |     |   | 9.43 
|October 3, 2004    |  |      | 13.93 |     |   | 7.01 



Dividend Policy.During the second quarter of fiscal 2004, the Company declared and issued a 5% common stock dividend. As a result, the Company issued 421,539 additional shares of common stock. The Company has paid no cash dividends since its initial public
offering. The Company currently intends to retain earnings for use in the operation and expansion of its business and, therefore, does not anticipate paying cash dividends on Common Stock in the foreseeable future. The payment of dividends is within
the discretion of the Board of Directors and will be dependent, among other things, upon earnings, capital requirements, any financing agreement covenants and the financial condition of the Company.



Anti-Takeover Provisions.Indiana law and the Companys Articles
of Incorporation and Code of By-laws contain provisions that restrict the acquisition of control of the Company. Such provisions can affect the rights of shareholders acquiring substantial interests in the Companys shares. For example, a
shareholder who acquires more than 10% of the Companys shares without prior board approval will be limited in the timing and terms of any transaction it may enter into with the Company and will be subject to related provisions.



SHAREHOLDER RIGHTS PLAN



In August 1997, the Company adopted a Shareholders Rights Plan issuing one right for each outstanding share of common stock.
Each right entitles the registered holder to purchase from the Company one share of common stock at $15 per share, subject to adjustment. The rights become exercisable if a person or group (other than certain related persons) acquires or announces a
tender offer for prescribed percentages of the Companys



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shares or is declared an adverse person by the Companys Board of Directors. In these events, each right holder may purchase shares with a
value equal to twice the exercise price. Furthermore, if the Company engages in certain mergers or similar business combinations a right holder may purchase shares of the acquiring company with a value of two times the purchase price of the right.
The rights expire on August 12, 2007.



On November 23, 2004,
the Company amended the Rights Plan so that it will not apply to the transaction with Quantum.



SALES OF UNREGISTERED SECURITIES



The Company had no sales of unregistered securities that have not been reported previously.



SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS



The following table summarizes the number of shares issuable under Starcrafts equity compensation plans, the weighted-average exercise price and the
number of shares available for issuance, as of October 3, 2004.



|                                                              |  |                                                                                              |  |                                                                                |      |                                                                                                                                            |       
|------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ | ---- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------
|Plan Category                                                 |  | (A) Number of securitiesto be issued upon exerciseof outstanding options,warrants and rights |  | (B) Weighted-averageexercise price for outstanding options,warrants and
rights |      | (C) Number of securitiesremaining available forfuture issuance underequity compensationplans (excluding securitiesreflected in column (a))
|Equity compensation plans approved by security holders(1)(2)  |  | 832,299                                                                                      |  | $                                                                              | 8.88 |                                                                                                                                            | 71,678
|                                                              |  |                                                                                              | 
|Equity compensation plans not approved by security holders(2) |  | 1,102                                                                                        |  |                                                                                | 1.36 |                                                                                                                                            | 26,000
|                                                              |  |                                                                                              |  |                                                                                |      |                                                                                                                                            |       
|Total                                                         |  | 833,401                                                                                      |  | $                                                                              | 8.87 |                                                                                                                                            | 97,678
|                                                              |  |                                                                                              |  |                                                                                |      |                                                                                                                                            |       

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|(1) | The foregoing information is provided for previously approved plans before giving effect to proposed amendments presented herein for approval at the annual meeting. Of such shares,
(i) 159,311 options remained exercisable at year-end under the 1993 Incentive Plan, but no further awards may be made under that plan; (ii) 672,988 options were outstanding at year-end under the 1997 Incentive Plan, and an additional 71,678 shares
are currently available for issuance thereunder, either as options or as awards of shares, as described above; and (iii) up to 30,000 additional shares may be awarded to directors under the Directors Share Plan, under which directors are permitted
to receive shares of stock in lieu of current or deferred fees for board service.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The only equity compensation plan not approved by shareholders is the Starcraft Corporation Sales Representatives Option Plan which provides for the issuance of options for
restricted shares to certain independent sales representatives of Starcraft.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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ITEM 6. SELECTED FINANCIAL DATA



|                                                        |  |                 |         |   |                |   |         |                |  |   |                |   |  |              |        |   |  |   |        |  
|------------------------------------------------------- |  | --------------- | ------- | - | -------------- | - | ------- | -------------- |  | - | -------------- | - |  | ------------ | ------ | - |  | - | ------ | -
|(dollars in thousand, except per share data)            |  | Year Ended      |        
|                                                        |  | October 3, 2004 |         |   | Sept. 28, 2003 |   |         | Sept. 29, 2002 |  |   | Sept. 30, 2001 |   |  | Oct. 1, 2000 |       
|Income Statement Data                                   |  |                 |         |   |                |   |         |                |  |   |                |   |  |              |        |   |  |   |        |  
|Net Sales:                                              |  |                 |         |   |                |   |         |                |  |   |                |   |  |              |        |   |  |   |        |  
|Domestic                                                |  | $               | 173,210 |   |                | $ | 191,401 |                |  | $ | 104,422        |   |  | $            | 48,647 |   |  | $ | 75,176 |  
|Export                                                  |  |                 | 193     |   |                |   | 701     |                |  |   | 262            |   |  |              | 287    |   |  |   | 139    |  
|Total Net Sales                                         |  |                 | 173,403 |   |                |   | 192,102 |                |  |   | 104,684        |   |  |              | 48,934 |   |  |   | 75,315 |  
|                                                        |  |                 |         |   |               
|Cost of Goods Sold                                      |  |                 | 150,339 |   |                |   | 147,835 |                |  |   | 79,748         |   |  |              | 38,184 |   |  |   | 56,719 |  
|Gross Profit                                            |  |                 | 23,064  |   |                |   | 44,267  |                |  |   | 24,936         |   |  |              | 10,750 |   |  |   | 18,596 |  
|Operating Expenses                                      |  |                 | 19,091  |   |                |   | 19,163  |                |  |   | 15,515         |   |  |              | 9,898  |   |  |   | 8,336  |  
|Goodwill Impairment                                     |  |                 | 47,900  |   |                |   |        |                |  |   |               |   |  |              |       |   |  |   |       |  
|Amortization of Intangibles                             |  |                 | 1,440   |   |                |   |        |                |  |   |               |   |  |              |       |   |  |   |       |  
|Compensation Expense From Warrant and Option Redemption |  |                 |        |   |                |   |        |                |  |   | 2,096          |   |  |              |       |   |  |   |       |  
|Operating Income (Loss)                                 |  |                 | (45,367 | ) |                |   | 25,104  |                |  |   | 7,325          |   |  |              | 852    |   |  |   | 10,260 |  
|                                                        |  |                 |         |   |               
|Interest Expense                                        |  |                 | (940    | ) |                |   | (457    | )              |  |   | (476           | ) |  |              | (547   | ) |  |   | (864   | )
|Other, Net                                              |  |                 |        |   |                |   | 33      |                |  |   | 589            |   |  |              | 293    |   |  |   | 82     |  
|                                                        |  |                 |         |   |               
|Income (Loss) Before Minority Interest and Income Taxes |  |                 | (46,307 | ) |                |   | 24,680  |                |  |   | 7,438          |   |  |              | 598    |   |  |   | 9,478  |  
|                                                        |  |                 |         |   |               
|Minority Interest                                       |  |                 | 610     |   |                |   | 10,832  |                |  |   | 4,087          |   |  |              | 70     |   |  |   | 4,918  |  
|                                                        |  |                 |         |   |               
|Income Tax Expense (Credit)                             |  |                 | (1,897  | ) |                |   | 2,060   |                |  |   | 388            |   |  |              | 26     |   |  |   | 379    |  
|                                                        |  |                 |         |   |               
|Income from Continuing Operations                       |  |                 | (45,020 | ) |                |   | 11,788  |                |  |   | 2,963          |   |  |              | 502    |   |  |   | 4,181  |  
|                                                        |  |                 |         |   |               
|Loss from Discontinued Operations                       |  |                 |        |   |                |   |        |                |  |   |               |   |  |              | (3,679 | ) |  |   | (8,528 | )
|                                                        |  |                 |         |   |               
|Net Income (Loss)                                       |  | $               | (45,020 | ) |                | $ | 11,788  |                |  | $ | 2,963          |   |  | $            | (3,177 | ) |  | $ | (4,347 | )
|                                                        |  |                 |         |   |               
|Weighted Average Common Shares Outstanding (a)          |  |                 | 7,772   |   |                |   | 4,975   |                |  |   | 4,770          |   |  |              | 4,680  |   |  |   | 4,646  |  
|                                                        |  |                 |         |   |               
|Basic Earnings (Loss) Per Share (a)                     |  | $               | (5.79   | ) |                | $ | 2.37    |                |  | $ | 0.62           |   |  | $            | (0.68  | ) |  | $ | (0.93  | )
|                                                        |  |                 |         |   |               
|Diluted Earnings (Loss) Per Share (a)                   |  | $               | (b      | ) |                | $ | 2.14    |                |  | $ | 0.52           |   |  | $            | (b     | ) |  | $ | (b     | )
|                                                        |  |                 |         |   |               
|Balance Sheet Data                                      |  |                 |         |   |                |   |         |                |  |   |                |   |  |              |        |   |  |   |        |  
|Working Capital                                         |  | $               | 20,447  |   |                | $ | 21,959  |                |  | $ | 9,066          |   |  | $            | 2,040  |   |  | $ | 2,165  |  
|Total Assets                                            |  |                 | 151,361 |   |                |   | 58,730  |                |  |   | 39,092         |   |  |              | 22,010 |   |  |   | 34,994 |  
|Long-Term Debt                                          |  |                 | 18,854  |   |                |   | 9,148   |                |  |   | 12,704         |   |  |              | 8,092  |   |  |   | 9,957  |  
|Shareholders Equity (Deficit)                          |  |                 | 102,981 |   |                |   | 12,640  |                |  |   | 331            |   |  |              | (2,703 | ) |  |   | 77     |  
|Book Value per Share                                    |  |                 | 11.48   |   |                |   | 2.51    |                |  |   | 0.07           |   |  |              | (0.58  | ) |  |   | 0.02   |  

---

|(a) | Retroactively adjusted for 5% stock dividends issued in March 2003 and March 2004.
|--- | ----------------------------------------------------------------------------------

|(b) | Not presented herein since effect is antidilutive.
|--- | --------------------------------------------------



9



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##### Table of Contents

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The consolidated statements of income summarize operating results for the last three years. This section of Managements Discussion highlights the
main factors affecting the changes in operating results during the three-year period.



2004 VERSUS 2003

(Dollars in Thousands)



|                                                 |  |      |         |   |      |       |    |                    |   |         |   |  |       |    |  |        |   
|------------------------------------------------ |  | ---- | ------- | - | ---- | ----- | -- | ------------------ | - | ------- | - |  | ----- | -- |  | ------ | --
|                                                 |  | 2004 |         |   | 2003 |       |    | 2003 to2004 Change |  
|Net sales                                        |  | $    | 173,403 |   |      | 100.0 | %  |                    | $ | 192,102 |   |  | 100.0 | %  |  | (9.7   | )%
|Cost of goods sold                               |  |      | 150,339 |   |      | 86.7  | %  |                    |   | 147,835 |   |  | 77.0  | %  |  | 1.7    | % 
|Gross profit                                     |  |      | 23,064  |   |      | 13.3  | %  |                    |   | 44,267  |   |  | 23.0  | %  |  | (47.9  | )%
|Selling and promotion expenses                   |  |      | 2,897   |   |      | 1.7   | %  |                    |   | 1,866   |   |  | 1.0   | %  |  | 55.3   | % 
|General and administrative expenses              |  |      | 16,194  |   |      | 9.3   | %  |                    |   | 17,297  |   |  | 9.0   | %  |  | (6.4   | )%
|Goodwill impairment                              |  |      | 47,900  |   |      | 27.6  | %  |                    |   |        |   |  |      |    |  |       |   
|Amortization of intangibles                      |  |      | 1,440   |   |      | .8    | %  |                    |   |        |   |  |      |    |  |       |   
|Operating income                                 |  |      | (45,367 | ) |      | (26.2 | )% |                    |   | 25,104  |   |  | 13.0  | %  |  | (280.7 | )%
|Interest expense                                 |  |      | (940    | ) |      | (.5   | )% |                    |   | (457    | ) |  | (.2   | )% |  | 105.7  | % 
|Other income                                     |  |      |        |   |      |      |    |                    |   | 33      |   |  | 0.0   | %  |  | (100.0 | )%
|Income before income taxes and minority interest |  |      | (46,307 | ) |      | (26.7 | )% |                    |   | 24,680  |   |  | 12.8  | %  |  | (287.6 | )%
|Minority interest                                |  |      | (610    | ) |      | (.4   | )% |                    |   | (10,832 | ) |  | (5.6  | )% |  | 94.4   | % 
|Income tax (expense) benefit                     |  |      | 1,897   |   |      | 1.1   | %  |                    |   | (2,060  | ) |  | (1.1  | )% |  | 192.1  | % 
|                                                 |  |      |         |   |     
|Net Income (loss)                                |  |      | (45,020 | ) |      | (26.0 | )% |                    |   | 11,788  |   |  | 6.1   | %  |  | (481.9 | )%



Net sales decreased
$18.7 million and 9.7% to $173.4 million in 2004. Primary sales decreases were $11.2 million from the product discontinuance and closing of the New Jersey facility and $23.4 million from product demand reductions in our Canadian facility. These
declines were partially offset by increased sales of $13.6 million from businesses acquired in 2004. Businesses acquired in 2004 include Wheel to Wheel, Tarxien and Classic Design Concepts, Inc. (Classic Design), which are further
described later in this section. Our Shreveport facility increased sales by 27.9% due to a new product introduction while the Texas facility sales decreased 2.2% primarily due to softness in the overall sport utility vehicle market. Parts
distribution sales increased 7.4% to $30.5 million due to sales generated from the new wheel distribution program. H2 parts sales, which are included in parts distribution sales, declined 27.8%, which is consistent with the decline of the overall H2
vehicle market, which reported a decrease in sales of 23.9% and the elimination of two high volume parts. Fiscal 2004 consisted of 53 weeks of activity versus 52 weeks in fiscal 2003.



Gross profit decreased from $44.3 million (23.0% of sales) to $23.1 million (13.3% of sales) in 2004. In addition to the
effect from lower sales at the New Jersey and Canadian facilities, gross profit was adversely affected by minimal gross profit generation from businesses acquired in 2004, and a temporary interruption in the supply of chassis to the Texas facility.
Gross profit as a percentage of sales also decreased in 2004 due to increased product mix of the parts distribution business, which carries a lower margin than the second stage manufacturing sales. Total second stage revenue declined by $45.8
million in 2004 compared to prior year levels.



Selling and
promotion expenses increased to $2.9 million (1.7% of sales) in 2004 compared to $1.9 million (1.0% of sales) in 2003. Acquired businesses in 2004 accounted for $.5 million of the increase in selling and promotion expenses. Show and travel expense
increased by $.5 million in 2004.



General administrative
expenses decreased 6.4% to $16.2 million in 2004 due to reductions in employee incentive compensation, partially offset by increases in salaries and $1.2 million of additional general and administrative expenses associated with businesses acquired
in 2004. General and administrative expenses as a percentage of sales in 2004 approximated 2003.



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##### Table of Contents

A goodwill impairment charge of $47.9 million was recorded during the second quarter of fiscal 2004
related to the Companys acquisition of Wheel to Wheel, its partner in Tecstar. According to Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, purchase accounting guidelines applied to
this non-cash transaction. Goodwill generated from the transaction was $125 million. This goodwill is not subject to amortization, but rather is tested annually for impairment per SFAS No. 142 Goodwill and Other Intangible Assets. The
principal driver of this impairment test is the trading price of the Companys shares at the time of testing for impairment. Due to a material decline in the trading price of the Companys shares, the Company decided to perform its annual
impairment test in the second quarter of fiscal 2004. Accordingly, a $47.9 million, non-cash charge was recorded.



Amortization expense attributable to intangible assets recorded in the Wheel to Wheel merger was $1.4 million in 2004.



Interest expense was $.9 million in 2004 compared to $.5 million in 2003
primarily due to higher borrowing levels. In addition, in the fourth quarter of 2004 the Company completed a $15 million private placement of unsecured senior subordinated convertible notes bearing interest at 8.5%, which is higher than the
Companys current revolving credit line interest rate.



Minority interest results from the Company owning 50% of Tecstar prior to the January 2004 merger with Wheel to Wheel. In 2003, Tecstars profits were much higher than 2004 levels resulting in a much higher minority interest.



Income tax benefit of $1.9 million in 2004 is attributable to
federal tax refunds received from research and development credits and a $1.1 million deferred tax credit arising from the reversal of the valuation allowance recorded against certain deferred tax assets. See Note 7 of notes to consolidated
financial statements for further information on income taxes.



Income tax expense for 2003 is comprised of state tax expense and Canadian tax on the profits of the Canadian operations, net of a $1.3 million deferred tax credit arising from the reduction of the valuation allowance for the NOL
carryforward deferred tax asset. The Company did not record any U.S. federal income tax expense in 2004 and 2003 due to net operating loss tax carry forwards generated from losses in prior years.



2003 VERSUS 2002

(Dollars in Thousands)



|                                                             |  |      |         |   |      |       |    |                    |   |         |   |  |       |    |  |        |   
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | ----- | -- | ------------------ | - | ------- | - |  | ----- | -- |  | ------ | --
|                                                             |  | 2003 |         |   | 2002 |       |    | 2002 to2003 Change |  
|Net sales                                                    |  | $    | 192,102 |   |      | 100.0 | %  |                    | $ | 104,684 |   |  | 100.0 | %  |  | 83.5   | % 
|Cost of goods sold                                           |  |      | 147,835 |   |      | 77.0  | %  |                    |   | 79,748  |   |  | 76.2  | %  |  | 85.4   | % 
|Gross profit                                                 |  |      | 44,267  |   |      | 23.0  | %  |                    |   | 24,936  |   |  | 23.8  | %  |  | 77.5   | % 
|Selling and promotion expenses                               |  |      | 1,866   |   |      | 1.0   | %  |                    |   | 2,014   |   |  | 1.9   | %  |  | (7.3   | )%
|General and administrative expenses                          |  |      | 17,297  |   |      | 9.0   | %  |                    |   | 13,501  |   |  | 12.9  | %  |  | 28.1   | % 
|Compensation expense from redemption of warrants and options |  |      |        |   |      |      |    |                    |   | 2,096   |   |  | 2.0   | %  |  | (100.0 | )%
|Operating income                                             |  |      | 25,104  |   |      | 13.0  | %  |                    |   | 7,325   |   |  | 7.0   | %  |  | 242.7  | % 
|Interest expense                                             |  |      | (457    | ) |      | (.2   | )% |                    |   | (476    | ) |  | (.5   | )% |  | (4.0   | )%
|Other income                                                 |  |      | 33      |   |      | 0     | %  |                    |   | 589     |   |  | .6    | %  |  | (94.4  | )%
|Income before income taxes and minority interest             |  |      | 24,680  |   |      | 12.8  | %  |                    |   | 7,438   |   |  | 7.1   | %  |  | 231.8  | % 
|Minority interest                                            |  |      | (10,832 | ) |      | (5.6  | )% |                    |   | (4,087  | ) |  | (3.9  | )% |  | 165.0  | % 
|Income tax expense                                           |  |      | (2,060  | ) |      | (1.1  | )% |                    |   | (388    | ) |  | (.4   | )% |  | 430.9  | % 
|                                                             |  |      |         |   |     
|Net Income                                                   |  | $    | 11,788  |   |      | 6.1   | %  |                    |   | 2,963   |   |  | 2.8   | %  |  | 297.8  | % 



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##### Table of Contents

Net sales increased 83.5% to $192 million in 2003.



Sales increased $87.4 million in 2003, primarily due to an increase in demand
for its products from its OEM customer, increased capacity expansion in the Texas facility resulting from increased product demand, the addition of the H2 parts program for the Hummer sport utility vehicle and the start-up of the Ontario, Canada
program.



The increased sales generated $19.3 million more
gross profit in 2003 compared to 2002 primarily due to the increased sales. Gross profit as a percentage of sales slightly decreased from 23.8% in 2002 to 23.0% in 2003 due to increased product mix of the H2 parts business, which carries a lower
margin.



General administrative expenses increased $3.8 million
in 2003 due to higher support requirements for the increased sales, primarily for the increased capacity in Texas and the new plant in Canada. The Company incurred a $1.1 million foreign currency gain in 2003 which reduced general and administrative
expense, which was partially offset by merger related costs and a provision for asset impairment. General and administrative expenses as a percentage of sales decreased to 9.0% in 2003 because the fixed expenses did not increase proportionately with
the sales growth.



In 2002, the Company reached agreement to
redeem and cancel 360,000 warrants and 500,000 options to purchase shares of common stock, previously issued to two individuals, both of whom are directors and one of whom is an officer of the Company, as incentive for their partial guarantee of the
Companys debt. The Company incurred a one-time expense of $2.1 million in 2002.



Other income in 2002 included $332 related to the cancellation of debt owed to a former vendor of the van conversion business.



Minority interest results from the Company owning 50% of the OEM Automotive Supply business. Income tax expense for 2003 is comprised of state tax
expense and Canadian tax on the profits of the new operation in Canada, net of $1.3 million of deferred tax credit arising from the reduction of the valuation allowance for the NOL carryforward deferred tax asset. The Company did not record any U.S.
federal income tax expense in 2003 due to net operating loss tax carry forwards generated from losses in prior years and the reduction in the valuation allowance for deferred tax assets. Income tax expense in 2002 was comprised only of state taxes,
as the Canadian operation had not begun operations.



Federal
income tax expense was impacted by the elimination of our deferred tax asset valuation allowance in 2003 by $1.3 million. This deferred tax asset, of which the majority is attributable to the $3.2 million dollars in NOL carryforwards at September
30, 2003, was fully reserved in previous years due to uncertainties in eventual recognition of the benefit of this asset. See Note 7 of notes to consolidated financial statements for further information on income taxes.



SEASONALITY AND TRENDS



The Companys sales and profits are dependent on the automotive markets, primarily located in North America and one
customer. The business may be influenced by a number of factors including OEM programs affecting price and supply, interest rates, gasoline prices, atypical weather for any sales region, OEM plant shutdowns and model year changeovers. Sales are
dependent upon long-term contracts.



In the ordinary course of
business, the Company has entered into multiple contracts of varying size and duration with General Motors (GM). At the end of these contracts, the Company seeks to replace the expiring contracts with similar contracts. However, the Company can
provide no assurances it will be able to continue to do so in the future. To mitigate this potential exposure, the Company generally structures its facility leases and vendor supply contracts to correspond with the terms of its GM contracts. Due to
the lack of availability of suitable buildings, the Oshawa, Ontario, Canada lease is ten years compared to a five year program life for the other plants.



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##### Table of Contents

The Company is currently largely dependent upon one customer and contractual agreements with this
customer. The terms of the agreements are tied to the customers anticipated life of the vehicle chassis. Following is a summary of existing program lives and the percentage of 2004 sales attributable to each plant. The program lives are tied
to contractual agreements, but may be shortened or extended based upon market conditions and chassis manufacturing plans at the option of the customer. Historically, the customer has continued programs upon the introduction of a new vehicle chassis,
although the Company is not assured of receiving such new contracts.



|                        |  |                       |  |                          |  
|----------------------- |  | --------------------- |  | ------------------------ | -
|Plant Location (a)      |  | EstimatedProgram Life |  | Percentage of 2004 Sales |  
|Shreveport, LA          |  | Jul 2006              |  | 6.6                      | %
|Haslett, TXTahoe       |  | Jan 2006              |  | 33.3                     | %
|Haslett, TXSuburban    |  | Jul 2006              |  | 23.7                     | %
|Livonia, MI             |  | (b)                   |  | 17.6                     | %
|Oshawa, Ontario, Canada |  | Jul 2007              |  | 6.0                      | %

---

|(a) | The Companys plants typically have several different programs being manufactured on the same vehicle chassis.
|--- | --------------------------------------------------------------------------------------------------------------

|(b) | Parts distribution. No determinable program life. The Company intends to continue to develop its parts distribution business.
|--- | -----------------------------------------------------------------------------------------------------------------------------



The sales program related to the New Jersey facility ended in October 2004.
Sales for this program accounted for 2.8% of the Companys sales in fiscal year 2004.



A supply program in Shreveport ended during the fourth quarter of fiscal 2003. The Company had minimal sales for the Shreveport plant during the first six months of 2004 compared to $6.1 million during the first six
months of fiscal 2003. A new supply program started during the third quarter of fiscal 2004, which returned the Shreveport facility to profitability, and should continue at this pace into fiscal 2005.



The Canadian facility operated at a loss for fiscal 2004 due to substantially
reduced sales volume. Operating losses at this facility will continue to occur if sales volumes do not increase. We do not anticipate sales in the first quarter of fiscal 2005 to improve over current levels. Currently, the Company is working with
its customer in attempts to increase sales at this location, and anticipates a return to profitability at this facility during fiscal 2005. Businesses acquired during the year incurred $2.8 million in operating losses in 2004. Results for these
businesses are expected to improve in 2005.



ACQUISITIONS AND JOINT VENTURES



In January 2004, the Company and Wheel to Wheel
Acquisition Company, LLC, an Indiana corporation and a wholly owned subsidiary of the Company (the Acquisition Subsidiary), consummated an Agreement and Plan of Merger (the Merger Agreement) with Wheel to Wheel and the
shareholders of Wheel to Wheel (the Shareholders). The Merger Agreement provided for the acquisition of Wheel to Wheel by the Company pursuant to a merger of Wheel to Wheel with and into the Acquisition Subsidiary (the
Merger), with the Acquisition Subsidiary surviving the Merger and continuing as a wholly owned subsidiary of the Company.



Wheel to Wheel owned 50% of Starcrafts joint venture subsidiaries Tecstar, LP and Tecstar Manufacturing Canada Limited. As a result of the Merger,
the Company owns directly or indirectly 100% of the equity interests in the Tecstar entities and Wheel to Wheel.



In the Merger, the Shareholders of Wheel to Wheel collectively received 3,550,000 shares of Starcraft common stock. The Company entered into employment
and non-competition agreements with the three key executives of Wheel to Wheel. The merger agreement restricts transfer of the shares issued in the merger for two years, with provisions for up to approximately 500,000 shares in 2004 and 300,000
shares in 2005 to be available for sale without contractual restriction, subject to compliance with applicable securities laws and Company policy.



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##### Table of Contents

Wheel to Wheel provides design, engineering, validation and testing of automotives and automotive
components and also manufactures show and specialty vehicles and pace cars.



Wheel to Wheel is the sole provider of engineering, design and validation services to Tecstar. Tecstar could be significantly harmed if Wheel to Wheel no longer provided these services. The merger of the Company and
Wheel to Wheel enabled the Company to control this critical aspect of Tecstars business.



In addition, Wheel to Wheel generated incremental revenues of approximately $5 million in the specialty vehicle and automotive engineering markets in the Companys fiscal year 2004.



The acquisition of Wheel to Wheel was treated as a purchase for financial
reporting purposes. Accordingly, the purchase price was first allocated to the fair value of assets received, net of assumed liabilities. The remaining purchase price was then allocated to any identifiable intangible assets, which in this case,
included a customer relationship and several supply contracts, with the remainder allocated to goodwill. The identifiable intangible assets, valued at $14.3 million, are being amortized to expense over the expected lives of the assets ranging from
three to twenty years. Goodwill, approximating $125 million at acquisition, will not be amortized to expense, but will be evaluated annually for any impairment in the carrying value, and adjusted accordingly through the income statement. As
previously discussed, the Company performed its annual review of goodwill impairment and recorded a $47.9 million, non-cash charge in the second quarter of fiscal 2004.



On July 13, 2004, the Company and IMPCO Technologies Inc. of Cerritos, California announced the formation of Powertrain
Integration, LLC (PI). The new company will provide Powertrain integration, engineering expertise and production capabilities to satisfy the OEM need for low volume, on-highway vehicle applications. PI is owned 51% by Wheel to Wheel, a
wholly owned subsidiary of Starcraft, and 49% by IMPCO. PI expects revenues to begin in calendar 2005.



In October 2003, Starcraft and Wheel to Wheel jointly acquired the assets of Tarxien in Ontario, Canada. Tarxien, with $6.6 million in sales in 2004, was
acquired for its OEM-compliant, highly efficient horizontal paint line, and its plastic injection molding facilities that will further support Starcrafts ongoing automotive aftermarket initiatives.



In November 2003, the Company acquired the assets of Classic Design of Walled
Lake, Michigan. Classic Design provides design and engineering services, concepting and show car development for automotive OEMs, primarily Ford Motor Company. Classic Design also develops and markets aftermarket parts. Classic Designs senior
staff brings additional expertise in direct sales and corporate relationships. Classic Design contributed $1.8 million in sales in fiscal 2004.



The total purchase price of the assets, net of assumed liabilities, for Tarxien and Classic Design was $1.2 million.



In October 2004, the Company formed a 50-50 joint venture company with AM
General LLC to provide second-stage manufacturing capabilities and design and engineering expertise for low volume OEM needs. The venture, named Amstar, will also offer a full line of aftermarket accessories to compliment the General Motors special
equipment packages available for the HUMMER consumer.



LIQUIDITY AND CAPITAL
RESOURCES



Operating activities generated $7.7 million in
cash in 2004 compared to $13.7 million in 2003. Cash generated in 2004 before working capital usage was $7.1 compared to generation of $24.4 million in 2003. Cash generated by reducing accounts receivable levels associated with the decline in sales
was $3.0 million net of inventory increases associated with the wheel program, and net of reductions in accounts payables. Cash used for accounts receivable, inventories and accounts payable in 2003 to fund the sales growth was $6.7 million.



14



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##### Table of Contents

The Company invested $5.7 million in property and equipment during 2004 primarily attributed to leasehold
improvements in the Texas plant, tooling to develop the aftermarket parts business and tooling and engineering projects.



In January 2004, the Company entered into a $30 million revolving credit agreement with its current lending institution, and a new lending institution,
which matures on April 1, 2006. The facility was amended to accommodate the increased revolver needs associated with the Wheel to Wheel acquisition. Advances under the agreement are limited to a specific percentage of eligible receivables and
inventories, subject to a maximum of $30 million. The advances bear interest subject to a pricing matrix with ranges of 3/4% below the prime rate to 1/4% above the prime rate dependent upon a ratio of funded debt to
EBITDA. The revolver also contains a LIBOR based borrowing option with rates ranging from 150 to 250 basis points above Euro dollar rates, dependent upon the same calculation. Substantially all of the Companys assets collateralize the
borrowings.



As discussed in Note 6 of the notes
to consolidated financial statements, the Company and its subsidiaries, have two bank lines of credit, which provide for $35 million of credit subject to borrowing base limitations of which $1 million was outstanding at October 3, 2004.



The Company, in relation to the acquisition of Wheel to Wheel, entered
into employment contracts with three employees that among other things, allow for severance payments of two years worth of base salary for termination without cause. Obligations under these severance agreements total $1.8 million annually. The
Company had previously entered into two employment contracts with two and five year terms, which among other things, have severance provisions totaling $2.8 million annually.



Effective July 13, 2004, Starcraft Corporation completed the private placement of $15 million of unsecured senior
subordinated convertible notes. The notes were placed with accredited investors in a transaction exempt from registration under the Securities Act of 1933, pursuant to Section 4(2) of the Securities Act, and Regulation D thereunder. The notes bear
interest at 8.5% and mature in July 2009 with semi-annual interest payments payable on January 1 and July 1 of each year, commencing January 1, 2005. The payments can be made in either cash or stock, to be determined at Starcrafts discretion.
The notes are convertible at the option of the holder, subject to certain conditions, in whole or in part, into shares of Starcrafts common stock at a 25% premium to the previous five-day average closing price of Starcrafts stock price
as of July 12, 2004.



Starcraft has filed a registration
statement under the Securities Act of 1933 to register the shares of its common stock issuable upon conversion of the notes for potential resale by note holders. Starcraft paid a placement fee of $0.4 million and an origination fee of $0.2 million
in respect of this issuance. The funds from the debt issuance were used to pay down the revolver. Available funds on the revolving line of credit, subject to borrowing base limitations, approximated $25 million at October 3, 2004. At December 14,
2004, available funds under the revolver line of credit are $20 million.



The Company believes the additional capital provided by the convertible notes proceeds will better align its long term growth initiatives with capital not subject to borrowing base fluctuations, enhancing
managements flexibility in addressing long and short term capital and liquidity needs as they arise. The Company believes the additional flexibility provided by the convertible notes together with borrowings available under revolving credit
facilities and internally generated funds will be sufficient to satisfy its liquidity requirements, and growth initiatives through 2005.



On February 9, 2004, the company declared a 5% common stock dividend. The stock dividend was paid on March 19, 2004 to stockholders of record as of
February 20, 2004.



INCOME TAXES



At this time, the Company does not have U.S. federal income tax expenses due
to existing net operating loss carryforwards generated from prior years tax losses that are being utilized to offset current taxable income. The Company is incurring certain state taxes.



15



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##### Table of Contents

As the net operating loss carryforwards are utilized, the Company will begin recording U.S. federal
income taxes, along with Canadian and state taxes. At October 3, 2004, the net operating loss carryforwards were approximately $3.6 million related to U.S. income taxes and $1.8 million related to Canadian taxes.



PROPOSED MERGER



On November 23, 2004, the Company entered into an Agreement and Plan of Merger whereby Quantum will acquire all of the
issued and outstanding shares of common stock of Starcraft in a tax-free stock-for-stock exchange valued at approximately $185 million, including the assumption of debt and other consideration. Under the terms of the definitive Agreement and Plan of
Merger, each Starcraft shareholder will receive 2.341 shares of Quantum common stock for every share of Starcraft common stock.



The proposed transaction received the unanimous approval of both Boards of Directors. Four of Starcrafts largest shareholders, who collectively
represent 51.3% of Starcrafts issued and outstanding shares of common stock have entered into a voting agreement with Quantum pursuant to which they have agreed to vote their Starcraft shares in favor of the merger. General Motors,
Quantums largest stockholder, owning 14.2% of the issued and outstanding common shares of Quantum and 11.4% of the voting power of Quantums stock, has entered into a voting agreement with Starcraft agreeing to vote in favor of the
transaction.



Starcraft common shareholders will own
approximately 40% of the pro forma Quantum common stock outstanding immediately following completion of the transaction. Quantum will maintain its listing on the NASDAQ National Market under the symbol QTWW. Starcraft Corporation will
survive the merger with a newly formed Quantum subsidiary and will operate as a wholly owned subsidiary of Quantum.



The transaction will be submitted to the shareholders of both companies for approval. The transaction is also subject to customary regulatory review and
closing conditions, and is expected to close in the first quarter of calendar year 2005.



Quantum is a leading designer, integrator and manufacturer of packaged fuel systems for fuel cells and alternative fuel applications in the transportation, fuel cell stationary power generation and hydrogen refueling
infrastructure markets. Leveraging its core competencies in ultra-light weight composite fuel storage, fuel injection, fuel metering, electronic controls, OEM-level systems integration, and years of OEM production experience, Quantum also designs
and manufactures hybrid and fuel cell vehicles. Quantum is a Tier 1 OEM supplier and has product commercialization alliances with General Motors, Sumitomo and IMPCO. Quantums customer base includes General Motors, Toyota, Opel, Hyundai,
Suzuki, Ford, Sunline, Yamaha, AeroVironment, and the U.S. Army. Quantums website is www.qtww.com.



The combined company would have an extensive range of operational expertise in areas such as vehicle systems design, powertrain engineering, systems
integration, validation, assembly and service readiness for traditional vehicles, alternative fuel platforms, and hydrogen-based fuel cell vehicles. The complementary strengths of each company should support expansion of current customer programs
and create the potential to attain new OEM programs. If the merger is effected, the combined company is expected to maintain operations in California, Indiana, Louisiana, Michigan, Texas, and Ontario, Canada, with its headquarters located in Irvine,
California.



APPLICATION OF CRITICAL ACCOUNTING POLICIES



In the course of normal business and in the preparation of its consolidated
financial statements in accordance with accounting principles generally accepted in the United States, management is required to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ
from those estimates. The significant policies under which such estimates and assumptions are made include:



Revenue Recognition: The Company generally manufactures products based on specific orders from customers. Shipments are generally made by common
carrier after receiving authorization from the customer, and revenue is recognized upon shipment under FOB factory terms.



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Warranties: The Company follows the policy of accruing an estimated liability for warranties at
the time the warranted products are sold. The Companys OEM Automotive Supply segment provides products to Original Equipment Manufacturers under warranty terms similar to those offered by the OEM to its customers, generally three years. The
Company accrues an estimated liability for potential warranties at the time products are sold, based on past claims experience.



Accrued Insurance: The Company is self-insured for a portion of its employee medical benefits. Medical claims are routinely reviewed by the
Companys insurance carrier for purposes of establishing ultimate loss estimates. In addition, management must determine estimated liability for claims incurred but not reported. Such estimates and any subsequent changes in estimates may result
in adjustments to our operating results in the future.



Property and Equipment: Property and equipment are stated at cost. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. The Company is depreciating buildings over periods of
15 to 50 years. Building improvements over periods of 5 to 20 years, and equipment over periods of 3 to 12 years.



Identifiable Intangible Assets and Goodwill: The identifiable intangible assets generated by the Wheel to Wheel merger will be amortized to expense
over the expected lives of the assets ranging from three to twenty years. Goodwill will not be amortized to expense, but rather will be evaluated annually for any impairment in the carrying value, and adjusted accordingly through the income
statement.



OFF-BALANCE SHEET ARRANGEMENTS



As part of the Wheel to Wheel merger, the Company assumed a consulting
agreement for a former shareholder of Wheel to Wheel. As of October 3, 2004, Wheel to Wheel has 103 remaining monthly payments of $28 due under this arrangement, which is not recorded on the balance sheet.



CONTRACTUAL OBLIGATIONS:



|                                 |  |                        |        |                 |   |          |  |          |        |                  |   |        |  |   |      
|-------------------------------- |  | ---------------------- | ------ | --------------- | - | -------- |  | -------- | ------ | ---------------- | - | ------ |  | - | -----
|                                 |  | Payments due by period
|                                 |  | Total                  |        | Less than1 Year |   | 1-3Years |  | 3-5Years |        | More than5 Years
|Long-Term Debt Obligations       |  | $                      | 19,164 |                 | $ | 310      |  | $        | 1,584  |                  | $ | 15,674 |  | $ | 1,596
|Operating Lease Obligations      |  |                        | 16,874 |                 |   | 3,181    |  |          | 5,329  |                  |   | 3,842  |  |   | 4,522
|Employment Agreement Obligations |  |                        | 7,090  |                 |   | 2,940    |  |          | 3,250  |                  |   | 900    |  |   |     
|                                 |  |                        |        |                 |   |          |  |          |        |                  |   |        |  |   |      
|Total                            |  | $                      | 43,128 |                 | $ | 6,431    |  | $        | 10,163 |                  | $ | 20,416 |  | $ | 6,118
|                                 |  |                        |        |                 |   |          |  |          |        |                  |   |        |  |   |      



AVAILABLE INFORMATION



Availability of Reports.Starcraft is a
reporting company under the Securities Exchange Act of 1934, as amended (the 1934 Act), and files reports, proxy statements and other information with the Securities and Exchange Commission (the SEC). The public may read and
copy any Company filings at the SECs Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.



Because the Company makes filings to the SEC electronically, you may access
this information at the SECs internet site: www.sec.gov. This site contains reports, proxies, information statements, and other information regarding issuers that file electronically with the SEC.



Web site Access. Our internet Web site address is
www.starcraftcorp.com. We make available, free of charge at the Investor Relations portion of this Web site under SEC Filings annual reports on Form 10-K,



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quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
1934 Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Reports of beneficial ownership filed pursuant to Section 16(a) of the 1934 Act are also available on our Web site.



DISCUSSION OF FORWARD-LOOKING INFORMATION



The discussion above includes forward-looking statements respecting domestic
and international market and economic trends, the Companys products and marketing plans, anticipated capital expenditures and revenues, the adequacy of capital resources and other matters. From time to time, the Company may make oral or
written forward-looking statements regarding its anticipated sales, costs, expenses, earnings and matters affecting its condition and operations. All such forward-looking statements are subject to a number of material factors which could cause the
statements or projections contained therein to be materially inaccurate. Such factors include, without limitation, the following:



General Operating Contingencies.The Company may not be able to attract and retain employees with sufficient skills to conduct its operations
efficiently and may from time to time be subject to work slow-downs or stoppages. The Company may be adversely affected by delay or unavailability of supply of numerous component parts. The Company will not always be able to satisfy its capital
requirements with internally generated funds and may, from time to time, need to rely on bank financing and other third party capital resources. There is no assurance that such resources will always be available to the Company or as to the terms
that will apply to any financing, or as the Companys ability to continue to comply with such terms over time.



Acquisitions and Diversification.The Company may be engaged in negotiations from time to time regarding prospective acquisitions of related
businesses. Such acquisitions could be material to the Company and, if affected, could have a material effect on the Companys financial condition or results of operations. There is no assurance as to when or whether the Company will be able to
effect acquisitions, whether it will be able to generate requisite funding to effect such acquisitions, or as to the terms on which such acquisitions may be effected. The Company may have less experience manufacturing and marketing such acquired
products than it has in its business. There is no assurance that such new acquisitions will be profitable.



Economic Conditions.The level of disposable consumer income affects the Companys sales because its products are generally considered
discretionary expenditures by consumers. In difficult economic times, consumers tend to spend less of their income on discretionary items. Other economic factors affecting the demand for the Companys products include the availability and price
of gasoline, the level of interest rates and the availability of consumer financing.



Reduced gasoline availability could adversely affect the demand for the Companys products. A significant increase in the price of gasoline could reduce demand for the Companys products because it would
increase the cost of operating these products. Because many consumers finance their purchase of vehicles on which Company products are installed, the availability of financing and level of interest rates can affect a consumers purchasing
decision. A decline in general economic conditions or consumer confidence can be expected to affect the Company and Tecstars sales adversely.



Revenues.All of the Companys sales in 2004, 2003 and 2002 were to GM. The Companys OEM Automotive Supply sales are directly impacted
by the size of the automotive industry and GMs market share. Further, GM periodically reduces production or closes plants for several months for model changeovers. During the fourth quarter of fiscal year 2000 and continuing into the second
quarter of fiscal 2001, one of the Companys manufacturing facilities was substantially shut down as a result of GMs model changeover. This adversely affected the Companys fiscal 2000 and 2001 results. A decline in sales in the
automotive market or in GMs automotive sales, or production cutbacks and plant shut downs for model changeovers by GM, could have an adverse impact on the Companys sales and profits. Sales of the Company are subject to long-term
contracts with GM. Continued sales and growth of this segment is subject to the Companys ability to continue to satisfactorily



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perform and to obtain such contracts over time. Sales programs are tied to contractual agreements, but may be shortened or extended based upon market
conditions and chassis manufacturing plans at the option of the customer. Historically, the customer has continued programs upon the introduction of a new vehicle chassis, although the Company has no assurance that it will receive such new
contracts.



The Companys agreements with its customer may
be shortened or extended by the customer at its discretion. There is no assurance that the Companys agreements will remain in effect for the stated periods.



Single Customer. GM has publicized its interest to put significant pressures on its suppliers to reduce costs,
including GMs intention to change suppliers if suppliers do not comply. As the Companys sole customer is GM, there is no assurance that the Companys sales and margins will not be adversely affected by this program.



Regulation.The Company is subject to various foreign, federal, state
and local regulations. The Company must comply with certain Federal and state regulations relating to the disposition of hazardous wastes generated in its production processes. The Companys failure to comply with applicable regulations or
changes in current regulations, including the adoption of new safety or environmental standards, could have a material adverse effect on the Companys results of operations.



Competition.The OEM Automotive Supply business is also highly competitive with several large companies competing in
this market. There is no assurance the Company will be able to maintain its current competitive position in this market.



Potential Product Liability and Warranties.Like other automotive manufacturers, the Company may be subject to claims that its products caused or
contributed to damage or injury sustained in vehicle accidents or may be required to recall products deemed unsafe. Any such claims in excess of the Companys insurance coverage or material product recall expenses could adversely affect the
Companys financial condition and results of operations. It is possible that actual expenses the Company incurs to honor warranties on products could exceed the warranty liability accrued on its books for such expenses, which could adversely
affect its results of operations.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



In the normal course of business, operations of the Company are exposed to fluctuations in interest rates and foreign currencies. These fluctuations can
vary the cost of financing, investment yields and operations of the Company.



The Company does not have any investments that would be classified as trading securities under generally accepted accounting principles. The Companys non-trading investments, excluding cash and cash equivalents,
consist of certificates of deposit and debt securities. These financial instruments are subject to market risk in that changes in interest rates would impact the market value of such investments. The Company generally does not utilize derivatives to
hedge against increases in interest rates which decrease market values.



Based on the Companys overall interest rate exposure at October 3, 2004, including variable rate debt, a hypothetical 10 percent change in interest rates applied to the fair value of the financial instruments as of October 3, 2004,
would have no material impact on earnings or cash flows over a one-year period.



The Companys foreign currency risk exposure results from fluctuating currency exchange rates, primarily the U.S. dollar against the Canadian dollar. The Company faces transactional currency exposures that arise
when its foreign subsidiaries enter into transactions, denominated in currencies other than their local currency. The Company also faces currency exposure that arises from translating the results of its Canadian operations to the U.S. dollar at
exchange rates that have used financial derivatives to hedge against fluctuations in currency exchange rates. During fiscal 2004, the Company incurred a $0.2 million net foreign currency gain.



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





STARCRAFT CORPORATION AND SUBSIDIARIES

Goshen, Indiana



CONSOLIDATED FINANCIAL
STATEMENTS

October 3, 2004, September 28, 2003 and September 29, 2002



CONTENTS



|                                                |  |   
|----------------------------------------------- |  | --
|                                                | 
|REPORT OF INDEPENDENT AUDITORS                  |  | 21
|                                                | 
|CONSOLIDATED FINANCIAL STATEMENTS               |  |   
|                                                | 
|CONSOLIDATED BALANCE SHEETS                     |  | 22
|                                                | 
|CONSOLIDATED STATEMENTS OF OPERATIONS           |  | 24
|                                                | 
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY |  | 25
|                                                | 
|CONSOLIDATED STATEMENTS OF CASH FLOWS           |  | 26
|                                                | 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      |  | 27



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders of

Starcraft Corporation and Subsidiaries:



We have audited the accompanying consolidated balance sheets of Starcraft Corporation and Subsidiaries as of October 3, 2004 and September 28, 2003 and
the related consolidated statements of operations, shareholders equity and cash flows for each of the three years in the period ended October 3, 2004. Our audit also included the financial statement schedule listed in the index at Item 15(c).
These financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.



We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States). 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 Starcraft
Corporation and Subsidiaries as of October 3, 2004 and September 28, 2003, and the results of their operations and their cash flows for each of the three years in the period ended October 3, 2004 in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the financial statement schedule referred to above presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.



As explained in Note 16, the Board of Directors has agreed to
a sale of all the common stock of the Company under an Agreement and Plan of Merger.





/S/    CROWE CHIZEK AND
COMPANY LLC

Crowe Chizek and Company LLC



Elkhart, Indiana

November 19, 2004



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

October 3, 2004 and September 28, 2003



|                                                                  |  |                        |         |      |   |       
|----------------------------------------------------------------- |  | ---------------------- | ------- | ---- | - | ------
|                                                                  |  | 2004                   |         | 2003
|                                                                  |  | (dollars in thousands)
|ASSETS                                                            |  |                        |         |      |   |       
|Current assets                                                    |  |                        |         |      |   |       
|Cash and cash equivalents                                         |  | $                      | 1,173   |      | $ | 836   
|Accounts receivable                                               |  |                        |         |      |   |       
|Trade, less allowance for doubtful accounts: 2004$327; 2003$200 |  |                        | 21,195  |      |   | 28,606
|Other receivables                                                 |  |                        | 2,188   |      |   | 576   
|Inventories                                                       |  |                        | 13,547  |      |   | 10,060
|Tooling and engineering projects                                  |  |                        | 2,609   |      |   | 6,593 
|Refundable income taxes                                           |  |                        | 1,696   |      |   |      
|Deferred income taxes                                             |  |                        | 1,949   |      |   | 1,487 
|Other current assets                                              |  |                        | 678     |      |   | 922   
|                                                                  |  |                        |         |      |   |       
|Total current assets                                              |  |                        | 45,035  |      |   | 49,080
|                                                                  |  |                       
|Property and equipment                                            |  |                        |         |      |   |       
|Land, buildings and improvements                                  |  |                        | 5,812   |      |   | 6,005 
|Machinery and equipment                                           |  |                        | 14,442  |      |   | 7,321 
|                                                                  |  |                        |         |      |   |       
|                                                                  |  |                        | 20,254  |      |   | 13,326
|Less accumulated depreciation                                     |  |                        | 5,737   |      |   | 4,190 
|                                                                  |  |                        |         |      |   |       
|Property and equipment, net                                       |  |                        | 14,517  |      |   | 9,136 
|                                                                  |  |                       
|Goodwill                                                          |  |                        | 77,443  |      |   |      
|Intangible assets, net of $1,440 accumulated amortization         |  |                        | 12,860  |      |   |      
|Other assets                                                      |  |                        | 1,506   |      |   | 514   
|                                                                  |  |                        |         |      |   |       
|                                                                  |  | $                      | 151,361 |      | $ | 58,730
|                                                                  |  |                        |         |      |   |       





See accompanying notes to consolidated financial statements.



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STARCRAFT CORPORATION AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS (CONTINUED)

October 3, 2004 and September 28, 2003



|                                                                                                                                       |  |                        |         |   |      |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------ | -
|                                                                                                                                       |  | 2004                   |         |   | 2003 |  
|                                                                                                                                       |  | (dollars in thousands) |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                   |  |                        |         |   |      |   |        |  
|Current liabilities                                                                                                                    |  |                        |         |   |      |   |        |  
|Current maturities of long-term debt                                                                                                   |  | $                      | 310     |   |      | $ |       |  
|Accounts payable, trade                                                                                                                |  |                        | 20,860  |   |      |   | 19,549 |  
|Accrued expenses                                                                                                                       |  |                        |         |   |      |   |        |  
|Compensation and related expenses                                                                                                      |  |                        | 1,742   |   |      |   | 2,668  |  
|Warranty                                                                                                                               |  |                        | 248     |   |      |   | 698    |  
|Income taxes                                                                                                                           |  |                        |        |   |      |   | 3,378  |  
|Taxes, other                                                                                                                           |  |                        | 185     |   |      |   | 434    |  
|Medical self insurance                                                                                                                 |  |                        | 412     |   |      |   |       |  
|Interest                                                                                                                               |  |                        | 262     |   |      |   |       |  
|Other                                                                                                                                  |  |                        | 569     |   |      |   | 394    |  
|                                                                                                                                       |  |                        |         |   |      |   |        |  
|Total current liabilities                                                                                                              |  |                        | 24,588  |   |      |   | 27,121 |  
|                                                                                                                                       |  |                       
|Long-term debt, net of current maturities                                                                                              |  |                        | 18,854  |   |      |   | 9,148  |  
|                                                                                                                                       |  |                       
|Deferred income taxes                                                                                                                  |  |                        | 4,938   |   |      |   |       |  
|                                                                                                                                       |  |                       
|Minority interest in subsidiary                                                                                                        |  |                        |        |   |      |   | 9,821  |  
|                                                                                                                                       |  |                       
|Commitments and contingencies (Note 11)                                                                                                |  |                        |        |   |      |   |       |  
|                                                                                                                                       |  |                       
|Shareholders equity                                                                                                                   |  |                        |         |   |      |   |        |  
|Preferred stock, no par value: authorized 2,000,000 shares, none issued                                                                |  |                        |        |   |      |   |       |  
|Common stock, no par value: authorized 20,000,000 shares, issued and outstanding 8,968,691 shares in 2004 and 4,804,102 shares in
2003 |  |                        | 149,831 |   |      |   | 15,203 |  
|Additional paid-in capital                                                                                                             |  |                        | 9,665   |   |      |   | 3,420  |  
|Accumulated deficit                                                                                                                    |  |                        | (56,794 | ) |      |   | (6,151 | )
|Accumulated other comprehensive income                                                                                                 |  |                        | 279     |   |      |   | 168    |  
|                                                                                                                                       |  |                        |         |   |      |   |        |  
|                                                                                                                                       |  |                        | 102,981 |   |      |   | 12,640 |  
|                                                                                                                                       |  |                        |         |   |      |   |        |  
|                                                                                                                                       |  | $                      | 151,361 |   |      | $ | 58,730 |  
|                                                                                                                                       |  |                        |         |   |      |   |        |  





See accompanying notes to consolidated financial statements.



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STARCRAFT CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended October 3, 2004, September 28, 2003 and September 29, 2002



|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------- |  | --------------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                        |  | 2004                                          |         |   | 2003 |   |         | 2002 | 
|                                                        |  | (dollars in thousands, except per share data) |        
|Net sales                                               |  | $                                             | 173,403 |   |      | $ | 192,102 |      |  | $ | 104,684 |  
|                                                        |  |                                               |        
|Cost of goods sold                                      |  |                                               | 150,339 |   |      |   | 147,835 |      |  |   | 79,748  |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|Gross profit                                            |  |                                               | 23,064  |   |      |   | 44,267  |      |  |   | 24,936  |  
|                                                        |  |                                               |        
|Operating expenses                                      |  |                                               |         |   |      |   |         |      |  |   |         |  
|Selling and promotion                                   |  |                                               | 2,897   |   |      |   | 1,866   |      |  |   | 2,014   |  
|General and administrative                              |  |                                               | 16,194  |   |      |   | 17,297  |      |  |   | 13,501  |  
|Goodwill impairment                                     |  |                                               | 47,900  |   |      |   |        |      |  |   |        |  
|Amortization of intangibles                             |  |                                               | 1,440   |   |      |   |        |      |  |   |        |  
|Compensation expense from warrant and option redemption |  |                                               |        |   |      |   |        |      |  |   | 2,096   |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|Operating income (loss)                                 |  |                                               | (45,367 | ) |      |   | 25,104  |      |  |   | 7,325   |  
|                                                        |  |                                               |        
|Nonoperating (expense) income                           |  |                                               |         |   |      |   |         |      |  |   |         |  
|Interest, net                                           |  |                                               | (940    | ) |      |   | (457    | )    |  |   | (476    | )
|Other, net                                              |  |                                               |        |   |      |   | 33      |      |  |   | 589     |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|                                                        |  |                                               | (940    | ) |      |   | (424    | )    |  |   | 113     |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|Income (loss) before minority interest and income taxes |  |                                               | (46,307 | ) |      |   | 24,680  |      |  |   | 7,438   |  
|                                                        |  |                                               |        
|Minority interest                                       |  |                                               | 610     |   |      |   | 10,832  |      |  |   | 4,087   |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income taxes                       |  |                                               | (46,917 | ) |      |   | 13,848  |      |  |   | 3,351   |  
|                                                        |  |                                               |        
|Income taxes (benefit)                                  |  |                                               | (1,897  | ) |      |   | 2,060   |      |  |   | 388     |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                       |  | $                                             | (45,020 | ) |      | $ | 11,788  |      |  | $ | 2,963   |  
|                                                        |  |                                               |         |   |      |   |         |      |  |   |         |  
|Earnings (loss) per common share, basic                 |  | $                                             | (5.79   | ) |      | $ | 2.37    |      |  | $ | .62     |  
|                                                        |  |                                               |        
|Earnings (loss) per common share, diluted               |  | $                                             | *       |   |      | $ | 2.14    |      |  | $ | .52     |  

---

|* | Not presented herein since effect is antidilutive.
|- | --------------------------------------------------



See accompanying notes to consolidated financial statements.



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STARCRAFT CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

For the years ended October 3, 2004, September 28, 2003 and September 29, 2002



|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|------------------------------------------------------ |  | --------------------------------- |  | ---------------------- | ------- | ------------------------ | - | ------- | ------------------ |  | - | -------------------------------------- | - | ----- | - | --- |  | - | ------- | -
|                                                       |  | Issued andOutstandingCommonShares |  | CommonStock            |         | AdditionalPaid-InCapital |   |         | AccumulatedDeficit |  |   | AccumulatedOther Compre- hensiveIncome |   | Total |  
|                                                       |  |                                   |  | (dollars in thousands) |        
|Balance, October 1, 2001                               |  | 4,255,059                         |  | $                      | 14,401  |                          | $ | 1,386   |                    |  | $ | (18,490                                | ) |       | $ |    |  | $ | (2,703  | )
|                                                       |  |                                   |  |                        |         |                         
|Net income                                             |  |                                  |  |                        |        |                          |   |        |                    |  |   | 2,963                                  |   |       |   |    |  |   | 2,963   |  
|Stock option redemption                                |  |                                  |  |                        |        |                          |   | (378    | )                  |  |   |                                       |   |       |   |    |  |   | (378    | )
|Issuance of common stock                               |  | 199,000                           |  |                        | 449     |                          |   |        |                    |  |   |                                       |   |       |   |    |  |   | 449     |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|Balance, September 29, 2002                            |  | 4,454,059                         |  |                        | 14,850  |                          |   | 1,008   |                    |  |   | (15,527                                | ) |       |   |    |  |   | 331     |  
|                                                       |  |                                   |  |                        |         |                         
|Net income                                             |  |                                  |  |                        |        |                          |   |        |                    |  |   | 11,788                                 |   |       |   |    |  |   | 11,788  |  
|Currency translation adjustments                       |  |                                  |  |                        |        |                          |   |        |                    |  |   |                                       |   |       |   | 168 |  |   | 168     |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|Comprehensive income                                   |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   | 11,956  |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|5% Common stock dividend                               |  | 225,460                           |  |                        |        |                          |   | 2,412   |                    |  |   | (2,412                                 | ) |       |   |    |  |   |        |  
|Issuance of common stock                               |  | 124,583                           |  |                        | 353     |                          |   |        |                    |  |   |                                       |   |       |   |    |  |   | 353     |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|Balance, September 28, 2003                            |  | 4,804,102                         |  |                        | 15,203  |                          |   | 3,420   |                    |  |   | (6,151                                 | ) |       |   | 168 |  |   | 12,640  |  
|                                                       |  |                                   |  |                        |         |                         
|Net loss                                               |  |                                  |  |                        |        |                          |   | (45,020 | )                  |  |   |                                       |   |       |   |    |  |   | (45,020 | )
|Currency translation adjustments                       |  |                                  |  |                        |        |                          |   |        |                    |  |   |                                       |   |       |   | 111 |  |   | 111     |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|Comprehensive loss                                     |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   | (44,909 | )
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|5% Common stock dividend                               |  | 421,539                           |  |                        |        |                          |   | 5,623   |                    |  |   | (5,623                                 | ) |       |   |    |  |   |        |  
|Tax benefit of disqualifying stock option dispositions |  |                                  |  |                        |        |                          |   | 622     |                    |  |   |                                       |   |       |   |    |  |   | 622     |  
|Issuance of common stock                               |  | 3,743,050                         |  |                        | 134,628 |                          |   |        |                    |  |   |                                       |   |       |   |    |  |   | 134,628 |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  
|Balance, October 3, 2004                               |  | 8,968,691                         |  | $                      | 149,831 |                          | $ | 9,665   |                    |  | $ | (56,794                                | ) |       | $ | 279 |  | $ | 102,981 |  
|                                                       |  |                                   |  |                        |         |                          |   |         |                    |  |   |                                        |   |       |   |     |  |   |         |  





See accompanying notes to consolidated financial statements.



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended October 3, 2004, September 28, 2003 and September 29, 2002



|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                                             |  | 2004                   |         |   | 2003 |   |        | 2002 | 
|                                                                                                             |  | (dollars in thousands) |        
|Cash flows from operating activities                                                                         |  |                        |         |   |      |   |        |      |  |   |         |  
|Net income (loss)                                                                                            |  | $                      | (45,020 | ) |      | $ | 11,788 |      |  | $ | 2,963   |  
|Adjustments to reconcile net income (loss) to net cash from operating activities                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Compensation expense from warrants and options                                                               |  |                        |        |   |      |   |       |      |  |   | 2,096   |  
|Depreciation and amortization                                                                                |  |                        | 4,030   |   |      |   | 1,646  |      |  |   | 766     |  
|(Gain) loss on disposal of assets                                                                            |  |                        |        |   |      |   | 233    |      |  |   | (85     | )
|Provision (credit) for losses on doubtful receivables                                                        |  |                        | (70     | ) |      |   | 157    |      |  |   | 184     |  
|Minority interest                                                                                            |  |                        | 610     |   |      |   | 10,832 |      |  |   | 4,087   |  
|Goodwill impairment                                                                                          |  |                        | 47,900  |   |      |   |       |      |  |   |        |  
|Deferred income taxes                                                                                        |  |                        | (958    | ) |      |   |       |      |  |   |        |  
|Tax benefit of disqualifying stock option dispositions                                                       |  |                        | 622     |   |      |   |       |      |  |   |        |  
|Changes in operating assets and liabilities, excluding effects from acquisitions in 2004                     |  |                        |         |   |      |   |        |      |  |   |         |  
|Accounts receivable                                                                                          |  |                        | 7,818   |   |      |   | (6,621 | )    |  |   | (11,163 | )
|Refundable income taxes                                                                                      |  |                        | (1,696  | ) |      |   |       |      |  |   |        |  
|Inventories                                                                                                  |  |                        | (2,112  | ) |      |   | (1,856 | )    |  |   | (3,568  | )
|Tooling and engineering projects                                                                             |  |                        | 3,984   |   |      |   | (5,641 | )    |  |   | (123    | )
|Accounts payable                                                                                             |  |                        | (2,726  | ) |      |   | 1,491  |      |  |   | 6,060   |  
|Accrued expenses                                                                                             |  |                        | (5,179  | ) |      |   | 3,038  |      |  |   | 882     |  
|Other                                                                                                        |  |                        | 509     |   |      |   | (1,366 | )    |  |   | (566    | )
|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Net cash from operating activities                                                                           |  |                        | 7,712   |   |      |   | 13,701 |      |  |   | 1,533   |  
|                                                                                                             |  |                        |        
|Cash flows from investing activities                                                                         |  |                        |         |   |      |   |        |      |  |   |         |  
|Collection of notes receivable, net                                                                          |  |                        |        |   |      |   |       |      |  |   | 358     |  
|Purchase of property and equipment                                                                           |  |                        | (5,680  | ) |      |   | (5,504 | )    |  |   | (2,943  | )
|Acquisitions, net of cash acquired                                                                           |  |                        | (1,200  | ) |      |   |       |      |  |   |        |  
|Proceeds from sale of property and equipment                                                                 |  |                        | 41      |   |      |   | 13     |      |  |   | 42      |  
|Increase in other assets                                                                                     |  |                        | 354     |   |      |   |       |      |  |   |         |  
|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Net cash from investing activities                                                                           |  |                        | (6,485  | ) |      |   | (5,491 | )    |  |   | (2,543  | )
|                                                                                                             |  |                        |        
|Cash flows from financing activities                                                                         |  |                        |         |   |      |   |        |      |  |   |         |  
|Net proceeds (payments) on revolving credit agreement                                                        |  |                        | (8,203  | ) |      |   | (3,556 | )    |  |   | 4,612   |  
|Proceeds from issuance of convertible debt                                                                   |  |                        | 15,000  |   |      |   |       |      |  |   |        |  
|Deferred financing costs                                                                                     |  |                        | (694    | ) |      |   |       |      |  |   |        |  
|Payments of long-term debt                                                                                   |  |                        | (400    | ) |      |   |       |      |  |   | (814    | )
|Distributions to minority shareholder                                                                        |  |                        | (7,500  | ) |      |   | (3,002 | )    |  |   | (2,253  | )
|Redemption and cancellation of warrants and options                                                          |  |                        |        |   |      |   | (1,474 | )    |  |   | (1,000  | )
|Issuance of common stock                                                                                     |  |                        | 935     |   |      |   | 353    |      |  |   | 449     |  
|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Net cash from financing activities                                                                           |  |                        | (862    | ) |      |   | (7,679 | )    |  |   | 994     |  
|                                                                                                             |  |                        |        
|Effect of exchange rate changes on cash                                                                      |  |                        | (28     | ) |      |   | 21     |      |  |   |        |  
|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Net change in cash and cash equivalents                                                                      |  |                        | 337     |   |      |   | 552    |      |  |   | (16     | )
|                                                                                                             |  |                        |        
|Cash and cash equivalents at beginning of year                                                               |  |                        | 836     |   |      |   | 284    |      |  |   | 300     |  
|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Cash and cash equivalents at end of year                                                                     |  | $                      | 1,173   |   |      | $ | 836    |      |  | $ | 284     |  
|                                                                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|                                                                                                             |  |                        |        
|Supplemental disclosure of cash flow information                                                             |  |                        |         |   |      |   |        |      |  |   |         |  
|Interest paid                                                                                                |  | $                      | 678     |   |      | $ | 606    |      |  | $ | 473     |  
|Income taxes                                                                                                 |  |                        | 2,535   |   |      |   | 673    |      |  |   | 137     |  
|                                                                                                             |  |                        |        
|Noncash investing and financing activities                                                                   |  |                        |         |   |      |   |        |      |  |   |         |  
|Business acquisitions:                                                                                       |  |                        |         |   |      |   |        |      |  |   |         |  
|                                                                                                             |  |                        |        
|Liabilities assumed                                                                                          |  | $                      | 13,592  |   |      | $ |       |      |  | $ |        |  
|                                                                                                             |  |                        |        
|Issuance of shares of common stock                                                                           |  |                        | 133,693 |   |      |   |       |      |  |   |        |  
|                                                                                                             |  |                        |        
|Issuance of notes payable as partial consideration consideration in redemption of warrants and stock options |  | $                      |        |   |      | $ |       |      |  | $ | 1,474   |  



See accompanying notes
to consolidated financial statements.



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



NOTE 1NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES



Nature of Business and Principles of Consolidation: Starcraft Corporation and Subsidiaries (collectively referred to as the Company) are second stage manufacturers of pickup truck and sport utility
vehicles to an original equipment manufacturer (OEM automotive supply). The Company also supplies after-market automotive parts and products (automotive parts and products) to wholesale and retail customers, and provides
engineering development services to customers in the automotive industry. The consolidated financial statements include the accounts of Starcraft Corporation and its wholly owned subsidiaries: Starcraft Automotive Group, Inc., Conversion Warranty,
Inc. and Starcraft Southwest, Inc. On January 16, 2004, the Company acquired all the issued and outstanding shares of common stock of Wheel to Wheel, Inc. (Wheel to Wheel) in a merger transaction. Prior to the acquisition, the Company
had a 50% ownership in Tecstar, LP and Tecstar Manufacturing Canada Limited (collectively Tecstar) which were 50% owned subsidiaries of Wheel to Wheel. Through the acquisition of Wheel to Wheel, the Company now owns 100% of Tecstar,
which accounts are consolidated in these financial statements. Prior to January 16, 2004, the Company owned 50% of Tecstar and consolidated the accounts due to its effective control over Tecstars financial policies through its representation
on the Boards of Managers, participation in policymaking processes, and interchange of managerial personnel. The Company accounted for the Wheel to Wheel 50% ownership as minority interest. All significant intercompany accounts and transactions have
been eliminated in consolidation.



The Companys customers
operate primarily in the automotive industry. The Companys sales are primarily to one customer in the United States and Canada.



Cash Equivalents and Concentrations: Cash equivalents include all highly liquid investments with a maturity when purchased of three months or less.
The first $100 of deposits in each financial institution is insured by an agency of the U.S. Government.



Accounts Receivable: The Company sells to customers using credit terms customary in its industry. Credit is extended to customers based on an
evaluation of the customers financial condition, and when credit is extended, collateral generally is not required. Interest is not normally charged on receivables. Management establishes an allowance for doubtful accounts for potential losses
on its accounts receivable based on historical loss experience and current economic conditions. Accounts receivable are charged off to the allowance when management determines the account is uncollectible.



Inventories: Inventories are stated at the lower of cost or market.
Cost is determined by the last-in, first-out (LIFO) method for certain inventories ($229 and $224 at October 3, 2004 and September 28, 2003, respectively) and by the first-in, first-out (FIFO) method for all other
inventories.



Tooling and Engineering Projects: Tooling
and engineering projects represent costs, less amounts billed, incurred by the Company in the development of tooling and engineering services provided by the Company. The Company receives a specific purchase order for these tooling and engineering
projects and is generally reimbursed by the customer within terms customary in its industry. Costs are deferred until reimbursed by the customer. Forecasted losses on incomplete projects are recognized currently.



Property and Equipment: Property and equipment are stated at cost less
accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. The Company is depreciating buildings over periods of 15 to 50 years, building improvements over periods of 5
to 20 years, and equipment over periods of 3 to 12 years. Gains or losses on disposition of property and equipment are included in income. Maintenance and repairs are expensed as incurred.



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



Warranties: The Company follows the policy of accruing an estimated liability for warranties
at the time the warranted products are sold. Warranty is provided for terms similar to those offered by the OEM to its customers. Warranty activity for the years ended October 3, 2004 and September 28, 2003 is as follows:



|                                      |  |      |      |   |      |   |     |  
|------------------------------------- |  | ---- | ---- | - | ---- | - | --- | -
|                                      |  | 2004 |      |   | 2003 |  
|Accrued warranty at beginning of year |  | $    | 698  |   |      | $ | 771 |  
|Adjustments                           |  |      | (322 | ) |      |   | (25 | )
|Warranty claims paid                  |  |      | (128 | ) |      |   | (48 | )
|                                      |  |      |      |   |      |   |     |  
|Accrued warranty at end of year       |  | $    | 248  |   |      | $ | 698 |  
|                                      |  |      |      |   |      |   |     |  



Segment
Information: The Companys principal business is the supply of the OEM Automotive Industry. The Companys previously reported Automotive Parts and Products segment no longer meets the quantitative thresholds for separate disclosure as
set forth in Statement of Financial Accounting Standards (SFAS) No. 131, Disclosure about Segments of an Enterprise and Related Information.



Revenue Recognition: The Company generally manufactures products based on specific orders from customers. Shipments
are generally made by common carrier after receiving authorization from the customer, and revenue is recognized upon shipment under FOB factory terms.



Translation of Foreign Currency: Assets and liabilities of Tecstar Canada are translated at rates of exchange in effect at the close of the fiscal
year. Revenues and expenses are translated at the average rates of exchange for the year. Translation gains and losses are accumulated within other comprehensive income as a separate component of shareholders equity. Foreign currency
transaction gains and losses (transactions denominated in a currency other than Tecstar Canadas local currency) are included in selling and administrative expenses, and net foreign currency transaction gains aggregated $225 and $1,120 for the
years ended October 3, 2004 and September 28, 2003, respectively.



Fair Value of Financial Instruments: The carrying amount of the Companys financial instruments, which include cash, accounts receivable, accounts payable and long-term debt, approximates fair value.



Other Income: Other income is comprised of royalty payments from
parties that license the use of the Starcraft brand name and other miscellaneous items. In 2002, other income also included $332 related to cancellation of debt owed to a former vendor of the van conversion business.



Income Taxes: Deferred income taxes are provided based on the
liability method of accounting pursuant to SFAS No. 109, Accounting for Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts and tax bases of assets and liabilities. A valuation allowance adjusts net deferred tax assets to the net amount that is more likely than not to be realized. No provision has been made for U.S. and state income taxes or foreign
withholding taxes on the undistributed earnings (approximately $1,671 and $4,143 at October 3, 2004 and September 28, 2003, respectively) of foreign subsidiaries because it is expected that such earnings will be reinvested indefinitely. Upon
distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits), state income taxes and withholding taxes payable to the foreign countries.
Determination of the amount of any unrecognized deferred income tax liability of these undistributed earnings is not practical.



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



Goodwill: Goodwill represents the excess of the purchase price over the fair value of the
assets acquired (see Note 2). Under SFAS No. 142, goodwill is not amortized and is assessed annually for impairment. Management has elected to test goodwill for impairment annually as of the end of the Companys second fiscal quarter. Effective
March 28, 2004, management determined the Companys goodwill to be impaired and recorded a $47,900 impairment charge. The impairment charge resulted from a significant reduction in the Companys fair market value of its common stock. The
Company utilizes the fair market value of its common stock as a determination of the Companys value.



|                              |  |   |         |  
|----------------------------- |  | - | ------- | -
|Goodwill at beginning of year |  | $ |        |  
|Additions                     |  |   | 125,343 |  
|Impairment charge             |  |   | (47,900 | )
|                              |  |   |         |  
|Goodwill at end of year       |  | $ | 77,443  |  
|                              |  |   |         |  



Evaluation of
Impairment of Long-Lived Assets: In accordance with SFAS No. 144, Impairment or Disposal of Long-Lived Assets, the Company evaluates the carrying value of long-lived assets whenever significant events or changes in circumstances
indicate the carrying value of these assets may be impaired. The Company evaluates potential impairment of long-lived assets by comparing the carrying value of the net assets to the expected net future cash inflows resulting from use of the assets.
Management believes that no material impairment of long-lived assets exists at October 3, 2004.



Stock Based Compensation: The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, and accordingly, accounts for its stock option plans using the intrinsic value method of Accounting Principles Board
Opinion No. 25, Accounting for Stock-Based Compensation.



The following table illustrates the effect on net income (loss) and earnings (loss) per share if compensation expense was measured using the fair value recognition provisions of SFAS No. 123.



|                                                                                               |  |      |         |   |      |   |        |  |   |      
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ |  | - | -----
|                                                                                               |  | 2004 |         |   | 2003 |   | 2002  
|Net income (loss), as reported                                                                 |  | $    | (45,020 | ) |      | $ | 11,788 |  | $ | 2,963
|Deduct: stock-based compensation expenses determined under fair value based method, net of tax |  |      | 2,512   |   |      |   | 129    |  |   | 289  
|                                                                                               |  |      |         |   |      |   |        |  |   |      
|Proforma net income (loss)                                                                     |  | $    | (47,532 | ) |      | $ | 11,659 |  | $ | 2,674
|                                                                                               |  |      |         |   |      |   |        |  |   |      
|Basic earnings (loss) per share, as reported                                                   |  |      | (5.79   | ) |      |   | 2.37   |  |   | .62  
|Proforma basic earnings (loss) per share                                                       |  |      | (6.12   | ) |      |   | 2.34   |  |   | .56  
|Diluted earnings (loss) per share, as reported                                                 |  |      | *       |   |      |   | 2.14   |  |   | .52  
|Proforma diluted earnings (loss) per share                                                     |  |      | *       |   |      |   | 2.12   |  |   | .48  

---

|* | Not presented herein since effect is antidilutive
|- | -------------------------------------------------



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STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



The proforma amounts shown above and the weighted-average grant-date fair values of options granted
were estimated using the Black-Scholes option-pricing model with the following assumptions:



|                        |  |                 |  |                 |  |                
|----------------------- |  | --------------- |  | --------------- |  | ---------------
|                        |  | 2004            |  | 2003            |  | 2002           
|Risk-free interest rate |  | 2.74% - 3.95%   |  | 3.10% - 5.25%   |  | 5.25% - 6.23%  
|Dividend yield          |  | 0%              |  | 0%              |  | 0%             
|Volatility factor       |  | 84.32% - 87.24% |  | 84.18% - 86.17% |  | 77.45% - 94.70%
|Expected option life    |  | 4 years         |  | 4 years         |  | 4 years        



Comprehensive
Income: Other comprehensive income refers to revenues, expenses, gains and losses that under accounting principles generally accepted in the United States of America are included in comprehensive income but are excluded from net income as these
amounts are recorded directly as an adjustment to shareholders equity. The Companys other comprehensive income consists of foreign currency translation adjustments.



Use of Estimates: Preparation of the financial statements in accordance with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management makes estimates
for accrued warranty, valuation allowance for deferred tax assets, allowance for doubtful accounts, allowances for slow-moving and obsolete inventories, impairment of long-lived assets and goodwill and accruals for self-insured risks.



Earnings Per Common Share: Basic earnings per common share is based on
net income available to common shareholders divided by the weighted average number of common shares considered to be outstanding during the period. Diluted earnings per common share shows the dilutive effect of any additional potential common shares
issuable under stock options and convertible senior subordinated notes.



Fiscal Year: The Companys fiscal year ends on the Sunday closest to September 30. The year ended October 3, 2004, consisted of 53 weeks, while the years ended September 28, 2003 and September 29, 2002 each consisted of 52
weeks.



Reclassifications: Certain amounts in the 2003
and 2002 consolidated financial statements have been reclassified to conform with the 2004 presentation. These reclassifications had no effect on total assets, total shareholders equity or net income as previously reported.



Recently Enacted Accounting Standards: In December 2003, the
Securities and Exchange Commission released Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, which supercedes SAB No. 101, Revenue Recognition in Financial Statements. SAB No. 104 clarifies existing
guidance regarding revenue contracts that contain multiple deliverables to make it consistent with Emerging Issues Task Force (EITF) No. 00-21. The adoption of SAB No. 104 did not have a material impact on the Companys
consolidated financial statements.



In December 2003, the
Financial Accounting Standards Board (FASB) issued Interpretation No. (FIN) 46R, a revision to FIN No. 46, Consolidation of Variable Interest Entities. FIN No. 46R clarifies some of the provisions of FIN No.
46 and exempts certain entities from its requirements. FIN No. 46R is effective at the end of the first interim period ending after March 15, 2004. The adoption of FIN No. 46R did not have a material impact on the Companys consolidated
financial statements.



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



NOTE 2ACQUISITIONS



As disclosed in Note 1, effective January 16, 2004, the Company acquired all the issued and outstanding shares of common
stock of Wheel to Wheel in a merger transaction for a purchase price of $133,693, representing the issuance of 3,550,000 common shares, with a market value of $37.66 per share. Wheel to Wheel provides design, engineering, validation and testing of
automotives and automotive components and also manufactures show and specialty vehicles and pace cars. The Acquisition of Wheel to Wheel has been accounted for in accordance with the provisions of SFAS No. 141, Business Combinations. The
operating results of Wheel to Wheel have been included in the Companys consolidated financial statements from the date of acquisition. As discussed in Note 1, the financial statements of Wheel to Wheels Tecstar subsidiaries (50% owned by
the Company prior to the January 16, 2004 acquisition) have previously been included in the Companys consolidated financial statements.



The acquired assets and liabilities assumed have been recorded at their estimated fair values at the date of acquisition and approximate the following:



|                       |  |   |         |  
|---------------------- |  | - | ------- | -
|Cash                   |  | $ | 4       |  
|Other current assets   |  |   | 2,508   |  
|Property and equipment |  |   | 1,913   |  
|Other assets           |  |   | 3,582   |  
|Goodwill               |  |   | 124,978 |  
|Intangible assets      |  |   | 14,300  |  
|Current liabilities    |  |   | (4,569  | )
|Other liabilities      |  |   | (9,023  | )
|                       |  |   |         |  
|                       |  | $ | 133,693 |  
|                       |  |   |         |  



Also during 2004, the
Company acquired the assets of Tarxien Automotive and Classic Design Concepts, Inc. for a purchase price of $1,200. The purchase resulted in $365 of goodwill.



The following table illustrates the effect on revenues, net income and earnings (loss) per share if Wheel to Wheel had been acquired at the beginning
of the year ended September 28, 2003. The proforma results of the Tarxien Automotive and Classic Design Concepts, Inc. acquisitions were insignificant.



|                                  |  |      |         |   |      |   |        
|--------------------------------- |  | ---- | ------- | - | ---- | - | -------
|                                  |  | 2004 |         |   | 2003
|Net sales                         |  | $    | 175,296 |   |      | $ | 197,914
|Net income (loss)                 |  |      | (47,529 | ) |      |   | 19,374 
|                                  |  |     
|Basic earnings (loss) per share   |  | $    | (6.12   | ) |      | $ | 2.23   
|Diluted earnings (loss) per share |  |      | *       |   |      |   | 2.10   

---

|* | Not presented herein since effect is antidilutive.
|- | --------------------------------------------------



31



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



NOTE 3INVENTORIES



Inventories consist of the following:



|                                                   |  |      |        |      |   |       
|-------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                   |  | 2004 |        | 2003
|Raw materials                                      |  | $    | 12,917 |      | $ | 9,583 
|Finished goods                                     |  |      | 700    |      |   | 877   
|                                                   |  |      |        |      |   |       
|                                                   |  |      | 13,617 |      |   | 10,460
|Allowance for slow-moving and obsolete inventories |  |      | 70     |      |   | 400   
|                                                   |  |      |        |      |   |       
|                                                   |  | $    | 13,547 |      | $ | 10,060
|                                                   |  |      |        |      |   |       



NOTE 4INTANGIBLE ASSETS



Intangible assets subject to amortization consist of a
customer relationship and business contracts obtained with the acquisition of Wheel to Wheel. The customer relationship (cost of $10,000 and accumulated amortization of $336 at October 3, 2004) is being amortized using the straight-line method over
20 years. The contracts (cost of $4,300 and accumulated amortization of $1,104 at October 3, 2004) are being amortized by the straight-line method over the life of the respective contract, ranging from two to four years. Amortization expense was
$1,440 for the year ended October 3, 2004 and is estimated as follows for each of the next five years: 2005 - $2,160; 2006 - $1,928; 2007 - $620; 2008 - $500 and 2009 - $500.



NOTE 5NOTES PAYABLE, RELATED PARTY



On September 25, 2002, the Company reached an agreement to redeem and cancel 360,000 outstanding warrants and 500,000 outstanding stock options previously
issued to two individuals, both of whom are currently directors and one of whom is an officer of the Company, as incentive for their guarantee of certain of the Companys debt. The warrants and stock options were redeemed at a price of $5.54
per share (less each issues underlying strike price), which reflected a 15% discount from the average closing price of $6.52 per share for the twenty-day period through and including September 25, 2002. The total cost of the redemption was
$2,474. Of this amount, the Company recorded $2,096 of compensation expense in fiscal 2002 (in fiscal 2001, the Company had recorded $378 of compensation expense for stock options issued in December 2000). The redemption price of $2,474 consisted of
$1,000 in cash and notes payable of $1,474. The notes payable were paid in full during the year ended September 28, 2003.



32



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



NOTE 6LONG-TERM DEBT



Long-term debt consists of the following:



|                                                                                                                                                                                                                             |  |      |        |      |   |      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | -----
|                                                                                                                                                                                                                             |  | 2004 |        | 2003
|Domestic bank revolving lines of credit                                                                                                                                                                                      |  | $    |       |      | $ | 9,143
|Canadian revolving line of credit                                                                                                                                                                                            |  |      | 975    |      |   | 5    
|Mortgage note payable to bank, due in monthly installments of $15 including interest at .5% above the banks prime rate (effective rate
of 5.25% at October 3, 2003) due September 2006, collateralized by related building. |  |      | 1,309  |      |   |     
|Promissory note payable to a former shareholder of Wheel to Wheel related to the stock redemption agreement (see Note 11), payable in monthly
installments of $22 including interest at 5%, due May 1, 2013, unsecured.      |  |      | 1,821  |      |   |     
|Various capital lease obligations due in total monthly installments of $7 including interest ranging from 12% to 19%, with maturities through
June 2006.                                                                     |  |      | 59     |      |   |     
|Senior subordinated convertible notes                                                                                                                                                                                        |  |      | 15,000 |      |   |     
|                                                                                                                                                                                                                             |  |      |        |      |   |      
|                                                                                                                                                                                                                             |  |      | 19,164 |      |   | 9,148
|Less, current maturities                                                                                                                                                                                                     |  |      | 310    |      |   |     
|                                                                                                                                                                                                                             |  |      |        |      |   |      
|Long-term debt                                                                                                                                                                                                               |  | $    | 18,854 |      | $ | 9,148
|                                                                                                                                                                                                                             |  |      |        |      |   |      



The Company entered
into a $30,000 revolving credit agreement with its current lending institution on January 16, 2004. This revolving credit facility replaced the two revolving credit agreements that existed at September 28, 2003 and provided for $12,000 of available
borrowings of which $9,143 was outstanding at September 28, 2003. The terms of the new facility are similar to those of the two old facilities. Advances under the agreement are limited to a specific percentage of eligible receivables and
inventories, subject to a maximum of $30,000. The advances bear interest subject to a pricing matrix with ranges of 3/4% below the prime rate to 1/4% above the prime rate dependent upon a ratio of the Companys
funded debt to EBITDA. The revolver also contains a LIBOR based borrowing option with rates ranging from 150 to 250 basis points above Euro dollar rates, dependent upon the same ratio of funded debt to EBITDA. The credit facility expires on April 1,
2006 and as a result, all borrowings under the credit facility at October 3, 2004 are classified as long-term debt. The borrowings are collateralized by substantially all of the Companys assets.



The Canadian revolving line of credit was entered into in April 2003 and
provides for maximum borrowings of $5,000. Advances under the agreement are limited to eligible receivables and a percentage of inventories. Borrowings bear interest subject to a pricing matrix with ranges of 3⁄4% below bank prime to 1⁄4%
above bank dependent upon a ratio of funded debt to EBITDA. The borrowings are collateralized by substantially all of the Companys assets and the credit facility expires on April 30, 2006.



The weighted-average interest rate on outstanding borrowings under the
revolving lines of credit at October 3, 2004 was 4.5% (3.5% at September 28, 2003).



Effective July 13, 2004, the Company issued $15 million in principal amount of unsecured senior subordinated convertible notes in a private placement to accredited investors. The notes bear interest at 8.5% and mature
in July 2009, with semi-annual interest payments payable on January 1 and July 1 of each year, commencing January 1, 2005. The interest payments can be made in either cash or shares of the Companys common stock, at the Companys
discretion. The notes are convertible, subject to certain conditions, into 961,538 shares of the Companys common stock at a conversion price of $15.60.



33



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



The agreements for revolving credit facilities and the senior subordinated convertible notes contain
various loan covenants with which the Company was in compliance as of October 3, 2004.



Maturities of long-term debt for each of the next five years are as follows: 2005 - $310; 2006 - $1,273; 2007 - $310; 2008 - $328 and 2009 - $15,346.



NOTE 7INCOME TAXES



The components of income (loss) before income taxes are as follows:



|                         |  |      |         |   |      |   |        |  |   |      
|------------------------ |  | ---- | ------- | - | ---- | - | ------ |  | - | -----
|                         |  | 2004 |         |   | 2003 |   | 2002  
|United States operations |  | $    | (43,798 | ) |      | $ | 9,091  |  | $ | 3,351
|Foreign operations       |  |      | (3,119  | ) |      |   | 4,757  |  |   |     
|                         |  |      |         |   |      |   |        |  |   |      
|Total                    |  | $    | (46,917 | ) |      | $ | 13,848 |  | $ | 3,351
|                         |  |      |         |   |      |   |        |  |   |      



The provision (credit)
for income taxes is summarized as follows:



|         |  |      |        |   |      |   |        |      |  |   |    
|-------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ---
|         |  | 2004 |        |   | 2003 |   |        | 2002
|Current  |  |      |        |   |      |   |        |      |  |   |    
|Federal  |  | $    |       |   |      | $ |       |      |  | $ |   
|State    |  |      | 101    |   |      |   | 733    |      |  |   | 388
|Foreign  |  |      | (937   | ) |      |   | 2,604  |      |  |   |   
|         |  |      |        |   |      |   |        |      |  |   |    
|         |  |      | (939   | ) |      |   | 3,337  |      |  |   | 388
|Deferred |  |      | (1,061 | ) |      |   | (1,277 | )    |  |   |   
|         |  |      |        |   |      |   |        |      |  |   |    
|         |  | $    | (1,897 | ) |      | $ | 2,060  |      |  | $ | 388
|         |  |      |        |   |      |   |        |      |  |   |    



The provision (credit)
for income taxes is different from the amount that would otherwise be computed by applying a federal statutory rate of 34% to income before income taxes. A reconciliation of the differences is as follows:



|                                                      |  |      |         |   |      |   |        |      |  |   |        |  
|----------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                      |  | 2004 |         |   | 2003 |   |        | 2002 | 
|Rate applied to pretax income                         |  | $    | (15,952 | ) |      | $ | 4,708  |      |  | $ | 1,139  |  
|Non-deductible goodwill impairment                    |  |      | 16,286  |   |      |   |       |      |  |   |       |  
|State income taxes, net of federal income tax benefit |  |      | 67      |   |      |   | 484    |      |  |   | 255    |  
|Income taxes passed through minority interest         |  |      | 207     |   |      |   | 1,651  |      |  |   |       |  
|Utilization of net operating loss carryforwards       |  |      |        |   |      |   | (3,433 | )    |  |   | (1,006 | )
|Change in valuation allowance                         |  |      | (1,111  | ) |      |   | (1,277 | )    |  |   |        |  
|Other, net                                            |  |      | (1,394  | ) |      |   | (73    | )    |  |   |       |  
|                                                      |  |      |         |   |      |   |        |      |  |   |        |  
|                                                      |  | $    | (1,897  | ) |      | $ | 2,060  |      |  | $ | 388    |  
|                                                      |  |      |         |   |      |   |        |      |  |   |        |  



34



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



The composition of the deferred tax assets and liabilities at October 3, 2004 and September 28, 2003
is shown below:



|                                            |  |      |        |   |      |   |        |  
|------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                            |  | 2004 |        |   | 2003 |  
|Deferred tax assets                         |  |      |        |   |      |   |        |  
|Inventories                                 |  | $    | 29     |   |      | $ | 98     |  
|Accrued warranty                            |  |      | 97     |   |      |   | 155    |  
|Other accrued liabilities                   |  |      | 678    |   |      |   | 723    |  
|Net operating loss carryforwards            |  |      | 2,042  |   |      |   | 1,277  |  
|Alternative minimum tax credit carryforward |  |      | 406    |   |      |   | 490    |  
|Other                                       |  |      | 37     |   |      |   | 70     |  
|                                            |  |      |        |   |      |   |        |  
|Total deferred tax assets                   |  |      | 3,289  |   |      |   | 2,813  |  
|Valuation allowance                         |  |      |       |   |      |   | (1,111 | )
|                                            |  |      |        |   |      |   |        |  
|                                            |  |      | 3,289  |   |      |   | 1,702  |  
|Deferred tax liabilities                    |  |      |        |   |      |   |        |  
|Intangible assets                           |  |      | (5,015 | ) |      |   |       |  
|Property and equipment                      |  |      | (1,263 | ) |      |   | (215   | )
|                                            |  |      |        |   |      |   |        |  
|Net deferred tax asset (liability)          |  | $    | (2,989 | ) |      | $ | 1,487  |  
|                                            |  |      |        |   |      |   |        |  



The alternative
minimum tax carryforward of $406 has no expiration date. The net operating loss carryforwards expire as follows: $3,641 in 2021 and $1,830 in 2011.



NOTE 8COMPENSATION PLANS



The Company sponsors three qualified profit-sharing plans, more commonly known as 401(k) plans, for all of its employees with over six months of service.
The plans provide for discretionary matching contributions by the Company of the employees contribution, up to 6% of compensation. Also, the plans provide for additional discretionary contributions annually as determined by the Board of
Directors. The amounts charged to expense for these plans were approximately $135, $56, and $31 in 2004, 2003 and 2002, respectively.



NOTE 9STOCK OPTIONS



The Company maintains two stock incentive plans under which stock options are granted to key employees and directors. The plans authorize the granting of
stock options for up to 1,436,360 shares of the Companys common stock, of which 71,678 are still available for grant. The options in these two plans have five-year terms and generally become fully exercisable after six months. The Company also
sponsors a stock option plan with 40,352 shares of common stock reserved for certain sales representatives who are not employees of the Company, of which 26,000 shares are still available for grant. There were 1,102 and 1,050 shares outstanding
under this plan at October 3, 2004 and September 28, 2003, respectively. No compensation expense was recorded for options issued and outstanding under this plan as the effect was immaterial. These options also have a five-year term.



At October 3, 2004, there were 833,401 options issued and outstanding under
these three plans. Under the three plans, options may not be granted at prices below 85% of the current market value of the stock at the date of grant. All options awarded through October 3, 2004 have been at fair market value on the date of grant.



35



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



On November 20, 1998 the Company issued warrants to purchase 400,000 shares of common stock to two
individuals as incentive for their partial guarantee of the Companys long-term debt. The warrants entitled each of the individuals to purchase up to 200,000 shares of common stock of the Company for $2.20 per share, which was the ten day,
average market price preceding the date of grant. The options had a five-year term. On December 12, 2000 the Company issued stock options to purchase 500,000 shares of common stock to two individuals as incentive for their partial guarantee of the
Companys long-term debt (see Note 5). Each of the individuals were entitled to purchase up to 250,000 shares of common stock of the Company for $3.00 per share, which was the twenty-day, average market price preceding the date of grant. The
options had a five-year term. On September 25, 2002, the Company elected to redeem and cancel warrants to purchase 360,000 shares of common stock and options to purchase 500,000 shares of common stock (see Note 5).



A summary of the Companys stock option and warrant activity and related
information under the stock option plans and warrants for the years ended October 3, 2004, September 28, 2003 and September 29, 2002 follows:



|                                 |  |          |   |      |                                  |       |         |          |   |                                  |   |         |  |           |                                  |  |   |     
|-------------------------------- |  | -------- | - | ---- | -------------------------------- | ----- | ------- | -------- | - | -------------------------------- | - | ------- |  | --------- | -------------------------------- |  | - | ----
|                                 |  | 2004     |   | 2003 |                                  | 2002 
|                                 |  | Options  |   |      | Weighted- Average Exercise Price |       | Options |          |   | Weighted- Average Exercise Price |   | Options |  |           | Weighted- Average Exercise Price
|Outstanding at beginning of year |  | 721,954  |   |      | $                                | 6.18  |         | 673,388  |   |                                  | $ | 3.19    |  | 1,888,894 |                                  |  | $ | 2.78
|Granted                          |  | 308,350  |   |      |                                  | 12.54 |         | 182,175  |   |                                  |   | 14.81   |  | 33,075    |                                  |  |   | 4.08
|Canceled                         |  |         |   |      |                                  |      |         | (525     | ) |                                  |   | 11.18   |  | (72,765   | )                                |  |   | 6.33
|Redeemed                         |  |         |   |      |                                  |      |         |         |   |                                  |   |        |  | (948,150  | )                                |  |   | 2.42
|Exercised                        |  | (196,903 | ) |      |                                  | 4.78  |         | (133,084 | ) |                                  |   | 2.75    |  | (219,397  | )                                |  |   | 2.04
|Expired                          |  |         |   |      |                                  |      |         |         |   |                                  |   |        |  | (8,269    | )                                |  |   | 4.30
|                                 |  |          |   |      |                                  |       |         |          |   |                                  |   |         |  |           |                                  |  |   |     
|Outstanding at end of year       |  | 833,401  |   |      | $                                | 8.87  |         | 721,954  |   |                                  | $ | 6.18    |  | 673,388   |                                  |  | $ | 3.19
|                                 |  |          |   |      |                                  |       |         |          |   |                                  |   |         |  |           |                                  |  |   |     



Options outstanding at
October 3, 2004, are exercisable at prices ranging from $1.42 to $38.55 and have a weighted-average remaining contractual life of 3.14 years. As of October 3, 2004, the exercise prices of 364,926 outstanding stock options were less than the market
price of the Companys common stock. The weighted-average fair value of options granted during the fiscal years ended October 3, 2004, September 28, 2003 and September 29, 2002, was $8.07, $9.24 and $3.05 respectively. The following table
summarizes information about stock options outstanding at October 3, 2004.



|                        |  |                                       |  |                                                        |  |                                  |       |                                       |         |                                  |   |      
|----------------------- |  | ------------------------------------- |  | ------------------------------------------------------ |  | -------------------------------- | ----- | ------------------------------------- | ------- | -------------------------------- | - | -----
|Range of Exercise Price |  | Number Outstanding at October 3, 2004 |  | Outstanding Weighted-Average Remaining ContractualLife |  | Weighted- Average Exercise Price |       | Number Exercisable at October 3, 2004 |         | Weighted- Average Exercise Price
|$1.35  $3.17           |  | 364,926                               |  | 1.71 years                                             |  | $                                | 2.82  |                                       | 364,926 |                                  | $ | 2.82 
|$9.72  $13.35          |  | 405,475                               |  | 4.30 years                                             |  |                                  | 10.75 |                                       | 130,475 |                                  |   | 11.69
|$21.43  $38.55         |  | 63,000                                |  | 4.03 years                                             |  |                                  | 31.75 |                                       | 63,000  |                                  |   | 31.75
|                        |  |                                       |  |                                                        |  |                                  |       |                                       |         |                                  |   |      
|                        |  | 833,401                               |  | 3.14 years                                             |  | $                                | 8.87  |                                       | 558,401 |                                  | $ | 8.16 
|                        |  |                                       |  |                                                        |  |                                  |       |                                       |         |                                  |   |      



There were exercisable
options outstanding to purchase 552,904 and 429,286 shares at September 28, 2003 and September 29, 2002, respectively, at weighted-average exercise prices of $3.38 and $3.01, respectively.



36



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



NOTE 10SHAREHOLDER RIGHTS PLAN



In August 1997, the Company adopted a Shareholders Rights Plan issuing one right for each outstanding share of common
stock. Each right entitles the registered holder to purchase from the Company one share of common stock at $15 per share, subject to adjustment. The rights become exercisable if a person or group (other than certain related persons) acquires or
announces a tender offer for prescribed percentages of the Companys shares or is declared an adverse person by the Companys Board of Directors. In these events, each right holder may purchase shares with a value equal to
twice the exercise price. Furthermore, if the Company engages in certain mergers or similar business combinations a right holder may purchase shares of the acquiring company with a value to two times the purchase price of the right. However,
effective November 23, 2004 the Company amended the Shareholders Rights Plan to state that it is not applicable to the transaction with Quantum (see Note 16). The rights expire on August 12, 2007.



NOTE 11COMMITMENTS AND CONTINGENCIES



The Company leases certain of its facilities and equipment. Rent expense for
2004, 2003 and 2002 was $3,962, $2,654 and $1,404, respectively. Future minimum annual lease commitments at October 3, 2004 for long-term noncancelable operating leases are as follows:



|           |  |   |       
|---------- |  | - | ------
|2005       |  | $ | 3,181 
|2006       |  |   | 2,884 
|2007       |  |   | 2,445 
|2008       |  |   | 2,019 
|2009       |  |   | 1,823 
|Thereafter |  |   | 4,522 
|           |  |   |       
|           |  | $ | 16,874
|           |  |   |       



The Company is subject
to various legal proceedings and claims with respect to such matters as product liabilities and other actions, which arise out of the normal course of its business. Management and its legal counsel periodically review the probable outcome of pending
proceedings and the costs reasonably expected to be incurred. The Company accrues for these costs when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the opinion of management, any
ultimate cost to the Company in excess of amounts accrued will not materially affect its consolidated financial position, results of operations or cash flows.



Effective June 1, 2004, the Company provides a group health insurance plan for substantially all of its employees. The Company has stop-loss insurance
to reduce its exposure under this plan. The Company is responsible for the funding of all claims up to $40 per individual per policy year and up to approximately $1,000 per year on the group as a whole. A liability of $412 has been recorded at
October 3, 2004, to estimate payment of claims pending on that date. Future operating results could be affected should actual claims differ from managements current estimate.



In connection with the Companys acquisition of Wheel to Wheel, the Company assumed a ten year consulting agreement
with a former shareholder of Wheel to Wheel. The agreement calls for payments of $28 per month throughout the term of the agreement. The Companys policy is to expense the payments as they are incurred. At October 3, 2004, $2,915 remained to be
paid out under the terms of the agreement.



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



NOTE 12RESEARCH AND DEVELOPMENT



The Company incurs costs to improve the appeal and safety of its products. Research and development costs are charged to
operations when incurred. Amounts charged to operations were $647, $853 and $713 in 2004, 2003 and 2002, respectively.



NOTE 13UNAUDITED FINANCIAL INFORMATION



Presented below is certain unaudited quarterly financial information for 2004 and 2003.



|                                  |  |                  |        |               |   |         |              |  |                |        |  |   |       
|--------------------------------- |  | ---------------- | ------ | ------------- | - | ------- | ------------ |  | -------------- | ------ |  | - | ------
|                                  |  | Quarter Ended   
|                                  |  | December 28,2003 |        | March 28,2004 |   |         | June 27,2004 |  | October 3,2004
|Net sales                         |  | $                | 43,798 |               | $ | 39,156  |              |  | $              | 45,099 |  | $ | 45,350
|Gross profit                      |  |                  | 7,646  |               |   | 5,663   |              |  |                | 5,128  |  |   | 4,627 
|Net income (loss)                 |  |                  | 1,323  |               |   | (47,349 | )            |  |                | 74     |  |   | 932   
|Basic earnings (loss) per share   |  |                  | .26    |               |   | (5.83   | )            |  |                | .01    |  |   | .10   
|Diluted earnings (loss) per share |  |                  | .24    |               |   | *       |              |  |                | .01    |  |   | .10   

---

|* | Not presented herein since effect is antidilutive.
|- | --------------------------------------------------



|                           |  |                  |        |               |   |              |  |                   |        |  |   |       
|-------------------------- |  | ---------------- | ------ | ------------- | - | ------------ |  | ----------------- | ------ |  | - | ------
|                           |  | Quarter Ended   
|                           |  | December 29,2002 |        | March 30,2003 |   | June 29,2003 |  | September 28,2003
|Net sales                  |  | $                | 39,882 |               | $ | 47,171       |  | $                 | 62,117 |  | $ | 42,932
|Gross profit               |  |                  | 8,867  |               |   | 10,471       |  |                   | 15,207 |  |   | 9,722 
|Net income                 |  |                  | 1,953  |               |   | 2,905        |  |                   | 4,053  |  |   | 2,877 
|Basic earnings per share   |  |                  | .42    |               |   | .58          |  |                   | .80    |  |   | .57   
|Diluted earnings per share |  |                  | .39    |               |   | .53          |  |                   | .73    |  |   | .51   



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



Net income for the fourth quarter of 2004 was favorably impacted by $450 as a result of the decrease in the warranty reserve by management. The decrease
was a result of a change in estimate by management.



NOTE
14SHAREHOLDERS EQUITY AND EARNINGS (LOSS) PER SHARE



On March 17, 2004 and February 4, 2003, the Company declared a 5% stock dividend. As a result, the Company issued 421,539 and 225,460 additional shares of common stock, respectively. The number of basic and diluted shares, along with the
basic and diluted earnings per share presented, have been adjusted to reflect these stock dividends.



38



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##### Table of Contents

STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



A reconciliation of the numerators and denominators of the basic earnings (loss) per common share and
earnings (loss) per common share assuming dilution computations for the years ended October 3, 2004, September 28, 2003 and September 29, 2002 is presented below.



|                                                                                                                       |  |      |         |   |      |   |        |  |   |      
|---------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ |  | - | -----
|                                                                                                                       |  | 2004 |         |   | 2003 |   | 2002  
|Earnings (loss) per share, basic                                                                                       |  |      |         |   |      |   |        |  |   |      
|Net income (loss) available to common shareholders                                                                     |  | $    | (45,020 | ) |      | $ | 11,788 |  | $ | 2,963
|                                                                                                                       |  |      |         |   |      |   |        |  |   |      
|Weighted average common shares outstanding (in thousands)                                                              |  |      | 7,772   |   |      |   | 4,975  |  |   | 4,770
|                                                                                                                       |  |      |        
|Earnings (loss) per share (EPS), basic                                                                                 |  | $    | (5.79   | ) |      | $ | 2.37   |  | $ | .62  
|                                                                                                                       |  |      |         |   |      |   |        |  |   |      
|Earnings (loss) per share assuming dilution                                                                            |  |      |         |   |      |   |        |  |   |      
|Net income (loss) available to common shareholders                                                                     |  | $    | (45,020 | ) |      | $ | 11,788 |  | $ | 2,963
|                                                                                                                       |  |      |        
|Plus: Income impact of assumed conversions of Senior subordinated notes Interest on 8.5% convertible notes, net of tax |  |      | 177     |   |      |   |       |  |   |     
|                                                                                                                       |  |      |        
|Net income (loss) available to common shareholders, plus assumed conversions                                           |  | $    | (44,843 | ) |      | $ | 11,788 |  | $ | 2,963
|                                                                                                                       |  |      |         |   |      |   |        |  |   |      
|Weighted average common shares outstanding (in thousands)                                                              |  |      | 7,772   |   |      |   | 4,975  |  |   | 4,770
|                                                                                                                       |  |      |        
|Add: dilutive effects of assumed                                                                                       |  |      |         |   |      |   |        |  |   |      
|Conversion of senior subordinated notes and exercises of stock options (in thousands)                                  |  |      | 699     |   |      |   | 520    |  |   | 853  
|                                                                                                                       |  |      |         |   |      |   |        |  |   |      
|Weighted average common and dilutive potential common shares outstanding (in thousands)                                |  |      | 8,471   |   |      |   | 5,495  |  |   | 5,623
|                                                                                                                       |  |      |        
|Earnings (loss) per share (EPS) assuming dilution                                                                      |  | $    | *       |   |      | $ | 2.14   |  | $ | .52  
|                                                                                                                       |  |      |         |   |      |   |        |  |   |      

---

|* | Not presented herein since effect is antidilutive.
|- | --------------------------------------------------



NOTE 15RELATED PARTY TRANSACTIONS



The Company paid administrative and engineering support in the amounts of $2,005 and $7,486 for 2004 and 2003, respectively to the Companys partner
in Tecstar. These expenses were in support of existing and potential new projects at Tecstar. The 2004 total includes amounts paid from October 1, 2003 through January 16, 2004, the date of the Wheel to Wheel acquisition.



NOTE 16SUBSEQUENT EVENT



On November 23, 2004, the Company entered into an Agreement and Plan of
Merger whereby Quantum Fuel Systems Technologies Worldwide, Inc. (Quantum) will acquire all of the issued and outstanding shares of common stock of Starcraft Corporation in a tax-free stock-for-stock exchange valued at approximately $185
million, including the assumption of debt and other consideration. Under the terms of the definitive Agreement and Plan of Merger, each Starcraft shareholder will receive 2.341 shares of Quantum common stock for every share of Starcraft common
stock.



The proposed transaction has the unanimous support of
both Boards of Directors, which are recommending that shareholders approve the transaction. Four of Starcrafts largest shareholders, who collectively represent



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STARCRAFT CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

October 3, 2004, September 28, 2003 and September 29, 2002

(Dollars in thousands, except per share data)



51.3% of Starcrafts issued and outstanding shares of common stock have entered into a voting agreement with Quantum pursuant to which they have agreed
to vote their Starcraft shares in favor of the merger. General Motors, Quantums largest stockholder, owning 14.2% of the issued and outstanding common shares of Quantum and 11.4% of the voting power of Quantums common stock, has entered
into a voting agreement with Starcraft agreeing to vote in favor of the transaction.



The transaction will be submitted to the shareholders of both companies for approval. The transaction is also subject to customary regulatory review and closing conditions, and is expected to close in the first
quarter of calendar year 2005.



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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.



ITEM 9A. CONTROLS AND PROCEDURES



Starcraft carried out an evaluation, under the supervision and with the participation of Starcrafts management, including Starcrafts Co-Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and
operation of Starcrafts disclosure controls and procedures pursuant to 1934 Act Rule 13a-15. Based upon that evaluation, the Co-Chief Executive Officers and Chief Financial Officer concluded that, at October 3, 2004, Starcrafts
disclosure controls and procedures are effective in accumulating and communicating to management (including such officers) the information relating to Starcraft (including its consolidated subsidiaries) required to be included in Starcrafts
periodic SEC filings.



ITEM 9B. OTHER INFORMATION



None.



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PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



DIRECTORS AND EXECUTIVE OFFICERS



The board of directors has eleven members. Starcraft s Articles of Incorporation provide that the board of directors is comprised of three classes as nearly equal in number as possible. The members of each class
are to be elected for a term of three years and until their successors are elected and qualified. One class of directors is to be elected annually.



The business experience of each director, each director nominee and each executive officer is set forth below.



Class I Directors



Jeffrey P. Beitzel (age 50) was appointed a director and Co-Chief Executive Officer of Starcraft upon consummation of
the Companys acquisition of Wheel to Wheel in January 2004. He has founded and owned several automotive companies since leaving an engineering position with Ford Motor Company in 1983. Such businesses have generally focused on converting
automotive design concepts into limited volume production for original equipment manufacturers. Mr. Beitzel has served since 1998 as President of Wheel to Wheel and President of Tecstar. He is also the President of Powertrain Integration, LLC, 51%
of which is owned by the Company and 49% of which is owned by IMPCO Technologies, Inc.



David J. Matteson (age 68) was elected a director of Starcraft in April 1993. Presently retired, he served as the Associate Pastor of Granger Missionary Church in Granger, Indiana, from September 1985 to May
1994. Prior to that appointment, he was associated with Bethel College, Mishawaka, Indiana, where he served as Vice President for Business and Finance, Registrar, Director of Admissions, and Director of Financial Aid over a period of twenty years.



Allen H. Neuharth (age 80) was appointed a director of
Starcraft in October 2003. Mr. Neuharth previously was a director of the Company from 1993 to 2002. The founder of the nationally distributed daily newspaper, USA TODAY, Mr. Neuharth retired as Chairman and CEO of Gannet Co., Inc. in March 1989.
Presently, he serves as Chairman of the Freedom Forum, which he founded, and is self-employed as an author, columnist, consultant and public speaker.



Kelly L. Rose (age 52) founded the Company in 1990. He has served as Chairman of the Board since January 1991, and served as Chief Executive
Officer from April 1993 to January 2004. Mr. Rose was co-founder and 50% owner of ASA Corporation from January 1977 to July 1990. ASA Corporation is an importer and international distributor of electronic components to manufacturers in the van
conversion and recreational vehicle industries. Mr. Rose remains committed to numerous charitable organizations.



Class II Directors



John M. Collins (age 56) is the founder and former Chairman of the Board of Leer, Inc., an innovative leader in the truck cap manufacturing market.
He was previously on the board of directors of Postle Distributors, Inc. of Elkhart, Indiana and is involved in numerous other business interests. He is a director of the Samaritan Institute, a national counseling organization and is involved in
several other charitable organizations.



Douglass C.
Goad (age 47) was appointed as a director and Executive Vice President of Starcraft in January 2004 upon the consummation of the acquisition of Wheel to Wheel. He has served since 1998 as Vice President of Operations & Quality of Wheel to
Wheel and more recently in the same capacity for Tecstar. Mr. Goad also serves as President of the Companys Tarxien operation. Prior to joining Wheel to Wheel, Mr. Goad served for five years as Vice President of Operations of TDM World
Conversions.



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Michael H. Schoeffler (age 44) was elected director of Starcraft in November 1999 and was
appointed Co-Chief Executive Officer in January 2004 upon consummation of the acquisition of Wheel to Wheel. Mr. Schoeffler originally joined Starcraft in 1995 as Chief Financial Officer and was appointed Secretary in 1995. In 1996 Mr.
Schoeffler was appointed President and Chief Operating Officer of the Company. Mr. Schoeffler resigned as an officer of Starcraft in August 2001, to become General Manager of Starcraft Bus and Mobility, a division of Forest River, Inc., a
recreational vehicle manufacturer, in connection with Starcrafts sale of its bus and mobility business. Mr. Schoeffler rejoined Starcraft in January 2003 as President and Chief Operating Officer. Prior to joining Starcraft in 1995 he was
Executive Vice President/Chief Financial Officer of General Products Corporation, an automotive parts supplier, from 1989 to 1995; Assistant Controller for Sudbury, Inc., a diversified automotive manufacturer, from 1986 to 1989; and a Certified
Public Accountant with Ernst & Whinney from 1982 to 1986.



Michael J. Starshak (age 63) was appointed as a director of Starcraft in January 2004. Mr. Starshak has been a Managing Director at Alvarez & Marsal, LLC, a management consulting firm, since 2003. Prior to joining Alvarez &
Marsal, Mr. Starshak founded and led Starshak & Associates since 1993. Previously, he was a senior partner in the firm of Morris Anderson & Associates, specializing in crisis management and turnaround consulting. Mr. Starshak began his
business career with Price Waterhouse and Co., and later served as Chief Financial Officer and a director of Rollins Burdick Hunter Co. (now Aon Corporation). He also served as Senior Vice President of Finance and Treasurer of SFN Companies (NYSE),
parent of Scott Foresman & Co.



Class III Directors



Richard C. Anderson (age 51) was appointed as a director and
Executive Vice President of Starcraft in January 2004 upon consummation of the acquisition of Wheel to Wheel. He has worked in the automotive industry since 1976. He worked eight years with the Ford Motor Company, primarily in the Advanced Engine
Engineering group. Since leaving Ford in 1984 he worked for various companies involved in a wide range of programs for automotive OEMs including powertrain development, complete concept vehicles and specialized production vehicle programs. Mr.
Anderson has served since 1998 as Vice President of Engineering of Tecstar. He served as the Vice President of Engineering of Wheel to Wheel from 1998 until January 2004, when he became President.



G. Raymond Stults (age 56) was appointed director of Starcraft in
December 1998. He is currently owner and Chairman of Babsco Supply Company, an electrical contractor supplier, as well as an investor in numerous companies as a venture capitalist. Previously, Mr. Stults was President of Shelter Components
Corporation, a supplier to the manufactured housing industry, until the corporation was sold in early 1998 and President and owner of Babsco, Inc., a regional distributor to the contractor and OEM markets, from January 1981 through January 1995.



David L. Stewart (age 66) was the founder, chairman and
CEO of Triple S Plastics in Kalamazoo, Michigan. Under his leadership, Triple S grew to become a major provider of injection molding services to the telecommunications industry. Triple S became a public company in
1989 and was sold in 2000. Mr. Stewart is active in several entrepreneurial businesses and investments and is involved in community and charitable organizations.



Other Executive Officer



Joseph E. KatonaIII(age 40) was named Chief Financial Officer and Secretary of Starcraft in September 2003. Prior to joining Starcraft,
Mr. Katona had served since 1998 as Chief Financial Officer of Creation Group, Inc., a manufacturer of windows, doors and specialty products for a wide range of vehicular and housing applications based in Elkhart, Indiana, and affiliated with
Heywood Williams, PLC. Mr. Katona served Creation Group in various financial management capacities between 1993 and 1998. He worked as a certified public accountant with McGladrey & Pullen between 1986 and 1993.



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Audit Committee Financial Expert



Our board of directors has determined that at least each of the following members of the Audit Committee is an audit
committee financial expert, as defined by SEC regulations: David J. Matteson, Michael J. Starshak, G. Raymond Stults. Mr. Matteson, Mr. Starshak, and Mr. Stults are independent as defined by Nasdaq rules.



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Section 16(a) of the 1934 Act, as amended, requires that Starcrafts
officers and directors and persons who own more than 10% of Starcrafts common stock file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% shareholders are required by SEC regulation to
furnish Starcraft with copies of all Section 16(a) forms that they file.



Based solely on its review of the copies of such forms received by it, and/or written representations from certain reporting persons that no Forms 5 were required for those persons, Starcraft believes that during the
fiscal year ended October 3, 2004, all filing requirements applicable to its officers, directors and greater than 10% beneficial owners with respect to Section 16(a) of the 1934 Act were complied with, except that Mr. Schoeffler was late in filing a
Form 4 to report the sale of stock.



CODE OF ETHICS



Starcraft has adopted a Code of Ethics that applies to the Co-Chief
Executive Officers and the Chief Financial Officer among others. The Code of Ethics is filed as an exhibit to this annual report.



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ITEM 11. EXECUTIVE COMPENSATION



COMPENSATION
OF NAMED EXECUTIVE OFFICERS



The following table sets
forth for each of the Companys last three fiscal years information with respect to Mr. Rose and our other executive officers, named below, whose cash compensation for 2004 exceeded $100,000.



Summary Compensation Table



|                                                                 |  |              |        |                     |                       |                               |                               |                             |                                    |          |  |          |  |   |            
|---------------------------------------------------------------- |  | ------------ | ------ | ------------------- | --------------------- | ----------------------------- | ----------------------------- | --------------------------- | ---------------------------------- | -------- |  | -------- |  | - | -----------
|                                                                 |  | Fiscal Year  |        | Annual Compensation |                       | Long Term Compensation Awards |                               | All Other Compen-sation (2)
|Name and Principal Position                                      |  |              | Salary |                     | Bonus                 |                               | Other Annual Compensation (1) |                             | Securities Underlying Options/SARs |         
|Kelly L. Rose Chairman of the Board                              |  | 200420032002 |        | $                   | 450,000450,000411,730 |                               |                               | 575,000500,000             |                                    | 35,779 |  | 50,000 |  | $ | 2,6355,249
|                                                                 |  |              |        |                     |                       |                              
|Jeffrey P. Beitzel(3)(6) Co-Chief Executive Officer              |  | 200420032002 |        | $                   | 702,154             |                               | $                             | 52,630                    |                                    |       |  |       |  |   |         
|                                                                 |  |              |        |                     |                       |                              
|Michael H. Schoeffler(4) Co-Chief Executive Officer              |  | 200420032002 |        | $                   | 487,500250,000100,000 |                               | $                             | 52,630475,000400,000        |                                    |       |  | 50,000 |  | $ | 2,5001,788
|                                                                 |  |              |        |                     |                       |                              
|Joseph E. Katona(5) Chief Financial Officer                      |  | 200420032002 |        | $                   | 120,000             |                               | $                             | 25,000                    |                                    |       |  | 35,000 |  | $ |         
|                                                                 |  |              |        |                     |                       |                              
|Douglass C. Goad(3)(6) Executive Vice President (Operations)     |  | 200420032002 |        | $                   | 575,230             |                               | $                             | 52,630                    |                                    |       |  |       |  | $ | 1,438    
|                                                                 |  |              |        |                     |                       |                              
|Richard C. Anderson(3)(6) Executive Vice
President (Engineering) |  | 200420032002 |        | $                   | 544,461             |                               | $                             | 52,630                    |                                    |       |  |       |  |   |         

---

|(1) | Other annual compensation shown consisted of taxes paid for the executive. The value of perquisites or other personal benefits received by the named executives did not otherwise
exceed the lesser of $50,000 or 10% of the executives salary and bonus.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | These amounts represent Company contributions to the 401(k) Plan, on behalf of each of the named executives.
|--- | ------------------------------------------------------------------------------------------------------------

|(3) | Messrs. Beitzel, Goad and Anderson became executive officers in January 2004. None was an executive officer in 2003 or 2002.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Schoeffler was not an executive officer during fiscal 2002.
|--- | ---------------------------------------------------------------

|(5) | Mr. Katona became an executive officer in September 2003.
|--- | ---------------------------------------------------------

|(6) | Messrs. Beitzel, Goad, and Andersons salary included compensation paid by Tecstar from October 2003 through September 2004, but does not include wages paid by Wheel to Wheel
prior to the merger on January 16, 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



STOCK INCENTIVE
PLANS



The purpose of the Incentive Plans is to provide to
certain directors, officers (including officers who are members of the board of directors) and other key employees of the Company who are materially responsible for the management or operations of the Company and have provided valuable services to
the Company a favorable



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opportunity to acquire Common Stock of the Company, thereby providing them with an increased incentive to work for the success of the Company and better
enabling the Company to attract and retain capable directors and executive personnel.



The following sets forth information related to options granted during fiscal 2004 to the following executive officers.



Options GrantedLast Fiscal Year



|                     |  |                   |  |                                                                                           |    |  |                                |       |                |          |  |   |        |  |   |        
|-------------------- |  | ----------------- |  | ----------------------------------------------------------------------------------------- | -- |  | ------------------------------ | ----- | -------------- | -------- |  | - | ------ |  | - | -------
|                     |  | Individual Grants |  | Potential RealizedValue at AssumedAnnual Rates of StockPrice
Appreciation for Option Term
|Name                 |  | OptionsGranted    |  | % of TotalOptions Grantedto Employees inFiscal Year                                       |    |  | Exercise ofBase Price($/share) |       | ExpirationDate |         
|                     |  |                   |  |                                                                                           | 5% |  | 10%                           
|Joseph E. Katona III |  | 35,000            |  | 11.4                                                                                      | %  |  | $                              | 11.42 |                | 05/11/09 |  | $ | 83,627 |  | $ | 210,200



The following table
includes the number of shares covered by both exercisable and unexercisable stock options held by the executive officers as of October 3, 2004.



Aggregated Option Exercises in Last Fiscal Year and

Fiscal Year-End Option Values



|                      |  |                          |  |               |           |                                                                    |         |                                                               |        |               |   |           |  |  
|--------------------- |  | ------------------------ |  | ------------- | --------- | ------------------------------------------------------------------ | ------- | ------------------------------------------------------------- | ------ | ------------- | - | --------- |  | -
|                      |  | SharesAcquiredonExercise |  | ValueRealized |           | Number of Shares Underlying Unexercised Options at Fiscal Year End |         | Value of Unexercised In-The-Money Options Fiscal Year End (1)
|Name                  |  |                          |  | Exercisable   |           | Unexercisable                                                      |         | Exercisable                                                   |        | Unexercisable
|Kelly L. Rose         |  | 110,250                  |  | $             | 388,907   |                                                                    | 300,562 |                                                               |       |               | $ | 1,128,277 |  | 0
|Michael H. Schoeffler |  | 52,500                   |  |               | 1,590,803 |                                                                    | 168,262 |                                                               |       |               |   | 525,695   |  | 0
|Joseph E. Katona III  |  |                         |  |               |          |                                                                    | 21,000  |                                                               | 35,000 |               |   | 0         |  | 0

---

|(1) | Based on market value of the common stock of $7.37 per share at October 3, 2004.
|--- | --------------------------------------------------------------------------------



COMPENSATION OF DIRECTORS



The Company does not pay directors of the Company who are salaried employees of the Company any additional compensation for serving as directors. During
fiscal 2004, the Company paid non-employee Directors of the Company a flat fee of $5,000 per quarter. The Audit Committee Chairman was paid an additional $2,500 per quarter. The Company did not pay any other meeting fees. Effective fiscal 2005, the
Company increased the quarterly fee to $7,500. The Audit Committee Chairman will be paid an additional $2,500 per quarter while the Compensation Committee Chairman and the Governance and Nominating Committee Chairman will each receive an additional
$1,000 per quarter. Pursuant to the Directors Share Plan and a related compensation deferral plan, non-employee directors may elect to receive their cash director fees in the form of Company Common Stock or to have the payment of their fees
deferred. In the event of deferral, the director may elect to have the deferred amount deemed invested in Company shares (with dividend-equivalent value deemed reinvested in shares) or as a general interest-bearing obligation of the Company.
Non-employee directors are eligible to receive supplemental life, accidental death and disability and health insurance. Premiums paid for Messrs. Collins, Matteson, Neuharth, Starshak, Stewart and Stults during fiscal 2004 were $4,800, $8,600, $300,
$200, $300, and $300, respectively.



EMPLOYMENT AGREEMENTS



Kelly L. Rose. The Company has entered into a five-year employment
contract with Kelly L. Rose. The contract was amended and restated effective July 23, 2003. The agreement extends for additional five-year terms



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unless either party to the contract properly gives notice not to extend. Mr. Rose is entitled to receive a minimum base salary of at least $300,000 under the
contract. Mr. Roses base salary is subject to increases as approved by the Company. The contract also provides, among other things, for participation in other fringe benefits and benefit plans available to the Companys employees. Mr.
Rose may terminate his employment upon ninety days written notice to the Company. The Company may discharge Mr. Rose for reasonable cause (as defined in the contract) at any time. If Mr. Rose terminates his own employment, or if
the Company terminates Mr. Roses employment without reasonable cause (as defined in the contract), Mr. Rose shall be entitled to receive his base compensation under the contract for an additional five years from the termination
date. In addition, during such period, Mr. Rose shall be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. Alternatively, Mr. Rose may elect to receive his base compensation under the
contract for such five year period, payable in one lump sum payment within thirty days of the date of termination; but shall not be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits.
Moreover, within the three month period after Mr. Roses employment is terminated for any reason including Mr. Roses termination of his employment with the Company without cause, Mr. Rose will have the right to cause the Company to
purchase any stock options he holds for a price equal to the fair market value (as defined in the contract) of the shares subject to such options minus their option price. In the event of Mr. Roses disability, Mr. Rose will be entitled to
receive his base compensation for five additional years during the continuance of such disability. In addition, during such period, Mr. Rose shall be entitled to continue to participate in the Companys group insurance plans or receive
comparable benefits. In the event of Mr. Roses death, Mr. Roses spouse will be entitled to receive Mr. Roses base compensation for an additional five years. During such period, Mr. Roses spouse will also continue to receive
the benefit of the Companys insurance plans. The contract provides for certain additional insurance coverage and other perquisites to be paid for by the Company. Such perquisites include use of a company vehicle, country club dues and fees,
certain travel expenses and similar items. The contract also requires Mr. Rose to protect the confidential business information of the Company.



Jeffrey P. Beitzel. The Company has entered into a two-year employment contract with Jeffrey P. Beitzel, effective upon consummation of the Wheel
to Wheel merger on January 16, 2004. The agreement extends for additional two-year terms unless either party to the contract properly gives notice not to extend. Mr. Beitzel is entitled to receive a minimum base salary of at least $700,000 annually
under the contract. Mr. Beitzels base salary is subject to increases as approved by the Company. The contract also provides, among other things, for participation in other fringe benefits and benefit plans available to the Companys
employees. Mr. Beitzel may terminate his employment upon ninety days written notice to the Company. The Company may discharge Mr. Beitzel for reasonable cause (as defined in the contract) at any time. If Mr. Beitzel terminates
his own employment as a result of a change in job responsibilities (as defined in the contract), or if the Company terminates Mr. Beitzels employment without reasonable cause (as defined in the contract), Mr. Beitzel
shall be entitled to receive his base compensation under the contract for an additional two years from the termination date and may exercise certain registration rights. In addition, during such period, Mr. Beitzel shall be entitled to continue to
participate in the Companys group insurance plans or receive comparable benefits. Alternatively, Mr. Beitzel may elect to receive his base compensation under the contract for such two year period, payable in one lump sum payment within thirty
days of the date of termination; but shall not be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. In the event of Mr. Beitzels disability, Mr. Beitzel will be entitled to receive
his base compensation for five additional years during the continuance of such disability. In addition, during such period, Mr. Beitzel shall be entitled to continue to participate in the Companys group insurance plans or receive comparable
benefits. In the event of Mr. Beitzels death, Mr. Beitzels spouse will be entitled to receive Mr. Beitzels base compensation for an additional two years. During such period, Mr. Beitzels spouse will also continue to receive
the benefit of the Companys insurance plans. The contract provides for certain additional insurance coverage and other perquisites to be paid for by the Company. Such perquisites include use of a company vehicle, country club dues and fees,
certain travel expenses and similar items. The contract also requires Mr. Beitzel to protect the confidential business information of the Company. If Mr. Beitzel is terminated for reasonable cause he will be subject to a two-year
restrictive covenant prohibiting him from competing with Starcraft.



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Michael H. Schoeffler. The Company has entered into a two-year employment contract with Michael
H. Schoeffler. The contract was initially executed January 2, 2003, but was amended and restated effective May 4, 2004. The agreement extends for additional two-year terms unless either party to the contract properly gives notice not to extend.
Mr. Schoeffler is entitled to receive a minimum base salary of at least $300,000 annually under the contract. Mr. Schoefflers base salary is subject to increases as approved by the Company. The contract also provides, among other things, for
participation in other fringe benefits and benefit plans available to the Companys employees. Mr. Schoeffler may terminate his employment upon ninety days written notice to the Company. The Company may discharge Mr. Schoeffler for
reasonable cause (as defined in the contract) at any time. If Mr. Schoeffler terminates his own employment, or if the Company terminates Mr. Schoefflers employment without reasonable cause (as defined in the
contract), Mr. Schoeffler shall be entitled to receive his base compensation under the contract for an additional two years from the termination date. In addition, during such period, Mr. Schoeffler shall be entitled to continue to participate
in the Companys group insurance plans or receive comparable benefits. Alternatively, Mr. Schoeffler may elect to receive his base compensation under the contract for such two year period, payable in one lump sum payment within thirty days of
the date of termination; but shall not be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. Moreover, within the three month period after Mr. Schoefflers employment is terminated
for any reason including Mr. Schoefflers termination of his employment with the Company without cause, Mr. Schoeffler will have the right to cause the Company to purchase any stock options he holds for a price equal to the fair market value
(as defined in the contract) of the shares subject to such options minus their option price. In the event of Mr. Schoefflers disability, Mr. Schoeffler will be entitled to receive his base compensation for five additional years during the
continuance of such disability. In addition, during such period, Mr. Schoeffler shall be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. In the event of Mr. Schoefflers death, Mr.
Schoefflers spouse will be entitled to receive Mr. Schoefflers base compensation for an additional two years. During such period, Mr. Schoefflers spouse will also continue to receive the benefit of the Companys insurance
plans. The contract provides for certain additional insurance coverage and other perquisites to be paid for by the Company. Such perquisites include use of a company vehicle, country club dues and fees, certain travel expenses and similar items. The
contract also requires Mr. Schoeffler to protect the confidential business information of the Company. If Mr. Schoeffler is terminated for reasonable cause he will be subject to a two-year restrictive covenant prohibiting him from
competing with Starcraft.



Richard C. Anderson. The
Company has entered into a two-year employment contract with Richard C. Anderson, effective upon consummation of the Wheel to Wheel merger on January 16, 2004. The agreement extends for additional two-year terms unless either party to the
contract properly gives notice not to extend. Mr. Anderson is entitled to receive a minimum base salary of at least $550,000 annually under the contract. Mr. Andersons base salary is subject to increases as approved by the Company.
The contract also provides, among other things, for participation in other fringe benefits and benefit plans available to the Companys employees. Mr. Anderson may terminate his employment upon ninety days written notice to the
Company. The Company may discharge Mr. Anderson for reasonable cause (as defined in the contract) at any time. If Mr. Anderson terminates his own employment as a result of a change in job responsibilities (as defined in
the contract), or if the Company terminates Mr. Andersons employment without reasonable cause (as defined in the contract), Mr. Anderson shall be entitled to receive his base compensation under the contract for an additional two
years from the termination date and may exercise certain registration rights. In addition, during such period, Mr. Anderson shall be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits.
Alternatively, Mr. Anderson may elect to receive his base compensation under the contract for such two year period, payable in one lump sum payment within thirty days of the date of termination; but shall not be entitled to continue to
participate in the Companys group insurance plans or receive comparable benefits. In the event of Mr. Andersons disability, Mr. Anderson will be entitled to receive his base compensation for five additional years during the continuance
of such disability. In addition, during such period, Mr. Anderson shall be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. In the event of Mr. Andersons death, Mr. Andersons
spouse will be entitled to receive Mr. Andersons base compensation for an additional two years. During such period, Mr. Andersons spouse will also continue to receive the benefit of the Companys insurance plans. The contract
provides for certain additional insurance coverage and other perquisites to be paid for



48



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by the Company. Such perquisites include use of a company vehicle, country club dues and fees, certain travel expenses and similar items. The contract also
requires Mr. Anderson to protect the confidential business information of the Company. If Mr. Anderson is terminated for reasonable cause he will be subject to a two-year restrictive covenant prohibiting him from competing with
Starcraft.



Douglass C. Goad. The Company has entered
into a two-year employment contract with Douglass C. Goad, effective upon consummation of the Wheel to Wheel merger on January 16, 2004. The agreement extends for additional two-year terms unless either party to the contract properly gives notice
not to extend. Mr. Goad is entitled to receive a minimum base salary of at least $550,000 annually under the contract. Mr. Goads base salary is subject to increases as approved by the Company. The contract also provides, among other things,
for participation in other fringe benefits and benefit plans available to the Companys employees. Mr. Goad may terminate his employment upon ninety days written notice to the Company. The Company may discharge Mr. Goad for
reasonable cause (as defined in the contract) at any time. If Mr. Goad terminates his own employment as a result of a change in job responsibilities (as defined in the contract), or if the Company terminates Mr. Goads
employment without reasonable cause (as defined in the contract), Mr. Goad shall be entitled to receive his base compensation under the contract for an additional two years from the termination date and may exercise certain registration
rights. In addition, during such period, Mr. Goad shall be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. Alternatively, Mr. Goad may elect to receive his base compensation under the
contract for such two year period, payable in one lump sum payment within thirty days of the date of termination; but shall not be entitled to continue to participate in the Companys group insurance plans or receive comparable benefits. In the
event of Mr. Goads disability, Mr. Goad will be entitled to receive his base compensation for five additional years during the continuance of such disability. In addition, during such period, Mr. Goad shall be entitled to continue to
participate in the Companys group insurance plans or receive comparable benefits. In the event of Mr. Goads death, Mr. Goads spouse will be entitled to receive Mr. Goads base compensation for an additional two years. During
such period, Mr. Goads spouse will also continue to receive the benefit of the Companys insurance plans. The contract provides for certain additional insurance coverage and other perquisites to be paid for by the Company. Such
perquisites include use of a company vehicle, country club dues and fees, certain travel expenses and similar items. The contract also requires Mr. Goad to protect the confidential business information of the Company. If Mr. Goad is terminated for
reasonable cause he will be subject to a two-year restrictive covenant prohibiting him from competing with Starcraft.



Joseph E. Katona III. The Company has entered into a one-year employment contract with Joseph E. Katona III. The contract was amended and restated
effective November 11, 2004. The agreement extends annually to for additional one-year terms unless either party to the contract properly gives notice not to extend. Mr. Katona is entitled to receive a minimum base salary of at least $140,000
annually under the contract. Mr. Katonas base salary is subject to increases as approved by the Company. The contract also provides, among other things, for participation in other fringe benefits and benefit plans available to the
Companys employees. Mr. Katona may terminate his employment upon thirty days written notice to the Company. The Company may discharge Mr. Katona for cause (as defined in the contract) at any time. If Mr. Katona
terminates his own employment for cause (as defined in the contract), or if the Company terminates Mr. Katonas employment without cause (as defined in the contract), Mr. Katona shall be entitled to receive his base
compensation under the contract for an additional one year from the termination date. In addition, during such period, Mr. Katona shall be entitled to continue to participate in the Companys group insurance plans or receive comparable
benefits. The contract requires Mr. Katona to protect the confidential business information of the Company. Upon termination of Mr. Katonas employment for any reason, he will be subject to a one-year restrictive covenant prohibiting him
from competing with Starcraft.



COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION



During fiscal 2004 the
Companys Compensation Committee was composed of outside directors Collins, Stewart and Stults. Refer to Item 13 for detail regarding certain relationships between the Company and Mr. Stults.



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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF



As of December 1, 2004, there were 8,968,691 shares of Starcrafts common stock issued and outstanding, and the Company had no other class of equity securities outstanding. The following table provides certain
information regarding the beneficial ownership of the common stock as of December 1, 2004, by each person who is known by the Company to be the beneficial owner of 5% or more of the common stock. Unless otherwise indicated, the named beneficial
owner has sole voting and dispositive power with respect to the shares reported.



|                                                                                                                            |  |                                                     |  |                     |  
|--------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------- |  | ------------------- | -
|Name and Address of Beneficial Owner                                                                                        |  | Number of Shares of Common Stock Beneficially Owned |  | Percent of Class(1) |  
|Kelly L. Rose(2) 1123 South Indiana Avenue Goshen, Indiana 46527                                                            |  | 1,644,243                                           |  | 17.7                | %
|                                                                                                                            |  |                                                    
|Husic Capital Management/ Frank J. Husic & Co./ Frank J. Husic(3) 555 California Street, Suite 2900 San Francisco, CA 94104 |  | 941,610                                             |  | 10.5                | %
|                                                                                                                            |  |                                                    
|Jeffrey P. Beitzel(4) 570 Executive Drive Troy, MI 48083                                                                    |  | 1,079,140                                           |  | 12.0                | %
|                                                                                                                            |  |                                                    
|Douglass C. Goad 570 Executive Drive Troy, MI 48083                                                                         |  | 1,149,043                                           |  | 12.8                | %
|                                                                                                                            |  |                                                    
|Richard C. Anderson 570 Executive Drive Troy, MI 48083                                                                      |  | 1,172,169                                           |  | 13.1                | %

---

|(1) | Based upon 8,968,691 shares of common stock outstanding (and in the case of Mr. Rose, 300,562 exercisable stock options issued under the 1993 and 1997 Stock Incentive Plans). The
number of shares deemed outstanding does not include exercisable stock options held by other employees, management and directors including options which currently are or will become exercisable within the next 60 days.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes 110,250 shares owned by Karen K. Rose, Mr. Roses spouse, 300,562 exercisable stock options issued under the 1993 and 1997 Incentive Stock Plans, and 30,683 shares
held in a charitable foundation as to which Mr. Rose disclaims beneficial ownership.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | This information is based on Amendment No. 1 to Schedule 13G filed August 6, 2004.
|--- | ----------------------------------------------------------------------------------

|(4) | Excludes 39,078 shares held by an independent trustee for the benefit of members of Mr. Beitzels immediate family.
|--- | -------------------------------------------------------------------------------------------------------------------



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COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS



The following table sets forth certain information regarding the directors,
including the number and percent of shares of common stock beneficially owned by such persons as of December 1, 2004. No director is related to any other director, nominee for director or executive officer of the Company by blood, marriage, or
adoption, and there are no arrangements or understandings between any nominee and any other person pursuant to which such nominee was selected. The table also sets forth the number of shares of common stock beneficially owned by each executive
officer of the Company and by all directors and executive officers of the Company as a group.



|                                                                |  |                                    |  |                 |  
|--------------------------------------------------------------- |  | ---------------------------------- |  | --------------- | -
|Name                                                            |  | Common Stock Beneficially Owned(1) |  | Percent ofClass |  
|DirectorsClass I:                                              |  |                                    |  |                 |  
|Kelly L. Rose(2)(3)                                             |  | 1,644,243                          |  | 17.7            | %
|Jeffrey P. Beitzel(4)                                           |  | 1,079,040                          |  | 12.0            | %
|David J. Matteson(3)                                            |  | 19,478                             |  | *               |  
|Allen H. Neuharth(3)(5)                                         |  | 25,250                             |  | *               |  
|                                                                |  |                                   
|DirectorsClass II:                                             |  |                                    |  |                 |  
|John M. Collins(3)                                              |  | 34,050                             |  | *               |  
|Douglass C. Goad                                                |  | 1,149,043                          |  | 12.8            | %
|Michael H. Schoeffler(3)                                        |  | 240,475                            |  | 2.6             | %
|Michael J. Starshak                                             |  | 23,650                             |  | *               |  
|                                                                |  |                                   
|DirectorsClass III:                                            |  |                                    |  |                 |  
|G. Raymond Stults(3)                                            |  | 35,245                             |  | *               |  
|David L. Stewart(3)                                             |  | 23,650                             |  | *               |  
|Richard C. Anderson                                             |  | 1,172,169                          |  | 13.1            |  
|                                                                |  |                                   
|Executive Officer:                                              |  |                                    |  |                 |  
|Joseph E. Katona III(3)                                         |  | 58,500                             |  | *               |  
|                                                                |  |                                    |  |                 |  
|All directors and executive officers as a group (12 persons)(6) |  | 5,515,643                          |  | 57.4            | %

---

|* | Indicates less than 1%
|- | ----------------------

|(1) | Based upon information furnished by the respective directors and executive officers. Under applicable regulations, shares are deemed to be beneficially owned by a person if he
directly or indirectly has or shares the power to vote or dispose of the shares, whether or not he has any economic interest with respect to the shares. Includes shares beneficially owned by members of the immediate families of the directors
residing in their homes and also includes options held by the individual or group that currently are or will become exercisable within the next 60 days.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes 110,250 shares owned by Mr. Roses spouse and 30,683 shares held in a charitable foundation as to which Mr. Rose disclaims beneficial ownership.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes the following shares subject to currently exercisable options granted under the Starcraft Corporation 1993 Stock Incentive Plan (the 1993 Incentive Plan) and/or
the Starcraft Corporation 1997 Stock Incentive Plan (1997 Incentive Plan and together with the 1993 Incentive Plan, the Incentive Plans): 300,562 shares subject to currently exercisable options held by Mr. Rose; 168,262
shares subject to currently exercisable options held by Mr. Schoeffler; and 56,000 shares subject to currently exercisable options held by Mr. Katona. Also includes 15,250; 15,250; 23,650; 23,650; 23,650 and 10,000 shares subject to exercisable
options held respectively by each of Mr. Collins, Mr. Matteson, Mr. Starshak, Mr. Neuharth, Mr. Stewart and Mr. Stults.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Excludes 39,023 shares held by an independent trustee for the benefit of members of Mr. Beitzels immediate family.
|--- | -------------------------------------------------------------------------------------------------------------------

|(5) | Shares are held in trusts for the benefit of family members.
|--- | ------------------------------------------------------------

|(6) | This total includes 636,274 shares subject to stock options granted under the Incentive Plans that are exercisable or will be exercisable within the next 60 days.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



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CHANGES IN CONTROL



On November 23, 2004, the Company entered into an Agreement and Plan of Merger whereby Quantum will acquire all of the outstanding shares of Starcraft in
a tax-free stock-for-stock exchange valued at approximately $185 million at announcement, including the assumption of debt and other consideration. Under the terms of the definitive Agreement and Plan of Merger, each Starcraft shareholder will
receive 2.341 shares of Quantum common stock for every share of Starcraft common stock. For additional detail regarding this proposed merger, please refer to the discussion under the subheading Proposed Merger in Item 7.



SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS



Refer to the discussion under the subheading Securities Authorized for
Issuance under Equity Compensation Plans in Item 5.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Airplane Use. The Company from time to time uses for business transportation purposes an airplane that is owned by a company in which Mr. Rose and Mr. Stults each holds a one-third interest. During 2004,
payments by the Company and Tecstar for use of the plane totaled $39,869.



Office Lease. In February 2003, Starcraft entered into an office lease agreement with a company owned by a group of investors. Mr. Rose, Mr. Stults and Mr. Schoeffler are members of that group of investors.
Costs associated with the lease were based on similar arms-length transactions and approximate fair market value. The lease expires in 2008 and provides for rental of $6,438 per month. It is being accounted for as an operating lease.



Indemnification related to Personal Guarantees.Mr. Beitzel, Mr. Goad
and Mr. Anderson have personally guaranteed certain obligations of Wheel to Wheel to third parties. The Company has agreed to indemnify the individuals in respect of such obligations. The current balance of these obligations of Wheel to Wheel is
approximately $6.0 million.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES



The accounting firm of Crowe Chizek and Company LLC (Crowe Chizek) served as the independent registered public accounting firm for the Company for the fiscal year ended October 3, 2004. Crowe Chizek has
served as auditors for the Company since July 27, 1998.



Audit Fees. The aggregate fees billed for professional services rendered by Crowe Chizek for the audit of our annual financial statements and the reviews of the financial statements included in our quarterly reports on Form 10-Q were
$102,860 for fiscal 2003 and $112,665 for fiscal 2004.



Audit-Related Fees. The aggregate fees billed for professional services by Crowe Chizek for assurance and related services reasonably related to the audit and review services described under Audit Fees above were $53,260
for fiscal 2003 and $105,605 for fiscal 2004. The amount shown for 2004 consists of fees for benefit plan audits, services related to future compliance with the provisions of the Sarbanes-Oxley Act of 2002, and fees for audit services related to the
merger with Wheel to Wheel. The amount shown for 2003 consists of fees for benefit plan audits, services related to future compliance with the provisions of the Sarbanes-Oxley Act of 2002, and fees for audit services related to the proposed merger
with Wheel to Wheel.



Tax Fees. The aggregate fees
billed for professional services by Crowe Chizek for tax compliance, tax advice and tax planning services were $166,915 for fiscal 2003 and $133,610 for fiscal 2004. Services include preparation of Federal, state, and benefit plan returns, tax
planning and assistance with various business issues including the merger with Wheel to Wheel, and correspondence with taxing authorities.



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All Other Fees. There were no fees billed by Crowe Chizek for products or for services other than
the services described above for each of fiscal 2003 and 2004.



None of the foregoing services were required to be authorized by our audit committee after the engagement to provide such services under the exception for post engagement approval of certain de minimis permitted on-audit services
described in 17 CFR 210.2-01(c)(7)(i)(C).



Our audit committee
requires pre-approval by the committee of all audit and permissible non-audit services to be provided by the independent auditor. Our audit committee charter authorizes the committee to delegate authority to pre-approve audit and permissible
non-audit services to a member of the committee. Any decision of a committee member under delegated authority must be presented to the full committee at its next scheduled meeting.



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PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.



|(a) | The following documents are filed as part of the report:
|--- | --------------------------------------------------------



Consolidated Financial Statements (as of October 3, 2004 and September 28, 2003 and for the fiscal years ended October 3, 2004 and September 28, 2003 and
September 28, 2002):



Report of Independent Registered Public
Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders Equity

Notes to Consolidated Financial Statements



|(b) | The exhibits filed herewith or incorporated by reference herein are set forth on the Exhibit Index beginning on page E-1.
|--- | -------------------------------------------------------------------------------------------------------------------------



|(c) | The following financial statement schedule is filed as part of this report:
|--- | ---------------------------------------------------------------------------



| | (i) | Valuation and Qualifying Accounts and Reserves.
| | --- | -----------------------------------------------



All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and have been omitted.



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SIGNATURES



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



|                        |  |                       |  |                                                  
|----------------------- |  | --------------------- |  | -------------------------------------------------
|                        |  | STARCRAFT CORPORATION
|                        |  |                      
|DATE: December 16, 2004 |  | By:                   |  | /s/    MICHAEL H.
SCHOEFFLER                     
|                        |  |                       |  | Michael H. Schoeffler, Co-Chief Executive Officer
|                        |  |                      
|                        |  | By:                   |  | /s/    JEFFREY P.
BEITZEL                        
|                        |  |                       |  | Jeffrey P. Beitzel, Co-Chief Executive Officer   



Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on this 16thday of December, 2004.



|1) | Principal Executive Officer:
|-- | ----------------------------



|    |  |                              |  |                           
|--- |  | ---------------------------- |  | --------------------------
|By: |  | /s/    MICHAEL H.
SCHOEFFLER |  | Co-Chief Executive Officer
|    |  | Michael H. Schoeffler        |  |                           
|    |  |                             
|By: |  | /s/    JEFFREY P.
BEITZEL    |  | Co-Chief Executive Officer
|    |  | Jeffrey P. Beitzel           |  |                           



|2) | Principal Financial/Accounting Officer:
|-- | ---------------------------------------



|    |  |                              |  |                                   
|--- |  | ---------------------------- |  | ----------------------------------
|By: |  | /s/    JOSEPH E. KATONA,
III |  | Secretary, Chief Financial Officer
|    |  | Joseph E. Katona, III        |  |                                   



|3) | A Majority of the Board of Directors:
|-- | -------------------------------------



|    |  |                            |  |                      
|--- |  | -------------------------- |  | ---------------------
|By: |  | /s/    KELLY L.
ROSE       |  | Director and Chairman
|    |  | Kelly L. Rose              |  |                      
|    |  |                           
|By: |  | /s/    RICHARD C.
ANDERSON |  | Director             
|    |  | Richard C. Anderson        |  |                      
|    |  |                           
|By: |  | /s/    JEFFREY P.
BEITZEL  |  | Director             
|    |  | Jeffrey P. Beitzel         |  |                      
|    |  |                           
|By: |  | /s/    JOHN M.
COLLINS     |  | Director             
|    |  | John M. Collins            |  |                      
|    |  |                           
|By: |  | /s/    DOUGLASS C.
GOAD    |  | Director             
|    |  | Douglass C. Goad           |  |                      
|    |  |                           
|By: |  | /s/    DAVID J.
MATTESON   |  | Director             
|    |  | David J. Matteson          |  |                      



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|    |  |                              |  |         
|--- |  | ---------------------------- |  | --------
|By: |  | /s/    ALLEN H.
NEUHARTH     |  | Director
|    |  | Allen H. Neuharth            |  |         
|    |  |                             
|By: |  | /s/    MICHAEL H.
SCHOEFFLER |  | Director
|    |  | Michael H. Schoeffler        |  |         
|    |  |                             
|By: |  | /s/    MICHAEL J.
STARSHAK   |  | Director
|    |  | Michael J. Starshak          |  |         
|    |  |                             
|By: |  |                              |  | Director
|    |  | David L. Stewart             |  |         
|    |  |                             
|By: |  |                              |  | Director
|    |  | G. Raymond Stults            |  |         



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Schedule II

Valuation and Qualifying Accounts and Reserves

(Dollars in Thousands)



|                                                                                                             |  |                              |     |                      |   |     |                                          |  |   |                          |   |  |   |    
|------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | --- | -------------------- | - | --- | ---------------------------------------- |  | - | ------------------------ | - |  | - | ---
|                                                                                                             |  | Balance atBeginning ofPeriod |     | Charged toOperations |   |     | Deductions from/Additions toReserves (a) |  |   | BalanceAt Close OfPeriod
|Allowance for doubtful accountsdeducted from accounts receivable, trade-in the consolidated balance sheets: |  |                              |     |                      |   |     |                                          |  |   |                          |   |  |   |    
|                                                                                                             |  |                              |     |                     
|53 weeks ended October 3, 2004                                                                               |  | $                            | 200 |                      | $ | (70 | )                                        |  | $ | 197                      |   |  | $ | 327
|                                                                                                             |  |                              |     |                     
|52 weeks ended September 28, 2003                                                                            |  |                              | 288 |                      |   | 157 |                                          |  |   | (245                     | ) |  |   | 200
|                                                                                                             |  |                              |     |                     
|52 weeks ended September 29, 2002                                                                            |  |                              | 170 |                      |   | 184 |                                          |  |   | (66                      | ) |  |   | 288

---

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



|                                       |  |                              |       |                      |   |                                      |  |   |                          |   |  |   |      
|-------------------------------------- |  | ---------------------------- | ----- | -------------------- | - | ------------------------------------ |  | - | ------------------------ | - |  | - | -----
|                                       |  | Balance atBeginning ofPeriod |       | Charged toOperations |   | Deductions from/Additions toReserves |  |   | BalanceAt Close OfPeriod
|Valuation Allowance of Deferred Taxes: |  |                              |       |                      |   |                                      |  |   |                          |   |  |   |      
|                                       |  |                              |       |                     
|53 weeks ended October 3, 2004         |  | $                            | 1,111 |                      | $ |                                     |  | $ | (1,111                   | ) |  | $ | -0-  
|                                       |  |                              |       |                     
|52 weeks ended September 28, 2003      |  |                              | 6,338 |                      |   |                                     |  |   | (5,227                   | ) |  |   | 1,111
|                                       |  |                              |       |                     
|52 weeks ended September 29, 2002      |  |                              | 7,206 |                      |   |                                     |  |   | (868                     | ) |  |   | 6,338



|                                  |  |                              |     |                      |   |      |                                      |  |   |                          |   |  |   |    
|--------------------------------- |  | ---------------------------- | --- | -------------------- | - | ---- | ------------------------------------ |  | - | ------------------------ | - |  | - | ---
|                                  |  | Balance atBeginning ofPeriod |     | Charged toOperations |   |      | Deductions from/Additions toReserves |  |   | BalanceAt Close OfPeriod
|Warranty Reserve:                 |  |                              |     |                      |   |      |                                      |  |   |                          |   |  |   |    
|                                  |  |                              |     |                     
|53 weeks ended October 3, 2004    |  | $                            | 698 |                      | $ | (322 | )                                    |  | $ | (128                     | ) |  | $ | 248
|                                  |  |                              |     |                     
|52 weeks ended September 28, 2003 |  |                              | 771 |                      |   | (25  | )                                    |  |   | (48                      | ) |  |   | 698
|                                  |  |                              |     |                     
|52 weeks ended September 29, 2002 |  |                              | 763 |                      |   | (8   | )                                    |  |   |                         |   |  |   | 771



57



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Schedule II

Valuation and Qualifying Accounts and Reserves

(Dollars in Thousands)



|                                                |  |                              |   |                      |   |                                      |  |   |                          |   |  |   |    
|----------------------------------------------- |  | ---------------------------- | - | -------------------- | - | ------------------------------------ |  | - | ------------------------ | - |  | - | ---
|                                                |  | Balance atBeginningof Period |   | Charged toOperations |   | Deductions from/Additions toReserves |  |   | BalanceAt Close OfPeriod
|Valuation Allowance for Medical Self Insurance: |  |                              |   |                      |   |                                      |  |   |                          |   |  |   |    
|                                                |  |                              |   |                     
|53 weeks ended October 3, 2004                  |  | $                            |  |                      | $ | 680                                  |  | $ | (268                     | ) |  | $ | 412
|                                                |  |                              |   |                     
|52 weeks ended September 28, 2003               |  |                              |  |                      |   |                                     |  |   |                         |   |  |   |   
|                                                |  |                              |   |                     
|52 weeks ended September 29, 2002               |  |                              |  |                      |   |                                     |  |   |                         |   |  |   |   



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##### Table of Contents

EXHIBIT INDEX



|                                         |  |                                                                                                                                                                                                                                                                                                         |  |                     
|---------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------
|Reference toRegulation S-KExhibit Number |  | Document                                                                                                                                                                                                                                                                                                |  | SequentialPageNumber
|                                         |  |                                                                                                                                                                                                                                                                                                        
|2.1                                      |  | Agreement and Plan of Merger dated as of October 29, 2003, among Registrant, Wheel to Wheel, Inc. and the shareholders of Wheel to Wheel, Inc. Incorporated by reference to Exhibit 42 to
Registrants Form 8-K filed November 3, 2003.                                                                 |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|2.2                                      |  | Agreement and Plan of Merger dated as of November 23, 2004, among Registrant, Quantum Fuel Systems Technologies Worldwide, Inc. and Quake Sub., Inc. Incorporated by reference to Exhibit 2.1
to Registrants Form 8-K filed November 24, 2004.                                                         |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|3.1                                      |  | Registrants Restated Articles of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 to the Registrants Form 10-Q for the quarter ended December 28,
2003.                                                                                                                            |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|3.2                                      |  | Registrants Code of By-Laws, as amended. Incorporated by reference to Exhibit 3.2 to the Registrants Form 10-Q for the quarter ended December 28, 2003.                                                                                                                                               |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|4.1                                      |  | Article 6Terms of Shares and Article 9Provisions for Certain Business Combinations of the Registrants Articles of Incorporation, as amended.
Incorporated by reference to Exhibit 3.1 to the Registrants Form 10-K for the year ending October 1, 1995.                                         |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|4.2                                      |  | Article IIIShareholder Meetings, Article VICertificates for Shares and Article VIICorporate Books and RecordsSection 3 of the
Registrants Code of By-Laws, as amended. Incorporated by reference to Exhibit 3.2 to the Registrants Form 10-K for the fiscal year ending September 29, 1996. |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|4.3(a)                                   |  | Rights Agreement, dated as of August 12, 1997, between Registrant and Harris Trust and Savings Bank, as Rights Agent. Incorporated by reference to the Registrants 8-A filed September 9,
1997.                                                                                                        |  | *                   
|                                         |  |                                                                                                                                                                                                                                                                                                        
|4.3(b)                                   |  | Amendment No. 1 to Rights Agreement, dated as of November 23, 2004. Incorporated by reference to Exhibit 4.3 to the Registrants Form 8-A/A filed November 24, 2004.                                                                                                                                    |  | *                   



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##### Table of Contents

|    |     |  |                                                                                                                                                                                                                                                           |  |  
|--- | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|    |     | 
|4.3 | (c) |  | Amendment No. 2 to Rights Agreement, dated as of November 23, 2004. Incorporated by reference to Exhibit 4.4 to the Registrants Form 8-A/A filed November 24, 2004.                                                                                      |  | *
|    |     | 
|4.3 | (d) |  | Form of Rights Certificate. Incorporated by reference to Exhibit A to the Rights Agreement filed as Exhibit 4.3(a) hereto.                                                                                                                                |  | *
|    |     | 
|4.4 | (a) |  | Loan Agreement by and between Tecstar, LP and Comerica Bank dated February 13, 2002. Incorporated by reference to Registrants Report on Form 10-Q for the quarter ended March 31,
2002.                                                                  |  | *
|    |     | 
|4.4 | (b) |  | First Amendment to Loan Agreement and Note dated as of May 13, 2002, by and between Tecstar, LP and Comerica Bank. Incorporated by reference to Registrants Report on Form 10-K for the
year ended September 28, 2003.                                   |  | *
|    |     | 
|4.4 | (c) |  | Amendment No. 2 to Loan Agreement and Consent dated as of the 7th day of June, 2002, by and between Tecstar, LP and Comerica Bank. Incorporated by reference to Registrants Report on
Form 10-K for the year ended September 28, 2003.                   |  | *
|    |     | 
|4.4 | (d) |  | Amendment to the Loan Agreement between Tecstar, LP and Comerica Bank, dated August 1, 2003. Incorporated by reference to Exhibit 4.2 to Registrants Form 10-Q for the fiscal quarter
ended June 29, 2003.                                               |  | *
|    |     | 
|4.5 | (a) |  | Loan Agreement by and between Starcraft Corporation and Comerica Bank dated June 28, 2002. Incorporated by reference to Exhibit 4.15 to the Registrants Form 10-K for the year ended
September 29, 2002.                                                 |  | *
|    |     | 
|4.5 | (b) |  | Amendment Number 1 dated April 6, 2003, to the Loan Agreement by and between Starcraft Corporation and Comerica Bank dated June 28, 2002. Incorporated by reference to Exhibit 4.1 to
Registrants Form 10-Q for the fiscal quarter ended March 30, 2003. |  | *
|    |     | 
|4.5 | (c) |  | Amendment to Loan Agreement between Starcraft Corporation and Comerica Bank, dated August 1, 2003. Incorporated by reference to Exhibit 4.1 to Registrants Form 10-Q for the fiscal
quarter ended June 29, 2003.                                         |  | *



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##### Table of Contents

|    |     |  |                                                                                                                                                                                                                                                     |  |       
|--- | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------
|    |     | 
|4.6 | (a) |  | Credit Agreement by and between the Registrant and Comerica Bank dated January 16, 2004. Incorporated by reference to Exhibit 4.1 to the Registrants Form 10-Q for the quarter ended
December 28, 2003.                                            |  | *     
|    |     | 
|4.6 | (b) |  | Amendment No. 1 dated January 30, 2004 to the Credit Agreement by and between the Registrant and Comerica Bank dated January 16, 2004. Incorporated by reference to Exhibit 4.1 to the
Registrants Form 10-Q for the quarter ended March 28, 2004. |  | *     
|    |     | 
|4.6 | (c) |  | Amendment No. 2 dated March 28, 2004 to the Credit Agreement by and between the Registrant and Comerica Bank dated January 16, 2004. Incorporated by reference to Exhibit 4.2 to the
Registrants Form 10-Q for the quarter ended March 28, 2004.   |  | *     
|    |     | 
|4.6 | (d) |  | Amendment No. 3 dated March 31, 2004 to the Credit Agreement by and between the Registrant and Comerica Bank dated January 16, 2004.                                                                                                                |  | [    ]
|    |     | 
|4.6 | (e) |  | Amendment No. 4 dated March 31, 2004 to the Credit Agreement by and between the Registrant and Comerica Bank dated January 16, 2004.                                                                                                                |  | [    ]
|    |     | 
|4.6 | (f) |  | Amendment No. 5 effective September 30, 2004 to the Credit Agreement by and between the Registrant and Comerica Bank dated January 16, 2004.                                                                                                        |  | [    ]
|    |     | 
|4.7 |     |  | Form of Revolving Note of the Registrant to Comerica Bank dated as of January 16, 2004. Incorporated by reference to Exhibit 4.2 to the Registrants Form 10-Q for the quarter ended
December 28, 2003.                                             |  | *     
|    |     | 
|4.8 |     |  | Form of Swing-line Note of the Registrant to Comerica Bank dated as of January 16, 2004. Incorporated by reference to Exhibit 4.3 to the Registrants Form 10-Q for the quarter ended
December 28, 2003.                                            |  | *     
|    |     | 
|4.9 |     |  | Loan Agreement made as of April 30, 2003, between Tecstar Manufacturing Canada Limited and Comerica Bank. Incorporated by reference to Registrants Report on Form 10-K for the year ended
September 28, 2003.                                      |  | *     



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##### Table of Contents

|        |  |                                                                                                                                                                                                                                                |  |  
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|        |  |                                                                                                                                                                                                                                               
|4.10    |  | Amendment to the Loan Agreement between Tecstar Manufacturing Canada, Ltd. and Comerica Bank, dated August 1, 2003. Incorporated by reference to Exhibit 4.3 to Registrants Form
10-Q for the fiscal quarter ended June 29, 2003.             |  | *
|        |  |                                                                                                                                                                                                                                               
|4.11    |  | Promissory Note from Starcraft Corporation to G. Ray Stults in the principal amount of $803,900 dated as of September 26, 2002. Incorporated by reference to Exhibit 4.16 to the
Registrants Form 10-K for the year ended September 29, 2002. |  | *
|        |  |                                                                                                                                                                                                                                               
|4.12    |  | Promissory Note from Starcraft Corporation to Kelly L. Rose in the principal amount of $670,220 dated as of September 26, 2002. Incorporated by reference to Exhibit 4.17 to the
Registrants Form 10-K for the year ended September 29, 2002. |  | *
|        |  |                                                                                                                                                                                                                                               
|4.13    |  | Convertible Senior Subordinated Note Purchase Agreement among the Registrant and certain purchasers, dated July 12, 2004. Incorporated by reference to Exhibit 4.1 to the Registrants
Form 8-K filed July 14, 2004.                           |  | *
|        |  |                                                                                                                                                                                                                                               
|10.1(a) |  | The Starcraft Automotive Corporation Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 to Registrants Form S-1 Registration Statement filed June 3, 1993.                                                                       |  | *
|        |  |                                                                                                                                                                                                                                               
|10.1(b) |  | The Starcraft Corporation 1997 Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10.4 to the Registrants From 10-Q for the quarter ended December 28,
2003.                                                              |  | *
|        |  |                                                                                                                                                                                                                                               
|10.2(a) |  | Employment Agreement with Kelly L. Rose dated December 12, 1996. Incorporated by reference to Exhibit 10.3(b) to the Registrants From 10-K for the fiscal year ending September 29,
1996.                                                     |  | *
|        |  |                                                                                                                                                                                                                                               
|10.2(b) |  | Form of First Addendum to Employment Agreement with Kelly L. Rose, December 31, 1997. Incorporated by reference to Exhibit 10.1 of the Registrants Form 10-Q for the fiscal year ending
March 29, 1998.                                       |  | *
|        |  |                                                                                                                                                                                                                                               
|10.2(c) |  | Second Addendum to Employment Agreement with Kelly L. Rose, effective December 15, 1997. Incorporated by reference to Exhibit 10.3(d) of the Registrants Form 10-K for the fiscal year
ending September 27, 1998.                             |  | *



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##### Table of Contents

|        |  |                                                                                                                                                                                                                            |  |       
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------
|        |  |                                                                                                                                                                                                                           
|10.2(d) |  | Amended and Restated Employment Agreement with Kelly L. Rose dated as of July 23, 2003. Incorporated by reference to Registrants Report on Form 10-K for the year ended September 28,
2003.                               |  | *     
|        |  |                                                                                                                                                                                                                           
|10.3(a) |  | Employment Agreement between Starcraft Corporation and Michael H. Schoeffler, dated January 2, 2003. Incorporated by reference to Exhibit 10.1.1 to Registrants Form 10-Q for the
fiscal quarter ended December 29, 2002. |  | *     
|        |  |                                                                                                                                                                                                                           
|10.3(b) |  | Amended and Restated Employment Agreement with Michael H. Schoeffler, dated as of October 6, 2003. Incorporated by reference to Registrants Report on Form 10-K for the year ended
September 28, 2003.                    |  | *     
|        |  |                                                                                                                                                                                                                           
|10.3(c) |  | Amended and Restated Employment Agreement with Michael H. Schoeffler, dated as of May 4, 2004. Incorporated by reference to Exhibit 10.1 to Registrants Report on Form 10-Q for the
quarter ended June 27, 2004.          |  | *     
|        |  |                                                                                                                                                                                                                           
|10.4    |  | Employment Agreement between Starcraft Corporation and Jeffrey P. Beitzel, dated January 16, 2004. Incorporated by reference to Exhibit 10.1 to Registrants Form 10-Q for the quarter
ended December 28, 2003.            |  | *     
|        |  |                                                                                                                                                                                                                           
|10.5    |  | Employment Agreement between Starcraft Corporation and Douglass C. Goad, dated January 16, 2004. Incorporated by reference to Exhibit 10.2 to Registrants Form 10-Q for the quarter ended
December 28, 2003.              |  | *     
|        |  |                                                                                                                                                                                                                           
|10.6    |  | Employment Agreement between Starcraft Corporation and Richard C. Anderson, dated January 16, 2004. Incorporated by reference to Exhibit 10.3 to Registrants Form 10-Q for the quarter
ended December 28, 2003.           |  | *     
|        |  |                                                                                                                                                                                                                           
|10.7(a) |  | Employment Agreement between Starcraft Corporation and Joseph E. Katona, III, dated May 24, 2004. Incorporated by reference to Exhibit 10.2 to Registrants Form 10-Q for the quarter
ended June 27, 2004.                 |  | *     
|        |  |                                                                                                                                                                                                                           
|10.7(b) |  | Amended and Restated Employment Agreement between Starcraft Corporation and Joseph E. Katona, III, dated November 11, 2004.                                                                                                |  | [    ]



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                             |  |  
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|      |  |                                                                                                                                                                                                                                                                            
|10.8  |  | Asset Purchase and Sale Agreement, dated May 7, 2001, between Starcraft Automotive Group, Inc. and Centurion Vehicles, Inc. Incorporated by reference to Exhibit 2 to the Registrants
Form 8-K dated May 25, 2001.                                                         |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.9  |  | Asset Purchase and Sale Agreement, dated August 21, 2001, between Starcraft Automotive Group, Inc. and National Mobility Corporation and Forest River, Inc. Incorporated by reference to
Exhibit 2.1 to the Registrants Form 8-K dated August 31, 2001.                    |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.10 |  | First Amendment to Asset Purchase and Sale Agreement, dated August 31, 2001, between Starcraft Automotive Group, Inc. and National Mobility Corporation and Forest River, Inc. Incorporated by
reference to Exhibit 2.2 to the Registrants Form 8-K dated August 31, 2001. |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.11 |  | License Agreement by and between the Registrant and Starcraft RV, Inc. dated September 12, 1991. Incorporated by reference to Exhibit 10.24 of the Registrants Form S-1 Registration
Statement filed June 3, 1993.                                                         |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.12 |  | License Agreement by and between the Registrant and Starcraft Recreational Products, Ltd. dated January 18, 1991. Incorporated by reference to Exhibit 10.25 of the Registrants Form S-1
Registration Statement filed June 3, 1993.                                        |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.13 |  | Directors Share Plan, restated effective October 1, 1995. Incorporated by reference to Exhibit 10.16(a) of the Registrants Form 10-K for the year ending October 1,
1995.                                                                                                 |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.14 |  | Directors Compensation Deferral Plan effective October 1, 1995. Incorporated by reference to Exhibit 10.16(b) of the Registrants Form 10-K for the year ending October 1,
1995.                                                                                           |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.15 |  | Warrant to Purchase 200,000 Shares of Common Stock of Starcraft Corporation, issued to Kelly L. Rose, dated November 23, 1998. Incorporated by reference to Exhibit 10.33 of the
Registrants Form 10-K for the fiscal year ending September 27, 1998.                      |  | *
|      |  |                                                                                                                                                                                                                                                                            
|10.16 |  | Warrant to Purchase 200,000 Shares of Common Stock of Starcraft Corporation, issued to G. Ray Stults, dated November 23, 1998. Incorporated by reference to Exhibit 10.34 of the
Registrants Form 10-K for the fiscal year ending September 27, 1998.                      |  | *



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##### Table of Contents

|         |  |                                                                                                                                                                                                                                                                                                                                                        |  |  
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.17    |  | Stock Options to Purchase Shares of Common Stock of Starcraft Corporation of Kelly L. Rose dated as of December 12, 2000. Incorporated by reference to Exhibit 10.16 to the Registrants
Form 10-K for the year ending October 1, 2000.                                                                                                                |  | *
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.18    |  | Stock Options to Purchase Shares of Common Stock of Starcraft Corporation of G. Raymond Stults dated as of December 12, 2000. Incorporated by reference to Exhibit 10.17 to the
Registrants Form 10-K for the year ending October 1, 2000.                                                                                                            |  | *
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.19(a) |  | Reimbursement Agreement between Starcraft Corporation, National Mobility Corporation, Imperial Automotive Group, Inc. and Starcraft Automotive Group, Inc. and Kelly L. Rose and
G. Ray Stults dated as of December 12, 2000. Incorporated by reference to Exhibit 10.18(a) to the Registrants Form 10-K for the year ending October 1, 2000.         |  | *
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.19(b) |  | Security Agreement between Starcraft Corporation and Starcraft Automotive Group, Inc. and Kelly L. Rose and G. Ray Stults entered into as of December 12, 2000. Incorporated by reference to
Exhibit 10.18(b) to the Registrants Form 10-K for the year ending October 1, 2000.                                                                       |  | *
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.19(c) |  | Real Property Mortgage (LaGrange County, Indiana) (Elkhart County, Indiana) made and executed by Starcraft Corporation, f/k/a Rokane Investment Group, Inc. in favor of Kelly L. Rose and G.
Ray Stults made as of December 12, 2000. Incorporated by reference to Exhibit 10.18(c) to the Registrants Form 10-K for the year ending October 1, 2000. |  | *
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.20    |  | Operating Agreement of Tecstar, LLC, dated January 1, 1999. Incorporated by reference to Exhibit 10.1 to Registrants Form 10-Q for the fiscal quarter ended March 30, 2003.                                                                                                                                                                           |  | *
|         |  |                                                                                                                                                                                                                                                                                                                                                       
|10.21    |  | Agreement for Office Lease By and Between Gateway Property Development, LLC and Starcraft Corporation, dated February 15, 2003. Incorporated by reference to Exhibit 10.2 to Registrants
Form 10-Q for the fiscal quarter ended March 30, 2003.                                                                                                       |  | *



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##### Table of Contents

|        |  |                                                                                                                                            |  |       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ------
|        |  |                                                                                                                                           
|14      |  | Starcraft Corporation Code of Ethics. Incorporated by reference to Registrants Report on Form 10-K for the year ended September 28, 2003. |  | *     
|        |  |                                                                                                                                           
|21      |  | Subsidiaries of the Registrant                                                                                                             |  | [    ]
|        |  |                                                                                                                                           
|23.1    |  | Consent of Crowe, Chizek and Company LLP.                                                                                                  |  | [    ]
|        |  |                                                                                                                                           
|31.1(a) |  | Section 13a-14(a)/15d-14(a) Certification of Jeffrey P. Beitzel                                                                            |  | [    ]
|        |  |                                                                                                                                           
|31.1(b) |  | Section 13a-14(a)/15d-14(a) Certification of Michael H. Schoeffler                                                                         |  | [    ]
|        |  |                                                                                                                                           
|31.2    |  | Section 13a-14(a)/15d-14(a) Certification of Joseph E. Katona III                                                                          |  | [    ]
|        |  |                                                                                                                                           
|32      |  | Section 1350 Certifications of Jeffrey P. Beitzel, Michael H. Schoeffler and Joseph E. Katona III                                          |  | [    ]

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*  incorporated by reference as indicated