<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                         ----------------------------
                                   FORM 10-K

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 [Fee Required]
                   For the fiscal year ended January 3, 1998
                                      OR
[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 [No Fee Required] For the transition period from
                          ___________ to ___________
                                       
                       Commission File Number:  0-22256
                         ----------------------------
                           MONACO COACH CORPORATION
            (Exact Name of Registrant as specified in its charter)

                  DELAWARE                                  35-1880244
(State or other jurisdiction of incorporation            (I.R.S. Employer
               or organization)                         Identification No.)

                             91320 INDUSTRIAL WAY
                            COBURG, OREGON   97408
                   (Address of principal executive offices)

      Registrant's telephone number, including area code: (541) 686-8011
                         ----------------------------
          Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $.01 per share
                         ----------------------------

  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 ninety 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 the Registrant's knowledge, in definite proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K  X
                            ---

  The aggregate market value of the voting stock held by non-affiliates of 
the Registrant, based upon the closing sale price of the Common Stock on 
February 27, 1998 as reported on the Nasdaq National Market, was 
approximately $157,469,515. Shares of Common Stock held by officers and 
directors and their affiliated entities have been excluded in that such 
persons may be deemed to be affiliates.  This determination of affiliate 
status is not necessarily conclusive for other purposes.

 As of February 27, 1998, the Registrant had 5,501,165  shares of Common Stock
                                 outstanding.
                         ----------------------------
                      DOCUMENTS INCORPORATED BY REFERENCE

  The Registrant's definitive Proxy Statement for its Annual Meeting of 
Stockholders to be held on May 20, 1998 (the "Proxy Statement") is 
incorporated by reference in Part III of this Form 10-K to the extent stated 
therein.

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

This document consists of 55 pages.  The Exhibit Index appears at page 52.



                                      
<PAGE>

                                     INDEX


                                    PART I

ITEM 1.            BUSINESS                                                    3
ITEM 2.            PROPERTIES                                                  9
ITEM 3.            LEGAL PROCEEDINGS                                          10
ITEM 4.            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS        10

                                    PART II

ITEM 5.            MARKET FOR THE REGISTRANT'S COMMON STOCK AND
                     RELATED STOCKHOLDER MATTERS                              11
ITEM 6.            SELECTED FINANCIAL DATA                                    11
ITEM 7.            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     FINANCIAL CONDITION AND RESULTS OF OPERATIONS            13
ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                20
ITEM 9.            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                     ACCOUNTING AND FINANCIAL DISCLOSURE                      44

                                   PART III

ITEM 10.           DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT             45
ITEM 11.           EXECUTIVE COMPENSATION                                     45
ITEM 12.           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                     OWNERS AND MANAGEMENT                                    45
ITEM 13.           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS             45

                                   PART IV

ITEM 14.           EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
                     REPORTS ON FORM 8-K                                      46
SIGNATURES                                                                    49



                                      2
<PAGE>
                                    PART I

THIS REPORT CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF 
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING, 
WITHOUT LIMITATION, STATEMENTS THAT INCLUDE THE WORDS "BELIEVES," "EXPECTS," 
AND "ANTICIPATES," "PLANS" OR SIMILAR EXPRESSIONS AND STATEMENTS.  SUCH 
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND 
OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF 
THE COMPANY TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH 
FORWARD-LOOKING STATEMENTS.  ALTHOUGH THE COMPANY BELIEVES THAT ITS PLANS, 
INTENTIONS AND EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE 
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH PLANS, INTENTIONS OR 
EXPECTATIONS WILL BE ACHIEVED.  IMPORTANT FACTORS THAT COULD CAUSE ACTUAL 
RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ARE SET FORTH IN 
THIS REPORT.

ITEM 1.  BUSINESS

    Monaco Coach Corporation (the "Registrant" or "Company") is a leading 
manufacturer of premium Class A motor coaches and towable recreational 
vehicles. The Company's product line consists of a broad line of motor 
coaches, fifth wheel trailers, and travel trailers under the  "Monaco",  
"Holiday Rambler", "Royale Coach", and "McKenzie Towables" brand names. The 
Company's products, which are typically priced at the high end of their 
respective product categories, range in suggested retail price from $60,000 
to $750,000 for motor coaches and from $15,000 to $70,000 for towables. Based 
upon retail registrations in 1997, the Company believes it had a 30% share of 
the market for High-Line Class A motor coaches (units with retail prices 
above $120,000), a 9% share of the market for high end fifth wheel trailers 
(units with retail prices above $24,000) and a 57% share of the market for 
high end travel trailers (units with retail prices above $20,000). The 
Company's products are sold through an extensive network of 208 dealerships 
located primarily in the United States and Canada.
    
    The Company is the successor to a company formed in 1968 (the 
"Predecessor") and commenced operations on March 5, 1993 by acquiring all the 
assets and liabilities of its predecessor company (the "Predecessor 
Acquisition").
    
    Prior to March 1996, the Company's product line consisted exclusively of 
High-Line Class A motor coaches. In March 1996, the Company acquired the 
Holiday Rambler Division of Harley-Davidson, Inc. ("Holiday Rambler"), a 
manufacturer of a full line of Class A motor coaches and towables (the 
"Holiday Acquisition"). The Holiday Acquisition: (i) more than doubled the 
Company's net sales; (ii) provided the Company with a significantly broader 
range of products, including complementary High-Line Class A motor coaches 
and the Company's first product offerings of fifth wheel trailers, travel 
trailers and entry-level to mid-range motor coaches; and (iii) lowered the 
price threshold for first-time buyers of the Company's products, thus making 
them more affordable for a significantly larger base of potential customers.
    
PRODUCTS
    
    The Company currently manufactures 11 motor coach and seven towable 
models, each of which has distinct features and attributes designed to target 
the model to a particular suggested retail price range. The Company's product 
offerings currently target three segments of the recreational vehicle market: 
Class A motor coaches, fifth wheel trailers and travel trailers. The Company 
does not currently compete, and has no present plans to compete, in any other 
segment of the recreational vehicle industry. In December 1997, the Company 
introduced the Diplomat, a new low-end diesel motor coach under the Monaco 
brand name, and plans to introduce two new gasoline powered models, the La 
Palma, under the Monaco label, and the Admiral, under the Holiday Rambler 
brand, in the summer of 1998.  All three of these products are designed to 
bring customers into the Company's line of products at a lower price point 
giving the Company the opportunity to benefit as these customers trade-up 
through the Company's line of products.  The following table highlights the 
Company's current product offerings.

<TABLE>
<CAPTION>
                         COMPANY MOTOR COACH PRODUCTS
                                                        CURRENT SUGGESTED
MODEL                                                   RETAIL PRICE RANGE        BRAND
---------------------------------------------------     ------------------       --------
<S>                                                    <C>                     <C>
Royale Coach.......................................      $550,000-$750,000       Monaco
Signature Series...................................      $300,000-$400,000       Monaco
Executive..........................................      $250,000-$300,000       Monaco
Navigator..........................................      $250,000-$300,000       Holiday Rambler
Dynasty............................................      $205,000-$240,000       Monaco
Imperial...........................................      $190,000-$210,000       Holiday Rambler
Windsor............................................      $150,000-$175,000       Monaco
Diplomat...........................................      $130,000-$145,000       Monaco
Endeavor-Diesel....................................      $130,000-$145,000       Holiday Rambler
Endeavor-Gasoline..................................      $ 80,000-$ 95,000       Holiday Rambler
Vacationer.........................................      $ 75,000-$ 85,000       Holiday Rambler
La Palma...........................................      $ 60,000-$ 75,000       Monaco*
Admiral............................................      $ 60,000-$ 75,000       Holiday Rambler*
</TABLE>

*  The Company plans to introduce these models in the summer of 1998.


                                      3
<PAGE>

                           COMPANY TOWABLE PRODUCTS

<TABLE>
<CAPTION>

                                                  CURRENT SUGGESTED
MODEL                                             RETAIL PRICE RANGE             BRAND
----------------------------------------------    ------------------           ----------
<S>                                             <C>                          <C>
Imperial Fifth Wheel..........................    $ 50,000-$ 70,000            Holiday Rambler
Aluma-Lite Fifth Wheel........................    $ 35,000-$ 50,000            Holiday Rambler
McKenzie Fifth Wheel..........................    $ 35,000-$ 50,000            McKenzie
Alumascape Fifth Wheel........................    $ 20,000-$ 35,000            Holiday Rambler
Aluma-Lite Travel Trailer.....................    $ 25,000-$ 45,000            Holiday Rambler
Alumascape Travel Trailer.....................    $ 15,000-$ 25,000            Holiday Rambler
McKenzie Travel Trailer.......................    $ 15,000-$ 25,000            McKenzie
</TABLE>

    In 1997, the average unit wholesale selling prices of the Company's motor 
coaches, fifth wheel trailers and travel trailers were approximately 
$112,700, $32,400 and $22,400, respectively.
    
    The Company's recreational vehicles are designed to offer all the 
comforts of home within a 190 to 400 square foot area. Accordingly, the 
interior of the recreational vehicle is designed to maximize use of available 
space. The Company's products are designed with five general areas, all of 
which are smoothly integrated to form comfortable and practical mobile 
accommodations. The five areas are the living room, kitchen, dining room, 
bathroom and bedroom. For each model, the Company offers a variety of 
interior layouts.
    
    Each of the Company's recreational vehicles comes fully equipped with a 
wide range of kitchen and bathroom appliances, audio and visual electronics, 
communication devices, and other amenities, including couches, dining tables, 
closets and storage spaces. All of the Company's recreational vehicles 
incorporate products from well-recognized suppliers, including stereos, video 
cassette recorders and televisions from Quasar and Sony, microwave ovens from 
Sharp and General Electric, stoves and ranges from KitchenAid and Modern 
Maid, and refrigerators from Dometic and Norcold. The Company's high end 
products offer top-of-the-line amenities, including 20" Sony stereo 
televisions, fully automatic DSS (satellite) systems, Corian kitchen and bath 
countertops, imported ceramic tile and leather furniture.
    
PRODUCT DESIGN
    
    To address changing consumer preferences, the Company modifies and 
improves its products each model year and typically redesigns each model 
every three or four years. The Company's designers work with the Company's 
marketing, manufacturing and service departments to design a product that is 
appealing to consumers, practical to manufacture and easy to service. The 
designers try to maximize the quality and value of each model at the 
strategic retail price point for that model. The marketing and sales staffs 
suggest features or characteristics that they believe could be integrated 
into the various models to differentiate the Company's products from those of 
its competitors. By working with manufacturing personnel, the Company's 
product designers engineer the recreational vehicles so that they can be 
built efficiently and with high quality. Service personnel suggest ideas to 
improve the serviceability and reliability of the Company's products and give 
the designers feedback on the Company's past designs.
    
    The exteriors of the Company's recreational vehicles are designed to be 
aesthetically appealing to consumers, aerodynamic in shape for fuel 
efficiency and practical to manufacture. The Company has an experienced team 
of computer-aided design personnel to complete the product design and produce 
prints from which the products will be manufactured.
    
SALES AND MARKETING
    
    DEALERS
    
    Over the past six years, the Company has expanded its dealer network from 
34 dealerships in 1992 to 208 dealerships primarily located in the United 
States and Canada at January 3, 1998. The Company's dealerships generally 
sell either Monaco motor coaches, the McKenzie Towables line, or Holiday 
Rambler motor coaches and towables. The Company intends to expand its dealer 
network, primarily by adding additional motorized dealers to carry the 
Company's new lower priced gas and diesel units as well as towables-only 
dealers to carry the McKenzie Towable line. The Company maintains an internal 
sales organization consisting of account executives and support staff who 
service the Company's dealer network.



                                      4
<PAGE>

     The Company analyzes and selects new dealers on the basis of such 
criteria as location, marketing ability, sales history, financial strength 
and the capability of the dealer's repair services. The Company provides its 
dealers with a wide variety of support services, including advertising 
subsidies and technical training, and offers certain model pricing discounts 
to dealers who exceed wholesale purchase volume milestones. The Company's 
sales staff is also available to educate dealers about the characteristics 
and advantages of the Company's recreational vehicles compared with competing 
products. The Company offers dealers geographic exclusivity to carry a 
particular model. While the Company's dealership contracts have renewable one 
or two-year terms, historically the Company's dealer turnover rate has been 
low.
    
    Dealers typically finance their inventory through revolving credit 
facilities established with asset-based lending institutions, including 
specialized finance companies and banks. It is industry practice that such 
"floor plan" lenders require recreational vehicle manufacturers to agree to 
repurchase (for a period of 12 to 18 months from the date of the dealer's 
purchase) motor coaches and towables previously sold to the dealer in the 
event the dealer defaults on its financing agreements. The Company's 
contingent obligations under these repurchase agreements are reduced by the 
proceeds received upon the sale of any repurchased units. See "Management's 
Discussion and Analysis of Financial Conditions and Results of Operations-- 
Liquidity and Capital Resources", and Note 17 of Notes to the Company's 
Consolidated Financial Statements. The Company does not anticipate any 
significant losses will be incurred under these agreements.  No material 
charge has been incurred during the last four years.
    
    As a result of the Holiday Acquisition, the Company acquired 10 retail 
dealerships (the "Holiday World Dealerships"). The Company sold seven of 
these Holiday World Dealerships in 1996 and sold the remaining three 
dealerships in 1997.
    
    ADVERTISING AND PROMOTION
    
    The Company advertises regularly in trade journals and magazines, 
participates in cooperative advertising programs with its dealers, and 
produces color brochures depicting its models' performance features and 
amenities. The Company also promotes its products with direct incentive 
programs to dealer sales personnel linked to sales of particular models.
    
    A critical marketing activity for the Company is its participation in the 
more than 150 recreational vehicle trade shows and rallies each year. 
National trade shows and rallies, which can attract as many as 40,000 
attendees, are an integral part of the Company's marketing process because 
they enable dealers and potential retail customers to compare and contrast 
all the products offered by the major recreational vehicle manufacturers. 
Setting up attractive display areas at major trade shows to highlight the 
newest design innovations and product features of its products is critical to 
the Company's success in attracting and maintaining its dealer network and in 
generating enthusiasm at the retail customer level. The Company also provides 
complimentary service for minor repairs to its customers at several rallies 
and trade shows.
    
    The Company attempts to encourage and reinforce customer loyalty through 
clubs for the owners of its products so that they may share experiences and 
communicate with each other. The Company's clubs currently have more than 
14,000 members. The Company publishes magazines to enhance its relations with 
these clubs and holds rallies for clubs to meet periodically to view the 
Company's new models and obtain maintenance and service guidance. Attendance 
at Company-sponsored rallies can be as high as 1,800 recreational vehicles. 
The Company frequently receives support from its dealers and suppliers to 
host these rallies.
    
CUSTOMER SERVICE
    
    The Company believes that customer satisfaction is vitally important in 
the recreational vehicle market because of the large number of repeat 
customers and the rapid communication of business reputations among 
recreational vehicle enthusiasts. The Company also believes that service is 
an integral part of the total product the Company delivers and that 
responsive and professional customer service is consistent with the premium 
image the Company strives to convey in the marketplace.
    
    The Company offers a warranty to all purchasers of its new vehicles. The 
Company's current warranty covers its products for one year. In addition, 
customers are protected by the warranties of major component suppliers such 
as those of Cummins Engine Company, Inc. ("Cummins") (diesel engines), Eaton 
Corporation ("Eaton") (axles), Allison Transmission Division of General 
Motors Corporation ("Allison") (transmissions) and Chevrolet Motor Division 
of General Motors Corporation ("Chevrolet"), Ford Motor Company ("Ford") and 
Freightliner Custom Chassis Corporation ("Freightliner") (chassis). The 
Company's warranty covers all manufacturing-related problems and part and 
system failures, regardless of whether the repair is made at a Company 
facility or by one of the Company's dealers or authorized service centers. As 
of January 3, 1998, the Company had 208 dealerships providing service to 
owners of the Company's products. In addition, 



                                      5
<PAGE>

owners of the Company's diesel products have access to the entire Cummins 
dealer network, which includes over 2,000 repair centers.
    
    The Company operates service centers in Coburg, Oregon and Elkhart and 
Wakarusa, Indiana.  The Company maintains individualized production records 
and a computerized warranty tracking system which enable the Company's 
service personnel to identify problems quickly and to provide individualized 
customer service. While many problems can be resolved on the telephone, the 
customer may be referred to a nearby dealer or service center. The Company 
believes that dedicated customer service phone lines are an ideal way to 
interact directly with the Company's customers and to quickly address their 
technical problems.
    
MANUFACTURING
    
    The Company currently operates motorized manufacturing facilities in 
Coburg, Oregon, where it manufactures Signature Series, Executive, Dynasty 
and Navigator motor coaches and in Wakarusa, Indiana, where it manufactures 
Imperial, Endeavor, Vacationer, Dynasty, Diplomat, La Palma, Admiral and 
Windsor motor coaches. The Company's towable manufacturing facilities are in 
Elkhart, Indiana, where it manufactures Alumascape fifth wheel and travel 
trailers; in Wakarusa, Indiana where it produces Imperial and Aluma-Lite 
fifth wheel and travel trailers, and Springfield, Oregon, where it 
manufactures McKenzie fifth wheel and travel trailers. The Company also 
operates its Royale Coach bus conversion facility in Elkhart, Indiana.
    
    The Company recently completed an upgrade and expansion of its Wakarusa 
motorized facility.  The Company's current motor coach production capacity is 
three units per day at its Coburg facility and 25 units per day at its 
Wakarusa facility. The Company believes its production of motor coaches has 
been limited by capacity constraints in recent years and the Company's 
current capacity is double that of a year ago.
    
    The Company's current towables production capacity is a combined 21 units 
per day at its Wakarusa, Springfield, and Elkhart facilities.  The expansion 
of the Wakarusa motorized facility and the subsequent consolidation of all 
Indiana motorized production into that facility freed up existing space at 
the Elkhart facility which will be used to consolidate all Indiana towable 
production into that facility in June 1998.  This will allow the Company to 
vacate existing leased towable manufacturing space in Wakarusa prior to the 
expiration of that lease in July 1998.  Towable production capacity will be a 
combined 23 units per day in the remaining Elkhart and Springfield facilities.
    
    The Company believes that this expanded manufacturing capacity will free 
the Company from capacity constraints on its motor coach production and allow 
the Company to gradually increase its overall production volumes for motor 
coaches, including the new models, and towables, consistent with anticipated 
market demand.
    
    The Company believes that its manufacturing process is one of the most 
vertically integrated in the recreational vehicle industry. By manufacturing 
a variety of items, including the Roadmaster semi-monocoque chassis, plastic 
components, some of its cabinetry and fiberglass parts, as well as many 
subcomponents, the Company maintains increased control over scheduling, 
component production and overall product quality. In addition, vertical 
integration enables the Company to be more responsive to market dynamics.
    
    Each facility has several stations for manufacturing, organized into four 
broad categories: chassis manufacturing, body manufacturing, painting and 
finishing. It takes from three weeks to two months to build each unit, 
depending on the product. The Company keeps a detailed log book during the 
manufacture of each product and has a computerized service tracking system.
    
    Each unit is given an inspection during which its appliances and plumbing 
systems are thoroughly tested. As a final quality control check, each motor 
coach is given a road test. To further ensure both dealer and end-user 
satisfaction, the Company pays a unit fee per recreational vehicle to its 
dealers so that they will thoroughly inspect each product upon delivery, and 
return a detailed report form.
    
    The Company purchases raw materials, parts, subcomponents, electronic 
systems, and appliances from approximately 750 vendors. These items are 
either directly mounted in the vehicle or are utilized in subassemblies which 
the Company assembles before installation in the vehicle. The Company 
attempts to minimize its level of inventory by ordering most parts as it 
needs them. Certain key components that require longer purchasing lead times 
are ordered based on planned needs. Examples of these components are diesel 
engines, axles, transmissions, chassis and interior designer fabrics. The 
Company has a variety of major suppliers, including Allison, Chevrolet, 
Cummins, Eaton, Ford and Freightliner. The Company does not have any 
long-term supply contracts with these suppliers or their distributors, but 
believes it has good relationships with them. To minimize the risks 
associated with reliance on a single-source supplier, the Company typically 



                                      6
<PAGE>

keeps a 60-day supply of axles, engines, chassis and transmissions in stock 
or available at the suppliers' facilities and believes that, in an emergency, 
other suppliers could fill the Company's needs on an interim basis. Recently, 
Allison put all chassis manufacturers on allocation with respect to one of 
the transmissions the Company uses. However, the Company believes that its 
allocation is sufficient to enable the unit volume increases that are planned 
for models using that transmission and does not foresee any operating 
difficulties with respect to this issue. Nevertheless, there can be no 
assurance that Allison or any of the other suppliers will be able to meet the 
Company's future requirements for transmissions or other key components. An 
extended delay or interruption in the supply of any components obtained from 
a single or limited source supplier could have a material adverse effect on 
the Company's business, results of operations and financial condition.
    
BACKLOG
    
    The Company's products are generally manufactured against orders from the 
Company's dealers. As of January 3, 1998, the Company's backlog of orders was 
$170.8 million compared to $100.2 million at December 28, 1996.  
Approximately $30 million of the year-to-year increase in the Company's 
backlog is related to orders taken for the Company's new Diplomat motor 
coach, which was introduced at the Louisville, Kentucky show in the first 
week of December 1997.  The Company began production of this model in January 
1998 and as a result all of those orders were unfilled as of year-end.  The 
Company includes in its backlog all accepted purchase orders from dealers 
shippable within the next six months. Orders in backlog can be canceled at 
the option of the purchaser at any time without penalty and, therefore, 
backlog should not be used as a measure of future sales.
    
COMPETITION
    
    The market for recreational vehicles is highly competitive. The Company 
currently encounters significant competition at each price point for its 
recreational vehicle products. The Company believes that the principal 
competitive factors that affect the market for the Company's products include 
product quality, product features, reliability, performance, quality of 
support and customer service, loyalty of customers, brand recognition and 
price. The Company believes that it competes favorably against its 
competitors with respect to each of these factors. The Company's competitors 
include, among others: Coachmen Industries, Inc., Fleetwood Enterprises, 
Inc., National R.V. Holdings, Inc., Skyline Corporation, SMC Corporation, 
Thor Industries, Inc. and Winnebago Industries, Inc.  Some of the Company's 
competitors have significantly greater financial resources and more extensive 
marketing capabilities than the Company. There can be no assurance that 
either existing or new competitors will not develop products that are 
superior to or that achieve better consumer acceptance than the Company's 
products, or that the Company will continue to remain competitive.
    
GOVERNMENT REGULATION

    The manufacture and operation of recreational vehicles are subject to a 
variety of federal, state and local regulations, including the National 
Traffic and Motor Vehicle Safety Act and safety standards for recreational 
vehicles and their components that have been promulgated by the Department of 
Transportation. These standards permit the National Highway Traffic Safety 
Administration to require a manufacturer to repair or recall vehicles with 
safety defects or vehicles that fail to conform to applicable safety 
standards. Because of its sales in Canada, the Company is also governed by 
similar laws and regulations promulgated by the Canadian government. The 
Company has on occasion voluntarily recalled certain products. The Company's 
operating results could be adversely affected by a major product recall or if 
warranty claims in any period exceed warranty reserves.
    
    The Company is a member of the Recreation Vehicle Industry Association 
(the "RVIA"), a voluntary association of recreational vehicle manufacturers 
and suppliers, which promulgates recreational vehicle safety standards. Each 
of the products manufactured by the Company has an RVIA seal affixed to it to 
certify that such standards have been met, except for the Royale Coach bus 
conversions.
    
    Many states regulate the sale, transportation and marketing of 
recreational vehicles. The Company is also subject to state consumer 
protection laws and regulations, which in many cases require manufacturers to 
repurchase or replace chronically malfunctioning recreational vehicles. Some 
states also legislate additional safety and construction standards for 
recreational vehicles.
    
    The Company is subject to regulations promulgated by the Occupational 
Safety and Health Administration ("OSHA"). The Company's plants are 
periodically inspected by federal or state agencies, such as OSHA, concerned 
with workplace health and safety.




                                      7
<PAGE>

    The Company believes that its products and facilities comply in all 
material respects with the applicable vehicle safety, consumer protection, 
RVIA and OSHA regulations and standards. Amendments to any of the foregoing 
regulations and the implementation of new regulations could significantly 
increase the cost of manufacturing, purchasing, operating or selling the 
Company's products and could materially and adversely affect the Company's 
net sales and operating results. The failure of the Company to comply with 
present or future regulations could result in fines being imposed on the 
Company, potential civil and criminal liability, suspension of production or 
cessation of operations.
    
    The Company is subject to product liability and warranty claims arising 
in the ordinary course of business. To date, the Company has been successful 
in obtaining product liability insurance on terms the Company considers 
acceptable. The Company's current policies jointly provide coverage against 
claims based on occurrences within the policy periods up to a maximum of 
$41.0 million for each occurrence and $42.0 million in the aggregate. There 
can be no assurance that the Company will be able to obtain insurance 
coverage in the future at acceptable levels or that the costs of insurance 
will be reasonable. Furthermore, successful assertion against the Company of 
one or a series of large uninsured claims, or of one or a series of claims 
exceeding any insurance coverage, could have a material adverse effect on the 
Company's business, operating results and financial condition.
    
    Certain U.S. tax laws currently afford favorable tax treatment for the 
purchase and sale of recreational vehicles. These laws and regulations have 
historically been amended frequently, and it is likely that further 
amendments and additional laws and regulations will be applicable to the 
Company and its products in the future. Furthermore, no assurance can be 
given that any increase in personal income tax rates will not have a material 
adverse effect on the Company's business, operating results and financial 
condition.
    
ENVIRONMENTAL REGULATION AND REMEDIATION
    
    REGULATION
    
    The Company's recreational vehicle manufacturing operations are subject 
to a variety of federal and state environmental regulations relating to the 
use, generation, storage, treatment and disposal of hazardous materials. 
These laws are often revised and made more stringent, and it is likely that 
future amendments to these laws will impact the Company's operations.
    
    The Company has submitted applications for "Title V" air permits for all 
of its operations.  The air permits have either been issued or not yet acted 
upon by the relevant state agency.
    
    The Company does not currently anticipate that any additional air 
pollution control equipment will be required as a condition of receiving new 
air permits, although new regulations and their interpretation may change 
over time, and there can be no assurance that additional expenditures will 
not be required.
    
    While the Company has in the past provided notice to the relevant state 
agencies that air permit violations have occurred at its facilities, the 
Company has resolved all such issues with those agencies, and the Company 
believes that there are no ongoing violations of any of its existing air 
permits at any of its owned or leased facilities at this time. However, the 
failure of the Company to comply with present or future regulations could 
subject the Company to: (i) fines; (ii) potential civil and criminal 
liability; (iii) suspension of production or cessation of operations; (iv) 
alterations to the manufacturing process; or (v) costly clean-up or capital 
expenditures, any of which could have a material adverse effect on the 
Company's business, results of operations and financial condition.
    
    REMEDIATION
    
    The Company has identified petroleum and/or solvent ground contamination 
at the Elkhart, Indiana manufacturing facility, at the Wakarusa, Indiana 
manufacturing facility and the Leesburg, Florida dealership acquired in the 
Holiday Acquisition and subsequently sold in 1997. The Company has remediated 
the Elkhart site and recommended to the relevant Indiana regulatory authority 
that no further action be taken because the remaining contaminants are below 
the state's clean-up standards. The Company currently expects that the 
regulatory authority will concur with this finding, although there is no 
assurance that such approval will be forthcoming or that the regulatory 
authority will not require additional investigation and/or remediation. The 
Company has investigated the Wakarusa site and recently recommended to the 
relevant regulatory authority that no further action be taken at that site 
based on its consultant's view that there is a limited risk associated with 
the remaining contamination. It is unclear whether the regulatory authority 
will concur in this finding or whether additional remediation will be 
required. In Florida, the Company has recently proposed additional sampling 
and monitoring of the site for two (2) years to the relevant Florida 
regulatory authority with respect to the contamination associated with former 
underground storage tanks at the Leesburg dealership for the purpose of 
confirming that the site is stable and natural 

                                      8
<PAGE>

attenuation is reducing known contamination. With regard to the Wakarusa and 
Leesburg sites, the Company is indemnified by Harley-Davidson for 
investigation and remediation costs incurred by the Company (subject to a 
$300,000 deductible in the case of the Wakarusa site and subject to a $10 
million maximum in the case of the Wakarusa site and a $5 million maximum in 
the case of the Leesburg site for matters, such as these, that were 
identified at the closing of the Holiday Acquisition).
    
    The Company does not believe that any costs it will bear with respect to 
continued investigation or remediation of the foregoing locations and other 
facilities currently or formerly owned or occupied by the Company will have a 
material adverse effect upon the Company's business, results of operations or 
financial condition. Nevertheless, there can be no assurance that the Company 
will not discover additional environmental problems or that the cost to the 
Company of the remediation activities will not exceed the Company's 
expectations.
    
EMPLOYEES
    
    As of January 3, 1998, the Company had 2,433 employees, including 2,048 
in production, 40 in sales, 158 in service and 187 in management and 
administration. The Company's employees are not represented by any collective 
bargaining organization, and the Company has never experienced a work 
stoppage. The Company believes its relations with its employees are good.
    
DEPENDENCE ON KEY PERSONNEL

    The Company's future prospects depend upon its key management personnel, 
including Kay L. Toolson, the Company's Chief Executive Officer. The loss of 
one or more of these key management personnel could adversely affect the 
Company's business. The prospects of the Company also depend in part on its 
ability to attract and retain qualified technical, manufacturing, managerial 
and marketing personnel. Competition for such personnel is intense, and there 
can be no assurance that the Company will be successful in attracting and 
retaining such personnel.
    
ITEM 2.  PROPERTIES
   
    The Company is headquartered in Coburg, Oregon, approximately 100 miles 
from Portland, Oregon. The following table summarizes the Company's current 
manufacturing facilities:

<TABLE>
<CAPTION>

                                                                        APPROXIMATE SQUARE
MANUFACTURING FACILITY                             OWNED/LEASED               FOOTAGE                PRODUCTS MANUFACTURED
-----------------------------------------          ------------         ------------------           -------------------------
<S>                                             <C>                       <C>                      <C>
Coburg, Oregon...........................              Owned                  300,000                Motor Coaches
Elkhart, Indiana.........................              Owned                  325,000                Towables
Elkhart, Indiana.........................             Leased                   28,000                Bus Conversions
Wakarusa, Indiana........................         Owned/Leased(1)           1,044,000                Motor Coaches, Towables
Nappanee, Indiana........................              Owned                  130,000                Wood Components
Springfield, Oregon......................             Leased                  100,000                Towables

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

</TABLE>

(1) The Company leases approximately 110,510 square feet of this facility.

    The Company believes that after the recent expansion of its motor coach 
and towable facilities its existing facilities are sufficient to meet its 
production requirements for the foreseeable future. Should the Company 
require increased production capacity in the future, the Company believes 
that additional or alternative space adequate to serve the Company's 
foreseeable needs would be available on commercially reasonable terms.




                                      9
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS
    
    The Company is involved in legal proceedings arising in the ordinary 
course of its business, including a variety of product liability and warranty 
claims typical in the recreational vehicle industry.  The Company does not 
believe that the outcome of its pending legal proceedings, net of insurance 
coverage, will have a material adverse effect on the business, financial 
condition or results of operations of the Company.
    
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    None.





                                      10
<PAGE>

                                    PART II

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

    The Company's Common Stock is traded on the Nasdaq National Market under 
the symbol "MCCO." The following table sets forth for the periods indicated 
the high and low closing sale prices for the Common Stock as reported on the 
Nasdaq National Market.

<TABLE>
<CAPTION>

                                        HIGH         LOW
                                       ------------------
<S>                                  <C>         <C>
1996
  First Quarter....................     14.25        8.50
  Second Quarter...................     14.00       11.50
  Third Quarter....................    14.625      10.625
  Fourth Quarter...................     16.50       12.25
  
1997
  First Quarter ...................     21.50       15.50
  Second Quarter...................     23.25       16.50
  Third Quarter....................     25.75       21.00
  Fourth Quarter...................     25.75      22.375
  
</TABLE>
  
    On February 27, 1998 the last reported sale price of the Company's Common 
Stock on the Nasdaq National Market was $39.50.  As of February 27, 1998, 
there were approximately 212 holders of record of the Company's Common Stock.
    
    The Company has never paid dividends on its Common Stock and does not 
anticipate paying any cash dividends on its Common Stock in the foreseeable 
future. The Company's existing loan agreements prohibit the payment of 
dividends on the Common Stock without the lender's consent.
    
    The market price of the Company's Common Stock could be subject to wide 
fluctuations in response to quarter-to-quarter variations in operating 
results, changes in earnings estimates by analysts, announcements of new 
products by the Company or its competitors, general conditions in the 
recreational vehicle market and other events or factors. In addition, the 
stocks of many recreational vehicle companies have experienced price and 
volume fluctuations which have not necessarily been directly related to the 
companies' operating performance, and the market price of the Company's 
Common Stock could experience similar fluctuations.
    
ITEM 6.  SELECTED FINANCIAL DATA
    
                SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
                
    The Consolidated Statements of Income Data set forth below with respect 
to fiscal years 1995, 1996 and 1997, and the Consolidated Balance Sheet Data 
at December 28, 1996 and January, 3, 1998, are derived from, and should be 
read in conjunction with, the audited Consolidated Financial Statements and 
Notes thereto of the Company included in this Annual Report on Form 10-K. The 
Consolidated Statements of Income Data set forth below with respect to fiscal 
years 1993 and 1994 and the Consolidated Balance Sheet Data at January 1, 
1994, December 31, 1994 and December 30, 1995 are derived from audited 
financial statements of the Predecessor and the Company, respectively, not 
included in this Annual Report on Form 10-K. The Company's fiscal year 
consists of three 13-week quarters and a fourth quarter ending the Saturday 
closest to the end of the calendar year. References to 1995, 1996 and 1997 
refer to the fiscal years ended December 30, 1995, December 28, 1996 and 
January 3, 1998, respectively.
    
    The data set forth in the following table should be read in conjunction 
with, and are qualified in their entirety by, Management's Discussion and 
Analysis of Financial Condition and Results of Operations, the Company's 
Consolidated Financial Statements and the Notes thereto appearing elsewhere 
in this Annual Report on Form 10-K.

                                      11


<PAGE>

FIVE-YEAR SELECTED FINANCIAL DATA


The following table sets forth financial data of Monaco Coach Corporation (the
Company) and Predecessor for the years indicated (in thousands of dollars,
except per share data and Consolidated Operating Data).

<TABLE>
<CAPTION>






                                           Predecessor (1)                               Company
                                           -----------     --------------------------------------------------------------------
                                           Two Months      Ten Months                         Fiscal Year
                                              Ended          Ended      -------------------------------------------------------
                                            March 4,       January 4,       1994           1995          1996(2)        1997(2)
                                              1993           1994
                                           -----------     --------------------------------------------------------------------
<S>                                         <C>            <C>           <C>            <C>            <C>            <C>
CONSOLIDATED STATEMENTS OF INCOME DATA:
Net sales                                  $ 12,026       $ 65,964      $ 107,300      $ 141,611      $ 365,638      $ 441,895
Cost of sales                                10,202         56,141         89,894        124,592        317,909(3)     382,367
-------------------------------------------------------------------------------------------------------------------------------
     Gross profit                             1,825          9,823         17,406         17,019         47,729         59,528
Selling, general and
     administrative expenses                  1,361          4,241          7,256          8,147         33,371         36,307
Amortization of goodwill                          0            431            517            517            617            594
-------------------------------------------------------------------------------------------------------------------------------
     Operating income                           464          5,151          9,633          8,355         13,741         22,627
Other expense (income), net                      (5)           (11)          (153)            40           (244)          (468)
Interest expense                                  5          1,308             69            298          3,914          2,379
Loss (gain) on sale of dealership assets                                                                                  (539)
-------------------------------------------------------------------------------------------------------------------------------
     Income before provision
          for income taxes                      464          3,855          9,717          8,017         10,071         21,255
Provision for income taxes                                   1,553          3,776          3,119          4,162          8,819
Pro forma provision for income taxes            181
-------------------------------------------------------------------------------------------------------------------------------
     Net income                                 283(4)       2,302(5)       5,941          4,898          5,909         12,436
Redeemable preferred stock dividends                                                                        (75)
Accretion of redeemable preferred stock                                                                     (84)          (317)
-------------------------------------------------------------------------------------------------------------------------------
Net income attributable to common stock         283          2,302(5)       5,941          4,898          5,750         12,119
-------------------------------------------------------------------------------------------------------------------------------
Earnings per common share:
   Basic                                                      0.77(5)        1.35           1.11           1.30(6)        2.43
   Diluted                                                    0.67(5)        1.33           1.09           1.27(6)        2.39

Weighted average shares outstanding:
   Basic                                                 3,003,230      4,397,282      4,407,327      4,422,187      4,997,287
   Diluted                                               3,414,614      4,469,734      4,473,383      4,664,790      5,198,656

CONSOLIDATED OPERATING DATA:
Units sold: (7)
     Motor coaches                               87            463            717            982          2,733          3,347
     Towables                                                                                             1,977          2,397
 Dealerships at end of period                    34             37             48             49            159            208
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>




<TABLE>
<CAPTION>

                                            Predecessor                                   Company
                                            -----------     ----------------------------------------------------------------------
                                               Jan 2,         Jan 1,        Dec 31,        Dec 30,        Dec 28,         Jan 3,
                                                1993           1994          1994           1995           1996            1998
                                            -----------     ----------    -----------    -----------    -----------    -----------
<S>                                          <C>           <C>             <C>            <C>           <C>            <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital                             $  5,577       $  2,918       $  5,910       $  3,795      $   4,502      $  10,412
Total assets                                  11,092         40,052         48,219         68,502        135,368        159,832
Long-term borrowings, less current portion                                                  5,000         16,500         11,500
Redeemable preferred stock                        -                             -              -           2,687              0
Total stockholders' equity                     6,431         26,951         32,945         37,930         43,807         74,748

</TABLE>


(1)  The Company commenced operations on March 5, 1993 by acquiring 
     substantially all of the assets and liabilities of the Predecessor. See
     "Management's Discussion and Analysis of Financial Condition and Results 
     of Operations--Overview."

(2) Includes the operations of Holiday Rambler and the Holiday World 
    Dealerships from March 4, 1996. The Holiday World Dealerships generated 
    $25.0 million and $6.8 million in net sales in 1996 and 1997 respectively, 
    which included the sale of 820 and 211 units in 1996 and 1997, 
    respectively that were either previously owned or not Holiday Rambler 
    units, as well as service revenues. The Company sold seven Holiday World 
    Dealerships in 1996 and the remaining three dealerships in 1997.

(3) Includes a $1.7 million increase in cost of sales resulting from the 
    sale of inventory that was written up to fair value at the date of the 
    Holiday Acquisition.

(4) The Predecessor was an S Corporation not subject to federal and 
    certain state income taxes during the periods indicated. The pro forma 
    provision for income taxes reflects the effect of the federal and state 
    income taxes as if the Predecessor had been a C Corporation, based on the 
    effective tax rates that would have been in effect during these periods.

(5) Excludes an extraordinary charge of $558,000, net of tax effect, or 
    $0.16 of diluted earnings per share.

(6) Includes a one time charge of $0.21 per share, net of tax effect, 
    related to the inventory write-up described in Note 3 above. Excluding 
    this charge, diluted earnings per common share would have been $1.48 per 
    share.

(7) Excludes units sold by the Holiday World Dealerships that were either 
    previously owned or not Holiday Rambler units.

                                      12

<PAGE>

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

OVERVIEW

    The Company is the successor to a company formed in 1968 and commenced 
operations on March 5, 1993 by acquiring substantially all of the assets and 
liabilities of the Predecessor. The Predecessor's management and the 
manufacturing of its High-Line Class A motor coaches were largely unaffected 
by the Predecessor Acquisition. However, the Company's consolidated financial 
statements for fiscal years 1995, 1996 and 1997 all contain Predecessor 
Acquisition-related expenses, consisting primarily of the amortization of 
acquired goodwill.
    
    On March 4, 1996, the Company acquired from Harley-Davidson certain 
assets of Holiday Rambler in exchange for $21.5 million in cash, 65,217 
shares of Redeemable Preferred Stock (which were convertible into 230,767 
shares of Common Stock), and the assumption of most of the liabilities of 
Holiday Rambler. Concurrently, the Company acquired 10 Holiday World 
Dealerships for $13.0 million, including a $12.0 million subordinated 
promissory note, and the assumption of certain liabilities. The Company sold 
seven Holiday World Dealerships in 1996, retired the $12.0 million note from 
the proceeds of these sales, and sold the remaining three dealerships in 
1997. The Holiday Acquisition was accounted for using the purchase method of 
accounting.
    
    Beginning on March 4, 1996, the operations acquired in the Holiday 
Acquisition were incorporated into the Company's consolidated financial 
statements. The Company's consolidated financial statements for the fiscal 
years ended December 28, 1996 and January 3, 1998 contain expenses related to 
the Holiday Acquisition, consisting of interest expense, the amortization of 
debt issuance costs and Holiday Acquisition goodwill.  The Company's 
consolidated financial statements for the year ended December 28, 1996 also 
include a $1.7 million increase in cost of sales resulting from the sale of 
inventory in the first and second quarters of 1996 that was written up to 
fair value at the date of the Holiday Acquisition.
    
RESULTS OF OPERATIONS
    
1997 COMPARED WITH 1996
    
    Net sales increased 20.9% from $365.6 million in 1996 to $441.9 million 
in 1997. Included in net sales in 1996 and 1997 were $25.9 million and $10.1 
million respectively, representing sales of units that were either previously 
owned or not Holiday Rambler units and service revenues generated by the 
Holiday World Dealerships prior to their sale. The Company's overall unit 
sales increased 22.0% from 4,710 units in 1996 to 5,744 units in 1997 
(excluding 820 units in 1996 and 211 units in 1997 sold by the Holiday World 
Dealerships that were either previously owned or not Holiday Rambler units). 
The Company's unit sales were up 22.5% on the motorized side and 21.2% for 
towables.  The Company's overall average unit selling price (excluding units 
sold by the Holiday World dealerships that were either previously owned or 
not Holiday Rambler units) increased slightly from $74,000 in 1996 to $76,900 
in 1997.  Due to the inclusion of Holiday Rambler's generally lower priced 
products and the planned introduction of new products at historically lower 
price points, the Company expects its overall average unit selling price to 
remain below $100,000.
    
    Gross profit increased by $11.8 million from $47.7 million in 1996 to 
$59.5 million in 1997 and gross margin increased from 13.1% in 1996 to 13.5% 
in 1997. 1996 gross profit and gross margin were limited by a $1.7 million 
increase in cost of sales as a result of an inventory write-up to fair value 
arising from the Holiday Acquisition. Without this charge, gross profit would 
have been $49.5 million and gross margin would have been 13.5% for 1996.  The 
Company's overall gross margin may fluctuate in future periods if the mix of 
products shifts from higher to lower gross margin units or if the Company 
encounters unexpected manufacturing difficulties or competitive pressures.
    
    Selling, general and administrative expenses increased by $2.9 million 
from $33.4 million in 1996 to $36.3 million in 1997 and decreased as a 
percentage of net sales from 9.1% in 1996 to 8.2% in 1997. The relatively 
high percentage of selling, general and administrative expenses to net sales 
in 1996 was primarily attributable to the addition of the Holiday Rambler 
operations which have traditionally had a higher percentage than Monaco.

                                      13

<PAGE>

    Amortization of goodwill was $617,000 in 1996 compared with $594,000 in 
1997. At January 3, 1998, goodwill arising from the Predecessor Acquisition, 
net of accumulated amortization, was $18.2 million, which is currently being 
amortized on a straight-line basis over 40 years. Goodwill from the Holiday 
Acquisition, net of accumulated amortization, was $2.3 million, and is being 
amortized over 20 years.
    
    Operating income increased $8.9 million from $13.7 million in 1996 to 
$22.6 million in 1997. The increase in the Company's gross margin, combined 
with the reduction of selling, general and administrative expenses as a 
percentage of net sales, resulted in an increase in operating margin from 
3.8% in 1996 to 5.1% in 1997. The Company's operating margin was adversely 
affected in 1996 by a $1.7 million expense related to an inventory write-up 
to fair value as a result of the Holiday Acquisition. Without that charge, 
the Company's operating margin would have been 4.2% for the year.
    
    Interest expense decreased substantially from $3.9 million in 1996 to 
$2.4 million in 1997. The Company's 1996 interest expense included 
approximately $992,000 of floor plan interest expense relating to the Holiday 
World Dealerships compared with $281,000 in 1997.   Additionally, interest 
expense included $343,000 in 1996 and $411,000 in 1997 related to the 
amortization of $2.1 million in debt issuance costs recorded in conjunction 
with the Holiday Acquisition. These costs are being written off over a 
five-year period. The Company capitalized approximately $244,000 of interest 
in 1996 primarily due to the purchase of the Holiday World Dealerships and 
construction in progress at the manufacturing facility in Wakarusa, Indiana. 
The Company capitalized $643,000 of interest in 1997 related to the 
construction in progress at the manufacturing facilities in Wakarusa, Indiana.
    
    The Company sold its two remaining Holiday World retail dealerships 
during the third quarter of 1997 and had a pre-tax gain on the sale of the 
buildings and fixed assets from the stores of $539,000 which is reflected as 
a separate line item above income before income taxes on the Company's 
Consolidated Statements of Income.  This equates to a $315,000 after-tax 
gain, or 6.1 cents of diluted earnings per share.
    
    The Company reported a provision for income taxes of $4.2 million, or an 
effective tax rate of 41.3%, for 1996 compared to $8.8 million, or an 
effective tax rate of 41.5%, for  1997.
    
    Net income increased by $6.5 million from $5.9 million in 1996 to $12.4 
million in 1997 due to the increase in net sales combined with an improvement 
in operating margin and a decrease in interest expense.
    
1996 COMPARED WITH 1995
    
    Net sales increased 158.2% from $141.6 million in 1995 to $365.6 million 
in 1996, primarily due to the Holiday Acquisition. Excluding the Holiday 
Acquisition, net sales of Monaco motor coaches decreased 3.4% from $141.6 
million in 1995 to $136.8 million in 1996, primarily due to difficulties in 
achieving higher production rates of motor coaches at the Company's Coburg 
facility, which commenced operations in late 1995. Net sales in 1996 also 
included $25.9 million of sales of units that were either previously owned or 
not Holiday Rambler units and service revenues generated by the Holiday World 
Dealerships. The Company's overall unit sales increased almost five-fold from 
982 units in 1995 to 4,710 units in 1996 (excluding 820 units sold by the 
Holiday World Dealerships that were either previously owned or not Holiday 
Rambler units). The Company's overall average unit selling price (excluding 
units sold in 1996 by the Holiday World dealerships that were either 
previously owned or not Holiday Rambler units) declined from $145,600 in 1995 
to $74,000 in 1996, primarily as a result of the Company selling a 
significantly large number of lower priced Holiday Rambler products, 
particularly towable products.
    
    Gross profit increased by $30.7 million from $17.0 million in 1995 to 
$47.7 million in 1996 and gross margin increased from 12.0% in 1995 to 13.1% 
in 1996. The increase in gross profit and gross margin was limited by a $1.7 
million increase in cost of sales as a result of an inventory write-up to 
fair value arising from the Holiday Acquisition. Without this charge, gross 
margin would have been 13.5% for 1996. Gross margin in 1995 was depressed 
primarily due to start-up inefficiencies relating to the Windsor model and 
unexpected costs associated with making three model changes simultaneously.
    
    Selling, general and administrative expenses increased by $25.2 million 
from $8.1 million in 1995 to $33.3 million in 1996 and increased as a 
percentage of net sales from 5.7% in 1995 to 9.1% in 1996. The increase in 
selling, general and administrative expenses in dollars and as a percentage 
of net sales in 1996 was primarily attributable to the addition of the 
Holiday Rambler operations that have traditionally had higher selling, 
general and administrative expenses as a percentage of net sales than Monaco. 
In addition, the Company's selling, general and administrative expenses in 
1995 were unusually low, both in dollars and as a percentage of net sales, in 
part because of lower than normal incentive-based compensation.


                                      14
<PAGE>

    Amortization of goodwill was $517,000 in 1995 compared with $617,000 in 
1996 as a result of the additional expense related to the amortization of 
Holiday Acquisition goodwill.
    
    Operating income was $13.7 million in 1996, a $5.4 million increase over 
the $8.4 million in 1995. The increase in the Company's gross margin was less 
than the increase in selling, general and administrative expenses as a 
percentage of net sales, resulting in a decline in operating margin from 5.9% 
in 1995 to 3.8% in 1996. The Company's operating margin was adversely 
affected in 1996 by a $1.7 million expense related to an inventory write-up 
to fair value as a result of the Holiday Acquisition. Without that charge, 
the Company's operating margin would have been 4.2% for 1996.
    
    Interest expense increased substantially from $298,000 in 1995 to $3.9 
million in 1996. The Company's 1996 interest expense included approximately 
$992,000 of floor plan interest expense relating to the Holiday World 
Dealerships. Additionally, 1996 interest expense included $343,000 related to 
the amortization of $2.1 million in debt issuance costs recorded in 
conjunction with the Holiday Acquisition. These costs are being written off 
over a five-year period. The Company capitalized approximately $244,000 of 
interest in 1996 primarily due to the purchase of the Holiday World 
Dealerships and construction in progress at the manufacturing facility in 
Wakarusa, Indiana. The Company capitalized $625,000 of interest in 1995 
related to the expansion of its Coburg, Oregon facility.
    
    The Company reported a provision for income taxes of $4.2 million, or an 
effective tax rate of 41.3%, for 1996 compared to $3.1 million, or an 
effective tax rate of 38.9%, for the comparable period in 1995.
    
    Net income increased by $1.0 million from $4.9 million in 1995 to $5.9 
million in 1996 due to substantial increases in net sales and operating 
income that more than offset increases in interest and amortization expense.
    
INFLATION
    
    The Company does not believe that inflation has had a material impact on 
its results of operations for the periods presented.
    
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
    
    POTENTIAL FLUCTUATIONS IN OPERATING RESULTS  The Company's net sales, 
gross margin and operating results may fluctuate significantly from period to 
period due to factors such as the mix of products sold, the ability to 
utilize and expand manufacturing resources efficiently, the introduction and 
consumer acceptance of new models offered by the Company, competition, the 
addition or loss of dealers, the timing of trade shows and rallies, and 
factors affecting the recreational vehicle industry as a whole. In addition, 
the Company's overall gross margin on its products may decline in future 
periods to the extent the Company increases its sales of lower gross margin 
towable products or if the mix of motor coaches shifts to lower gross margin 
units. Due to the relatively high selling prices of the Company's products 
(in particular, its High-Line Class A motor coaches), a relatively small 
variation in the number of recreational vehicles sold in any quarter can have 
a significant effect on sales and operating results for that quarter. Demand 
in the overall recreational vehicle industry generally declines during the 
winter months, while sales and revenues are generally higher during the 
spring and summer months. With the broader range of recreational vehicles now 
offered by the Company as a result of the Holiday Acquisition, seasonal 
factors could have a significant impact on the Company's operating results in 
the future. In addition, unusually severe weather conditions in certain 
markets could delay the timing of shipments from one quarter to another.


                                      15
<PAGE>

    CYCLICALITY  The recreational vehicle industry has been characterized by 
cycles of growth and contraction in consumer demand, reflecting prevailing 
economic, demographic and political conditions that affect disposable income 
for leisure-time activities. Unit sales of recreational vehicles (excluding 
conversion vehicles) reached a peak of approximately 259,000 units in 1994 
and declined to approximately 247,000 units in 1996. Although unit sales of 
High-Line Class A motor coaches have increased in each year since 1989, there 
can be no assurance that this trend will continue. Furthermore, as a result 
of the Holiday Acquisition and recent new model introductions, the Company 
offers a much broader range of recreational vehicle products and will likely 
be more susceptible to recreational vehicle industry cyclicality than in the 
past. Factors affecting cyclicality in the recreational vehicle industry 
include fuel availability and fuel prices, prevailing interest rates, the 
level of discretionary spending, the availability of credit and overall 
consumer confidence. In particular, interest rates rose significantly in 1994 
and while recent interest rates have not had a material adverse effect on the 
Company's business, no assurances can be given that an increase in interest 
rates would not have a material adverse effect on the Company's business, 
results of operations and financial condition.
    
    MANAGEMENT OF GROWTH  As a result of the Holiday Acquisition and the 
recent expansion of its manufacturing facilities, the Company has experienced 
significant growth in the number of its employees and the scope of its 
business. This growth has resulted in the addition of new management 
personnel, increased responsibilities for existing management personnel, and 
has placed added pressure on the Company's operating, financial and 
management information systems. While management believes it has been 
successful in managing this expansion there can be no assurance that the 
Company will not encounter problems in the future associated with the 
continued growth of the Company. Failure to adequately support and manage the 
growth of its business could have a material adverse effect on the Company's 
business, results of operations and financial condition.
    
    MANUFACTURING EXPANSION  The Company significantly increased its 
manufacturing capacity in 1995 by expanding its Elkhart, Indiana facility and 
opening its Coburg, Oregon facility. In 1997, in order to meet market demand 
and realize manufacturing efficiencies, the Company completed construction of 
a new motor coach manufacturing facility in Wakarusa, Indiana, has relocated 
its Elkhart, Indiana motor coach production to the new Wakarusa facility, and 
has opened a Springfield, Oregon facility to manufacture towables. In the 
first quarter of 1998 the Company expects to begin a third line of production 
in its motorized facility in Wakarusa, Indiana.  By June 1998 the Company 
expects to consolidate its existing Wakarusa, Indiana towable production with 
existing Elkhart, Indiana towable production.  The integration of the 
Company's facilities and the expansion of the Company's manufacturing 
operations involve a number of risks including unexpected production 
difficulties. In 1995, the Company experienced start-up inefficiencies in 
manufacturing the Windsor model, and, beginning in 1996, the Company 
experienced difficulty in increasing production rates of motor coaches at its 
Coburg facility. There can be no assurance that the Company will successfully 
integrate its manufacturing facilities or that it will achieve the 
anticipated benefits and efficiencies from its expanded manufacturing 
operations. In addition, the Company's operating results could be materially 
and adversely affected if sales of the Company's products do not increase at 
a rate sufficient to offset the Company's increased expense levels resulting 
from this expansion.
    
    The set-up of new models and scale-up of production facilities in 
Wakarusa, Elkhart, and Springfield involve various risks and uncertainties, 
including timely performance of a large number of contractors, 
subcontractors, suppliers and various government agencies that regulate and 
license construction, each of which is beyond the control of the Company. The 
set-up of production for new models involves risks and costs associated with 
the development and acquisition of new production lines, molds and other 
machinery, the training of employees, and compliance with environmental, 
health and safety and other regulatory requirements. The inability of the 
Company to complete the scale-up of its facilities and to commence full-scale 
commercial  production in a timely manner could have a material adverse 
effect on the Company's business, results of operations and financial 
condition. In addition, the Company may from time to time experience lower 
than anticipated yields or production constraints that may adversely affect 
its ability to satisfy customer orders. Any prolonged inability to satisfy 
customer demand could have a material adverse effect on the Company's 
business, results of operations and financial condition.
    
    CONCENTRATION OF SALES TO CERTAIN DEALERS  Although the Company's 
products were offered by 208 dealerships located primarily in the United 
States and Canada at the end of 1997, a significant percentage of the 
Company's sales have been and will continue to be concentrated among a 
relatively small number of independent dealers. Although no single dealer 
accounted for as much as 10.0% of the Company's net sales in 1997, the top 
two dealers accounted for approximately 15.0% of the Company's net sales in 
that period. The loss of a significant dealer or a substantial decrease in 
sales by such a dealer could have a material adverse effect on the Company's 
business, results of operations and financial condition.
    
    POTENTIAL LIABILITY UNDER REPURCHASE AGREEMENTS  As is common in the 
recreational vehicle industry, the Company enters into repurchase agreements 
with the financing institutions used by its dealers to finance their 
purchases. These agreements obligate the Company to repurchase a dealer's 
inventory under certain circumstances in the event of a 


                                      16
<PAGE>

default by the dealer to its lender. If the Company were obligated to 
repurchase a significant number of its products in the future, it could have 
a material adverse effect on the Company's financial condition, business and 
results of operations. The Company's contingent obligations under repurchase 
agreements vary from period to period and totaled approximately $141.5 
million as of January 3, 1998, with approximately 10.7% concentrated with one 
dealer. See "Liquidity and Capital Resources" and Note 17 of Notes to the 
Company's Consolidated Financial Statements.
    
    AVAILABILITY AND COST OF FUEL  An interruption in the supply, or a 
significant increase in the price or tax on the sale, of diesel fuel or 
gasoline on a regional or national basis could have a material adverse effect 
on the Company's business, results of operations and financial condition. 
Diesel fuel and gasoline have, at various times in the past, been difficult 
to obtain, and there can be no assurance that the supply of diesel fuel or 
gasoline will continue uninterrupted, that rationing will not be imposed, or 
that the price of or tax on diesel fuel or gasoline will not significantly 
increase in the future, any of which could have a material adverse effect on 
the Company's business, results of operations and financial condition.
    
    DEPENDENCE ON CERTAIN SUPPLIERS  A number of important components for 
certain of the Company's products are purchased from single or limited 
sources, including its turbo diesel engines (Cummins), substantially all of 
its transmissions (Allison), axles for all diesel motor coaches other than 
the Holiday Rambler Endeavor Diesel model and chassis for certain of its 
Holiday Rambler products (Chevrolet, Ford and Freightliner). The Company has 
no long term supply contracts with these suppliers or their distributors. 
Recently, Allison put all chassis manufacturers on allocation with respect 
to one of the transmissions the Company uses. The Company believes that its 
allocation is sufficient to enable the unit volume increases that are planned 
for models using that transmission and does not foresee any operating 
difficulties with respect to this issue. Nevertheless, there can be no 
assurance that Allison or any of the other suppliers will be able to meet the 
Company's future requirements for transmissions or other key components. An 
extended delay or interruption in the supply of any components obtained from 
a single or limited source supplier could have a material adverse effect on 
the Company's business, results of operations and financial condition.
    
    NEW PRODUCT INTRODUCTIONS  The Company believes that the introduction of 
new features and new models will be critical to its future success. Delays in 
the introduction of new models or product features or a lack of market 
acceptance of new models or features and/or quality problems with new models 
or features could have a material adverse effect on the Company's business, 
results of operations and financial condition. For example, in the third 
quarter of 1995 the Company incurred unexpected costs associated with three 
model changes introduced in that quarter which adversely affected the 
Company's gross margin. There also can be no assurance that product 
introductions in the future will not divert revenues from existing models and 
adversely affect the Company's business, results of operations and financial 
condition.
    
    COMPETITION  The market for the Company's products is highly competitive. 
The Company currently competes with a number of other manufacturers of motor 
coaches, fifth wheel trailers and travel trailers, some of which have 
significantly greater financial resources and more extensive marketing 
capabilities than the Company. There can be no assurance that either existing 
or new competitors will not develop products that are superior to, or that 
achieve better consumer acceptance than, the Company's products, or that the 
Company will continue to remain competitive.
    
    RISKS OF LITIGATION  The Company is subject to litigation arising in the 
ordinary course of its business, including a variety of product liability and 
warranty claims typical in the recreational vehicle industry. Although the 
Company does not believe that the outcome of any pending litigation, net of 
insurance coverage, will have a material adverse effect on the business, 
results of operations or financial condition of the Company, due to the 
inherent uncertainties associated with litigation, there can be no assurance 
in this regard.
    
    To date, the Company has been successful in obtaining product liability 
insurance on terms the Company considers acceptable. The Company's current 
policies jointly provide coverage against claims based on occurrences within 
the policy periods up to a maximum of $41.0 million for each occurrence and 
$42.0 million in the aggregate. There can be no assurance that the Company 
will be able to obtain insurance coverage in the future at acceptable levels 
or that the costs of insurance will be reasonable. Furthermore, successful 
assertion against the Company of one or a series of large uninsured claims, 
or of one or a series of claims exceeding any insurance coverage, could have 
a material adverse effect on the Company's business, results of operations 
and financial condition.


                                      17
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
    
    The Company's primary sources of liquidity are internally generated cash 
from operations and available borrowings under its credit facilities. During 
1997, the Company used net cash from operations of $41,000. Net income and 
non-cash expenses such as depreciation and amortization generated 
approximately $15.5 million, which was offset primarily by an increase in 
accounts receivable and a reduction in income taxes payable.  Accounts 
receivable were up $10.4 million, on a year-to-year basis, largely due to 
higher than normal end of year unit shipments in 1997.  Income taxes payable 
were abnormally high at the end of 1996 due to the Holiday Acquisition and 
the $6.4 million reduction in 1997 was to a more normal level.
    
    The Company has credit facilities consisting of a term loan of $20.0 
million (the "Term Loan") and a revolving line of credit of up to $45.0 
million (the "Revolving Loans"). The Term Loan bears interest at various 
rates based upon the prime lending rate announced from time to time by 
Banker's Trust Company (the "Prime Rate") or LIBOR and is due and payable in 
full on March 1, 2001. The Term Loan requires monthly interest payments, 
quarterly principal payments and certain mandatory prepayments. The mandatory 
prepayments consist of: (i) an annual payment on April 30 of each year, 
beginning April 30, 1997, of seventy-five percent (75%) of the Company's 
defined excess cash flow for the then most recently ended fiscal year; and 
(ii) a payment within two days of the sale of any Holiday World dealership, 
of the net cash proceeds received by the Company from such sale. While the 
Company has now sold all of the Holiday World dealerships, as of January 3, 
1998, the Company was still holding $2.7 million in notes receivable relating 
to the sales of the stores which will fall under provision (ii) when payment 
is received.  At January 3, 1998, the balance on the Term Loan was $15.9 
million with $15.0 million at an effective interest rate of 7.47% and $875,000 
at 8.5%.  At the election of the Company, the Revolving Loans bear interest 
at variable interest rates based on the Prime Rate or LIBOR. The Revolving 
Loans are due and payable in full on March 1, 2001, and require monthly 
interest payments. As of January 3, 1998, $9.4 million was outstanding under 
the Revolving Loans, with an effective interest rate of 8.5%. The Term Loan 
and the Revolving Loans are collateralized by a security interest in all of 
the assets of the Company and include various restrictions and financial 
covenants. As a result of the sale of the three remaining Holiday World 
retail dealerships in 1997, the Company no longer has any loans outstanding 
to finance retail inventory.
    
    The Company's principal working capital requirements are for purchases of 
inventory and, to a lesser extent, financing of trade receivables. The 
Company's dealers typically finance product purchases under wholesale floor 
plan arrangements with third parties as described below. At January 3, 1998, 
the Company had working capital of approximately $10.4 million, an increase 
of $5.9 million from working capital of $4.5 million at December 28, 1996. 
The Company and certain stockholders completed a secondary public offering of 
1,955,000 shares of the Company's Common Stock in June 1997 at $21.25 per 
share, including 800,000 shares sold by the Company.  The approximately $15.4 
million of net proceeds to the Company from this offering were used to pay 
down the outstanding balance under its Revolving Loans with the remainder 
being added to working capital.  The Company has been using short-term credit 
facilities and cash flow to finance its construction of facilities and other 
capital expenditures. The Company primarily used long-term debt and 
redeemable preferred stock to finance the Holiday Acquisition.
    
    The Company's capital expenditures were $19.6 million in 1997, primarily 
for the Wakarusa, Indiana motorized manufacturing facility. This facility 
approximately doubled the Company's production capacity of motor coaches.  
The Company started construction of a new paint facility and finish area 
adjacent to the new Wakarusa facility in the fourth quarter of 1997.  The new 
paint facility is expected to cost approximately $8.6 million and will be 
operational by the end of the first quarter of 1998.
    
    The Company believes that cash flow from operations and funds available 
under its credit facilities will be sufficient to meet the Company's 
liquidity requirements for the next 12 months. The Company anticipates 
capital expenditures in 1998 will total approximately $6.0 to $7.0 million, 
of which an estimated $2.8 million will be used to finish construction of the 
new Wakarusa paint facility. The Company spent approximately $700,000 for new 
hardware and software in 1997 to upgrade the Company's management information 
systems, including software to handle the "Year 2000" issue, and plans to 
spend $500,000 in 1998 to complete this project.  The Company may require 
additional equity or debt financing to address working capital and facilities 
expansion needs, particularly if the Company further expands its operations 
to address greater than anticipated growth in the market for its products. 
The Company may also from time to time seek to acquire businesses that would 
complement the Company's current business, and any such acquisition could 
require additional financing. There can be no assurance that additional 
financing will be available if required or on terms deemed favorable by the 
Company.
    
    As is typical in the recreational vehicle industry, many of the Company's 
retail dealers utilize wholesale floor plan financing arrangements with third 
party lending institutions to finance their purchases of the Company's 
products. Under the terms of these floor plan arrangements, institutional 
lenders customarily require the recreational vehicle manufacturer to agree to 
repurchase any unsold units if the dealer fails to meet its commitments to 
the lender, subject to certain conditions. 


                                      18
<PAGE>

The Company has agreements with several institutional lenders under which the 
Company currently has repurchase obligations. The Company's contingent 
obligations under these repurchase agreements are reduced by the proceeds 
received upon the sale of any repurchased units. The Company's obligations 
under these repurchase agreements vary from period to period. At January 3, 
1998, approximately $141.5 million of products sold by the Company to 
independent dealers were subject to potential repurchase under existing floor 
plan financing agreements, with approximately 10.7% concentrated with one 
dealer. If the Company were obligated to repurchase a significant number of 
products under any repurchase agreement, its business, operating results and 
financial condition could be adversely affected.
    
NEWLY ISSUED FINANCIAL REPORTING PRONOUNCEMENTS

The Company adopted Statement of Financial Accounting Standard (SFAS) No. 
129, "Disclosures of Information about Capital Structure."  This Statement 
requires disclosures relating to the special aspects of the Company's capital 
structure. Implementation of this Statement did not result in significant 
additional disclosures. 

In 1998 the Company intends to adopt the following SFAS':

SFAS No. 130, "Reporting Comprehensive Income."  This Statement establishes 
standards for reporting and display of comprehensive income and its 
components in a full set of general-purpose financial statements.  This 
Statement will require additional financial statement disclosures.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related 
Information." This Statement will require disclosure of information about key 
revenue-producing segments of an entity.  A reconciliation of segment 
financial information to amounts reported in the financial statements will be 
required. The effect of implementation of this Statement has not yet been 
determined by the Company.

SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement 
Benefits."  This Statement standardizes the disclosure requirements for 
pension and other postretirement benefits to the extent practicable.  The 
implementation of this Statement will not result in significant additional 
financial statement disclosures.



                                      19
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                      Page
                                                                                      ----
<S>                                                                                  <C>
Monaco Coach Corporation--Consolidated Financial Statements:
 Report of Independent Accountants...................................................  21
 Consolidated Balance Sheets as of December 28, 1996 and January 3, 1998.............  22
 Consolidated Statements of Income for the Fiscal Years Ended December 30,
   1995, December 28, 1996 and January 3, 1998.......................................  23
 Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended
   December 30, 1995, December 28, 1996 and January 3, 1998........................... 24
 Consolidated Statements of Cash Flows for the Fiscal Years Ended December 30,
   1995, December 28, 1996 and January 3, 1998........................................ 25
 Notes to Consolidated Financial Statements........................................... 27

Schedule Included in Item 14(a):
 II Valuation and Qualifying Accounts................................................  50
</TABLE>


                                      20
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors of
Monaco Coach Corporation:


We have audited the accompanying consolidated balance sheets of Monaco Coach 
Corporation and Subsidiaries (the Company) as of December 28, 1996 and 
January 3, 1998, and the related consolidated statements of income, 
stockholders' equity and cash flows for each of the three years in the period 
ended January 3, 1998.  These financial statements are the responsibility of 
the Company's management.  Our responsibility is to express an opinion on 
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Monaco Coach 
Corporation and Subsidiaries as of December 28, 1996 and January 3, 1998, and 
the consolidated results of their operations and their cash flows for each of 
the three years in the period ended January 3, 1998 in conformity with 
generally accepted accounting principles.


                                       COOPERS & LYBRAND  L.L.P.




Eugene, Oregon
January 30, 1998, except for stock split
 information in Note 1, as to which the
 date is March 16, 1998.


                                      21
<PAGE>

                            MONACO COACH CORPORATION
                          CONSOLIDATED BALANCE SHEETS
          (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>

                                                                       December 28,     January 3,
                                                                           1996           1998
                                                                       -----------      ---------
<S>                                                                   <C>             <C>
ASSETS 
Current assets:
   Trade receivables, net of $140 and $127, respectively               $  14,891       $ 25,309
   Inventories                                                            46,930         45,421
   Prepaid expenses                                                        1,343            928
   Deferred income taxes                                                   8,278          8,222
   Notes receivable                                                        1,064          1,552
   Assets held for sale                                                    1,383
                                                                       -----------      ---------
            Total current assets                                          73,889         81,432

Notes receivable, less current portion                                       636          1,125
Property and equipment, net                                               38,309         55,399
Debt issuance costs, net of accumulated amortization of
     $343 and $755, respectively                                           1,760          1,358
Goodwill, net of accumulated amortization of $2,084 and
     $2,739, respectively                                                 20,774         20,518
                                                                       -----------      ---------
            Total assets                                               $ 135,368     $  159,832
                                                                       -----------      ---------
                                                                       -----------      ---------
LIABILITIES
Current liabilities:
   Book overdraft                                                        $ 2,455        $ 6,762
   Short-term borrowings:
      Bank line of credit                                                  3,789          9,353
      Flooring agreements                                                  6,202
   Current portion of long-term note payable                               2,000          4,375
   Accounts payable                                                       24,218         23,498
   Income taxes payable                                                    7,362          1,005
   Accrued expenses and other liabilities                                 23,361         26,027
                                                                       -----------      ---------
            Total current liabilities                                     69,387         71,020

Note payable, less current portion                                        16,500         11,500
Deferred income tax liabilities                                            2,787          2,564
Deferred income                                                              200
                                                                       -----------      ---------

            Total liabilities                                             88,874         85,084
                                                                       -----------      ---------

Redeemable Series A Convertible Preferred Stock, $.01
     par value; 100,000 and 34,783 shares authorized,
     respectively; 65,217 shares (redemption value of $3,005)
     issued and outstanding at December 28, 1996                           2,687
                                                                       -----------      ---------


Commitments and contingencies (Notes 12 and 17)

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,900,000 shares
     authorized, no shares outstanding
Common stock, $.01 par value, 20,000,000 shares
     authorized, 4,430,467 and 5,496,499 shares
     issued and outstanding, respectively                                     44             55
Additional paid-in capital                                                25,430         44,241
Retained earnings                                                         18,333         30,452
                                                                       -----------      ---------
            Total stockholders' equity                                    43,807         74,748
                                                                       -----------      ---------
            Total liabilities and stockholders' equity                 $ 135,368      $ 159,832
                                                                       -----------      ---------
                                                                       -----------      ---------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                      22
<PAGE>

                           MONACO COACH CORPORATION
                       CONSOLIDATED STATEMENTS OF INCOME
 FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND JANUARY 3, 1998
          (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                           1995           1996           1997
                                                         --------       --------       --------
<S>                                                   <C>            <C>
Net sales                                               $ 141,611      $ 365,638      $ 441,895
Cost of sales                                             124,592        317,909        382,367
                                                         --------       --------       --------
            Gross profit                                   17,019         47,729         59,528


Selling, general and administrative expenses                8,147         33,371         36,307
Amortization of goodwill                                      517            617            594
                                                         --------       --------       --------
            Operating income                                8,355         13,741         22,627

Other expense (income), net                                    40          (244)          (468)
Interest expense                                              298          3,914         2,379
Loss (gain) on sale of dealership assets                                                  (539)
                                                         --------       --------       --------
            Income before income taxes                      8,017         10,071        21,255

Provision for income taxes                                  3,119          4,162         8,819
                                                         --------       --------       --------
            Net income                                      4,898          5,909        12,436

Preferred stock dividends                                                   (75)

Accretion of redeemable preferred stock                         0           (84)          (317)
                                                         --------       --------       --------
            Net income attributable to
                common stock                              $ 4,898        $ 5,750      $ 12,119
                                                         --------       --------       --------
                                                         --------       --------       --------
Earnings per common share:
   Basic                                                   $1.11          $1.30         $2.43
   Diluted                                                 $1.09          $1.27         $2.39


 Average common shares outstanding:
   Basic                                               4,407,327      4,422,187     4,997,287
   Diluted                                             4,473,383      4,664,790     5,198,656

</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.




                                      23
<PAGE>

                            MONACO COACH CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
  FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND JANUARY 3, 1998
        (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>


                                                               Common Stock           Additional
                                                               ------------            Paid-in         Retained 
                                                          Shares           Amount      Capital         Earnings       Total
                                                          ------           ------     ----------       --------     ---------
<S>                                                     <C>              <C>         <C>             <C>           <C>
Balances, December 31, 1994                            4,401,097           $  44       $ 25,216        $ 7,685       $ 32,945
Issuance of common stock                                   9,792                             58                            58
Tax benefit of stock options exercised                                                       29                            29
Net income                                                                                               4,898          4,898
                                                       ---------           ------     ----------       --------     ---------

Balances, December 30, 1995                            4,410,889              44         25,303         12,583         37,930
Issuance of common stock                                  19,578                             89                            89
Tax benefit of stock options exercised                                                       38                            38
Preferred stock accretion                                                                                  (84)           (84)
Preferred stock dividends                                                                                  (75)           (75)
Net income                                                                                               5,909          5,909
                                                       ---------           ------     ----------       --------     ---------

Balances, December 28, 1996                            4,430,467              44         25,430         18,333         43,807
Issuance of common stock                                 835,265               9         15,697                        15,706
Conversion of preferred stock                            230,767               2          2,997                         2,999
Tax benefit of stock options exercised                                                      117                           117
Preferred stock accretion                                                                                 (317)          (317)
Net income                                                                                              12,436         12,436
                                                       ---------           ------     ----------       --------     ---------

Balances, January 3, 1998                              5,496,499           $  55       $ 44,241       $ 30,452       $ 74,748
                                                       ---------           ------     ----------       --------     ---------
                                                       ---------           ------     ----------       --------     ---------

</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.




                                      24
<PAGE>

                           MONACO COACH CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND JANUARY 3, 1998
        (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                           1995           1996           1997
                                                         --------       --------       --------
<S>                                                     <C>            <C>            <C>
INCREASE (DECREASE) IN CASH:
Cash flows of operating activities:
   Net income                                             $ 4,898        $ 5,909       $ 12,436
   Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
      Gain on sale of dealership assets                                                    (539)
      Depreciation and amortization                         1,077          3,005          3,641
      Loss on disposal of equipment                            60             79
      Deferred income taxes                                   273         (6,399)          (167)
      Change in assets and liabilities, net of effects
           of business combination:
         Trade receivables                                 (3,440)         1,266        (10,423)
         Inventories                                       (4,180)         9,702           (790)
         Prepaid expenses                                     (15)          (810)           415
         Accounts payable                                     745           (457)          (720)
         Accrued expenses and other current liabilities      (218)         7,246          2,663
         Income taxes payable                                 140          7,141         (6,357)
         Deferred income                                      200              0           (200)
                                                         --------       --------       --------
            Net cash provided by (used in) operating
                 activities                                  (460)        26,682            (41)
                                                         --------       --------       --------
Cash flows of investing activities:
   Additions to property and equipment                    (13,864)       (7,327)        (19,617)
   Payment for business acquisition                                     (24,645)
   Proceeds from sale of retail stores, collections on
           notes receivable, net of closing costs                        11,749           1,249
   Other                                                        0            40
                                                         --------       --------       --------
            Net cash used in investing activities         (13,864)      (20,183)        (18,368)
                                                         --------       --------       --------
Cash flows of financing activities:
   Book overdraft                                             516         1,939           4,307
   Borrowings (payments) on line of credit, net             6,487        (6,056)          5,564
   Payments on subordinated note                                        (12,000)
   Borrowings on long-term notes payable                    7,000        20,000
   Debt issuance costs                                                   (2,060)
   Payments on floor financing, net                                                     (4,650)
   Payments on long-term notes payable                                   (8,500)        (2,625)
   Issuance of common stock                                                             16,351
   Cost to issue shares of common stock                                                   (645)
   Other                                                       87           178            107
                                                         --------       --------       --------
            Net cash provided by (used in) financing
                 activities                                14,090        (6,499)        18,409
                                                         --------       --------       --------
Net decrease in cash                                         (234)            0              0
Cash at beginning of period                                   234             0              0
                                                         --------       --------       --------
Cash at end of period                                        $  0          $  0           $  0
                                                         --------       --------       --------
                                                         --------       --------       --------

</TABLE>

Continued

                                      25
<PAGE>


                           MONACO COACH CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
 FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND  JANUARY 3, 1998
          (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>
                                                            1995           1996           1997
                                                          --------       --------       --------
<S>                                                      <C>           <C>            <C>
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
   Interest, net of amount capitalized of $625 in
        1995, $244 in 1996 and $643 in 1997                $  273       $  3,435        $ 2,064
   Income taxes                                             2,731          3,382         15,311


Business acquisition (Note 2):
   Fair value of assets acquired                                        $ 92,143
      Less liabilities assumed                                            52,899
      Less issuance of subordinated debt                                  12,000
      Less issuance of preferred stock                                     2,599
                                                                        --------
            Net cash paid at the acquisition                            $ 24,645
                                                                        --------
                                                                        --------

Sale of retail stores:
   Notes receivable obtained from the sale of
        retail stores
                                                                        $  2,730        $ 2,038


</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.




                                      26
<PAGE>

                           MONACO COACH CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  1.    BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:

   BUSINESS
   
   Monaco Coach Corporation and its subsidiaries (the "Company") manufactures a
   line of premium motor coaches, bus conversions and towable recreational
   vehicles at manufacturing facilities in Oregon and Indiana.  These products
   are sold primarily to independent dealers throughout the United States and
   Canada.
   
   CONSOLIDATION POLICY
   
   The accompanying consolidated financial statements include the accounts of
   the Company and its wholly-owned subsidiaries.  All material intercompany
   transactions and balances have been eliminated.

   FISCAL PERIOD

   The Company follows a 52/53 week fiscal year period ending on the Saturday
   closest to December 31.  Interim periods also end on the Saturday closest to
   the calendar quarter end.  Therefore 1997 was 53 weeks long and the 1996 and
   1995 years were 52 weeks long.  All references to years in the consolidated
   financial statements relate to fiscal years rather than calendar years.

   REVENUE RECOGNITION

   The Company recognizes revenue from the sale of recreational vehicles (i) 
   upon shipment or dealer/customer pick-up (most dealers finance their 
   purchases under floor plan financing arrangements with banks or finance 
   companies; for these sales, the financing is completed before the vehicles 
   are shipped), or (ii) when the dealer has arranged floor plan financing 
   for the vehicle and the vehicle is available for delivery but has been set 
   aside and held at the request of the dealer, generally for a few days, 
   until pick-up or delivery.

   ESTIMATES AND INDUSTRY FACTORS

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

   CONCENTRATION OF CREDIT RISK -The Company distributes its products through
   an independent dealer network for recreational vehicles.  Sales to one
   customer were approximately 17%, 7% and 5% of net revenues for the fiscal
   years ended December 30, 1995, December 28, 1996 and January 3, 1998,
   respectively.  Sales to a second customer were approximately 23%, 9% and 10%
   of net revenues for the fiscal years ended December 30, 1995, December 28,
   1996 and  January 3, 1998, respectively.   No other individual dealers
   represented over 10% of net revenues in any of the three years.  The loss of
   a significant dealer or a substantial decrease in sales by such a dealer
   could have a material adverse effect on the Company's business, results of
   operations and financial results.

   Continued




                                      27
<PAGE>

                           MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued:
                                       
   Concentrations of credit risk exist for accounts receivable and repurchase
   agreements (see Note 17), primarily for the Company's largest dealers.  The
   Company generally sells to dealers throughout the United States and there is
   no geographic concentration of credit risk.
   
   RELIANCE ON KEY SUPPLIERS - The Company's production strategy relies on
   certain key suppliers' ability to deliver subassemblies and component parts
   in time to meet manufacturing schedules.  The Company has a variety of key
   suppliers, including Allison, Chevrolet, Cummins, Eaton, Ford and
   Freightliner.  The Company does not have any long-term contracts with these
   suppliers or their distributors.  Recently, Allison put all chassis
   manufacturers on allocation with respect to one of the transmissions the
   Company uses.  The Company believes that its allocation is sufficient to
   enable the unit volume increases that are planned for models using that
   transmission and does not foresee any operating difficulties with respect to
   this issue.  Nevertheless, in light of these dependencies, it is possible
   that failure of Allison or any of the other suppliers to meet the Company's
   future requirements for transmissions or other key components could have a
   material near-term impact on the Company's business, results of operations
   and financial condition.
   
   WARRANTY CLAIMS - Estimated warranty costs are provided for at the time of
   sale of products with warranties covering the products for up to one year.
   
   INVENTORIES
   
   Inventories consist of raw materials, work-in-process and finished
   recreational vehicles and are stated at the lower of cost (first-in, first-
   out) or market.  Cost of work-in-process and finished recreational vehicles
   includes material, labor and manufacturing overhead costs.
   
   PROPERTY AND EQUIPMENT
   
   Property and equipment, including significant improvements thereto, are
   stated at cost less accumulated depreciation and amortization.  Cost
   includes expenditures for major improvements, replacements and renewals and
   the net amount of interest cost associated with significant capital
   additions during periods of construction.  Capitalized interest was $625,000
   in 1995, $48,000 in 1996 and $643,000 in 1997.  Maintenance and repairs are
   charged to expense as incurred.  Replacements and renewals are capitalized.
   When assets are sold, retired or otherwise disposed of, the cost and
   accumulated depreciation are removed from the accounts and any resulting
   gain or loss is reflected in income.
   
   The cost of plant and equipment is depreciated using the straight-line
   method over the estimated useful lives of the related assets.  Buildings are
   generally depreciated over 39 years and equipment is depreciated over 3 to
   10 years.  Leasehold improvements are amortized under the straight-line
   method based on the shorter of the lease periods or the estimated useful
   lives.


   Continued


                                      28
<PAGE>

                           MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued:

   GOODWILL AND DEBT ISSUANCE COSTS
   
   Goodwill represents the excess of the cost of acquisition over the fair
   value of net assets acquired.  The Company is the successor to a company
   formed in 1968 (the "Predecessor") and commenced operations on March 5, 1993
   by acquiring substantially all of the assets and liabilities of the
   Predecessor.  The goodwill arising from the acquisition of the assets and
   operations of the Company's Predecessor in March 1993 is being amortized on
   a straight-line basis over 40 years and, at January 3, 1998, the unamortized
   amount was $18.2 million.  The goodwill arising from the acquisition of
   Holiday Rambler (as hereinafter defined) and Holiday World (as hereinafter
   defined) is being amortized on a straight-line basis over 20 years; at
   January 3, 1998, the unamortized amount was $2.3 million.  At each balance
   sheet date, management assesses whether there has been permanent impairment
   in the value of goodwill and the amount of such impairment by comparing
   anticipated undiscounted future cash flows from operating activities with
   the carrying value of the goodwill.  The factors considered by management in
   performing this assessment include current operating results, trends and
   prospects, as well as the effects of obsolescence, demand, competition and
   other economic factors.
   
   Unamortized debt issuance costs of $1.8 million at December 28, 1996 and 
   $1.4 million at January 3, 1998, arising from the Holiday Acquisition, are
   being amortized over the term of the loan.

   INCOME TAXES
   
   Deferred taxes are recognized based on the difference between the financial
   statement and tax bases of assets and liabilities at enacted tax rates in
   effect in the years in which the differences are expected to reverse.
   Deferred tax expense or benefit represents the change in deferred tax
   asset/liability balances.  A valuation allowance is established for deferred
   tax assets when it is more likely than not that the deferred tax asset will
   not be realized.
   
   ADVERTISING COSTS
   
   The Company expenses advertising costs as incurred, except for prepaid show
   costs which are expensed when the event takes place.
   
   At December 28, 1996 and January 3, 1998, total advertising included in
   prepaid expenses was $51,000 and $106,000, respectively.  During the fiscal
   year 1997, approximately $6.2 million ($1.5 million in 1995 and $5.5 million
   in 1996) of advertising costs were expensed.
   
   RESEARCH AND DEVELOPMENT COSTS
   
   Research and development costs are charged to expense as incurred and were
   $3.2 million for 1996 and $4.6 million for 1997.  These costs were
   insignificant for 1995.


   Continued


                                      29
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued:

   STOCK SPLIT
   
   On March 16, 1998 the Board of Directors declared a 3-for-2 stock split in
   the form of a 50% stock dividend on the Company's Common stock, payable
   April 16, 1998 to stockholders of record April 2, 1998.  Share and per share
   amounts have not been restated for the stock split.  If per share amounts
   had been restated, diluted earnings per share would have been $0.73, $0.84
   and $1.59 for 1995, 1996 and 1997 respectively.
   
2. HOLIDAY ACQUISITION:

   On March 4, 1996, the Company acquired certain assets of the Holiday Rambler
   Recreational Vehicle Manufacturing Division ("Holiday Rambler") and certain
   assets of the Holiday World Retail Division ("Holiday World") of Harley-
   Davidson, Inc. ("Harley-Davidson").  The acquisition was accounted for as a
   purchase.
   
   The purchase price for Holiday Rambler and Holiday World was comprised of:
  
<TABLE>
<CAPTION>

                                                               (IN THOUSANDS)
<S>                                                              <C>
Cash, including transaction costs of $2.1 million, net of
  $836,000 received from Harley-Davidson                           $ 24,645
Preferred stock (Note 9)                                              2,599
Subordinated debt                                                    12,000
                                                                   --------
                                                                   $ 39,244
                                                                   --------
                                                                   --------

</TABLE>

   The purchase price was allocated to the assets acquired and liabilities 
   assumed based on estimated fair values at March 4, 1996, as follows:

<TABLE>
<CAPTION>

                                                                (IN THOUSANDS)
<S>                                                               <C>
Receivables                                                        $  9,536
Inventories                                                          61,269
Property and equipment                                               11,592
Prepaids and other assets                                                86
Assets held for sale                                                  7,100
Goodwill                                                              2,560
Notes payable                                                       (21,784)
Accounts payable                                                    (16,851)
Accrued liabilities                                                 (14,264)
                                                                   --------
                                                                   $ 39,244
                                                                   --------
                                                                   --------

</TABLE>

   The allocation of the purchase price and the related goodwill was subject to
   adjustment upon resolution of pre-Holiday Acquisition contingencies.  The
   effects of resolution of pre-Holiday Acquisition contingencies occurring:
   (i) within one year of the acquisition date were reflected as an adjustment
   of the allocation of the purchase price and of goodwill, and (ii) after one
   year were recognized in the determination of net income.




                                      30
<PAGE>

                           MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


2. HOLIDAY ACQUISITION, Continued:

   The ten acquired Holiday World retail store properties were classified as
   "assets held for sale".  Seven of the stores were sold during 1996 at a gain
   of $1.4 million, which has been reflected as an adjustment of goodwill.  One
   store was sold during the first quarter of 1997 at a loss of $399,000, which
   also has adjusted goodwill.  The remaining two stores were sold for a gain
   of $539,000 in the third quarter which was recognized in the determination
   of net income for the period.  The Company's results of operations and cash
   flows include Holiday World since March 4, 1996, as the operating activities
   of Holiday World are not clearly distinguishable from other continuing
   operations.  Net sales of Holiday World stores subsequent to the purchase
   and included in the fiscal years ended December 28, 1996 and January 3, 1998
   were $25.0 million and $6.8 million, respectively.
   
   The following unaudited pro forma information presents the consolidated
   results as if the acquisition had occurred at the beginning of the period
   and giving effect to the adjustments for the related interest on financing
   the purchase price, goodwill and depreciation.  The pro forma information
   does not necessarily reflect results that would have occurred or is it
   necessarily indicative of future operating results.
  

<TABLE>
<CAPTION>

                                                    (IN THOUSANDS, EXCEPT PER SHARE 
                                                                  DATA)
                                                         1995           1996
                                                       ---------      ---------
<S>                                                  <C>            <C>
Net sales                                              $ 441,850      $ 419,440
Net income (loss)                                         (5,376)         4,699

Diluted earnings (loss) per common share               $   (1.20)     $    1.01

</TABLE>



3.  INVENTORIES:

    Inventories consist of the following:
   

<TABLE>
<CAPTION>

                                                            (IN THOUSANDS)
                                                      December 28,     January 3,
                                                          1996            1998
                                                      ------------     ----------
<S>                                                   <C>            <C>
Raw materials                                           $ 16,844       $ 20,826
Work-in-process                                           17,592         20,212
Finished units                                             3,998          4,383
Holiday World retail inventory                             8,496
                                                      ----------       --------
                                                        $ 46,930       $ 45,421
                                                      ----------       --------
                                                      ----------       --------

</TABLE>



                                      31
<PAGE>


                          MONACO COACH CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

4.  PROPERTY AND EQUIPMENT:

    Property and equipment consist of the following:
  
<TABLE>
<CAPTION>
 
                                                           (IN THOUSANDS)
                                                      December 28,    January 3,
                                                         1996            1998
                                                      ------------    ----------
<S>                                                  <C>            <C>
Land                                                     $ 5,440        $ 3,830
Buildings                                                 23,358         37,385
Equipment                                                  4,085          8,579
Furniture and fixtures                                     1,958          3,574
Vehicles                                                     748            746
Leasehold improvements                                       312            540
Construction in progress                                   5,542          6,320
                                                     -----------     ----------
                                                          41,443         60,974
Less accumulated depreciation and amortization             3,134          5,575
                                                     -----------     ----------
                                                        $ 38,309       $ 55,399
                                                     -----------     ----------
                                                     -----------     ----------

</TABLE>

5. NOTES RECEIVABLE:

   The Company acquired notes receivable as consideration for the sale of
   certain Holiday World retail stores.  The notes provide for the periodic
   collection of principal, with interest ranging from 8% to 10% and mature
   through September 2001.  The outstanding balance at January 3, 1998 was $2.7
   million,  with $1.6 million expected to be collected in 1998.

6. ACCRUED EXPENSES AND OTHER LIABILITIES:

<TABLE>
<CAPTION>

                                                              (IN THOUSANDS)
                                                      December 28,    January 3,
                                                          1996           1998
                                                      ------------    ----------
<S>                                                   <C>            <C>
Payroll, vacation and related accruals                   $ 5,132        $ 6,393
Payroll and property taxes                                 1,424          1,241
Provision for warranty claims                              8,791          9,981
Provision for product liability claims                     4,507          5,259
Promotional and advertising                                  818            654
Other                                                      2,689          2,499
                                                      ----------     ----------
                                                         $23,361        $26,027
                                                      ----------     ----------
                                                      ----------     ----------

</TABLE>




                                      32
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

7. SHORT-TERM BORROWINGS:

   In connection with the acquisition of Holiday Rambler and Holiday World on
   March 5, 1996, the Company replaced its bank line of credit with new credit
   facilities consisting, in part, of a revolving line of credit of up to $45
   million, with interest payable monthly at varying rates based on the
   Company's interest coverage ratio and interest payable monthly on the unused
   available portion of the line at .375%.  There were outstanding borrowings
   of $9.4 million at January 3, 1998 with an effective interest rate of  8.5%.
   
   The weighted average interest rate on the outstanding borrowings under the
   revolving line of credit was 9.5% and 9.6% for 1996 and 1997, respectively.
   Interest expense on the unused available portion of the line was $164,000 or
   3.4% and $186,000 or 3.4% of weighted average outstanding borrowings for
   1996 and 1997, respectively.  The revolving line of credit expires March 1,
   2001 and would be collateralized by all the assets in the event the Company
   is in default under the loan agreement.  The agreement contains restrictive
   covenants as to EBITDA (earnings before interest, taxes, depreciation and
   amortization), interest coverage ratio, leverage ratio and capital
   expenditures.
   
8. LONG-TERM BORROWINGS:

   The Company obtained a term loan of $20 million primarily to finance the
   acquisition of Holiday Rambler and Holiday World on March 5, 1996, with
   interest payable monthly at various rates based on the Company's interest
   coverage ratio, expiring on March 1, 2001.  The term loan requires quarterly
   principal payments and certain mandatory payments.  At January 3, 1998,
   there were outstanding borrowings of $15.9 million, with $875,000 at an
   effective interest rate of 8.5% and $15 million at 7.47% under a LIBOR
   arrangement.  The term loan would be collateralized by all the assets of the
   Company in the event the Company is in default under the loan agreement.
   The agreement contains restrictive covenants as to EBITDA, interest coverage
   ratio, leverage ratio and capital expenditures.
   
   The principal on the long-term debt is payable as follows:
  
<TABLE>
<CAPTION>

                                                         (IN THOUSANDS)
<S>                                                       <C>
   1998                                                     $ 4,375
   1999                                                       5,000
   2000                                                       4,250
   2001                                                       2,250
                                                            -------
                                                            $15,875
                                                            -------
                                                            -------
</TABLE>




                                      33
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

9. PREFERRED STOCK:

   The Company has authorized "blank check" preferred stock (1,900,000 shares
   authorized, $.01 par value) ("Preferred Stock"), which may be issued from
   time to time in one or more series upon authorization by the Company's Board
   of Directors.  The Board of Directors, without further approval of the
   stockholders, is authorized to fix the dividend rights and terms, conversion
   rights, voting rights, redemption rights and terms, liquidation preferences,
   and any other rights, preferences, privileges and restrictions applicable to
   each series of the Preferred Stock.  There were no shares of Preferred Stock
   outstanding as of January 3, 1998.

   The Company had designated 100,000 shares of the original 2,000,000 shares
   authorized of Preferred Stock as Series A Convertible Preferred Stock
   ("Series A") at $.01 par value.  The Company issued 65,217 shares of Series
   A in connection with the acquisition of Holiday Rambler and Holiday World.
   The outstanding shares of Series A were converted into 230,767 shares of
   Common Stock in conjunction with the Company's secondary public offering on
   June 23, 1997 (see note 18).  34,783 unissued shares of Series A remain
   authorized with none outstanding at January 3, 1998.
   
   The excess of redemption value over the carrying value of Series A was
   accreted by charges to retained earnings.  For the years ended December 28,
   1996 and January 3, 1998, the accretion charge was $84,000 and $317,000,
   respectively.
  



                                      34
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

10. INCOME TAXES:

    The provision for income taxes for the years ended December 30, 1995,
    December 28, 1996 and January 3, 1998 is as follows:

<TABLE>
<CAPTION>
                                                                     (IN THOUSANDS)
                                                           1995           1996           1997
                                                         --------       --------       --------
<S>                                                     <C>           <C>            <C>
Current:
  Federal                                                 $2,382        $ 8,563        $ 7,349
  State                                                      464          1,998          1,637
                                                         --------       --------       --------
                                                           2,846         10,561          8,986
Deferred:
  Federal                                                    211         (5,245)          (136)
  State                                                       62         (1,154)           (31)
                                                         --------       --------       --------
Provision for income taxes                                $3,119        $ 4,162        $ 8,819
                                                         --------       --------       --------
                                                         --------       --------       --------

</TABLE>

    The reconciliation of the provision for income taxes at the U.S. federal
    statutory rate to the Company's effective income tax rate is as follows:
   

<TABLE>
<CAPTION>

                                                                    (IN THOUSANDS)
                                                            1995           1996          1997
                                                          --------       --------      --------
<S>                                                      <C>           <C>            <C>
Expected U.S. federal income taxes at
  statutory rates                                          $2,726         $3,525        $ 7,439
State and local income taxes, net of 
  federal benefit                                             366            541          1,106
Other                                                          27             96            274
                                                          --------       --------      --------
                                                           $3,119         $4,162        $ 8,819
                                                          --------       --------      --------
                                                          --------       --------      --------

</TABLE>

    Continued



                                      35
<PAGE>

                           MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                       
10. INCOME TAXES, Continued:

    The components of the current net deferred tax asset and long-term net
    deferred tax liability are:
   
<TABLE>
<CAPTION>

                                                            (IN THOUSANDS)
                                                     December 28,     January 3,
                                                         1996            1998
                                                     ------------     ----------
<S>                                                    <C>            <C>
Current deferred income tax assets:
  Warranty liability                                     $ 3,519        $ 3,994
  Product liability                                        1,802          2,228
  Other accruals                                           1,454          1,166
  Contingent dealer rebates                                  841            158
  Payroll and related                                        781            727
  Prepaid expenses                                          (119)           (51)
                                                     ------------     ----------

                                                         $ 8,278        $ 8,222
                                                     ------------     ----------
                                                     ------------     ----------

Long-term deferred income tax liabilities:
  Depreciation                                            $  189         $  979
  Amortization                                             2,598          1,585
                                                     ------------     ----------
                                                         $ 2,787        $ 2,564
                                                     ------------     ----------
                                                     ------------     ----------

</TABLE>

    Management believes that the temporary differences which gave rise to the
    deferred income tax assets will be reversed in the foreseeable future and
    that the benefit thereof will be realized as a reduction in the provision
    for current income taxes.


                                      36


<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

11. EARNINGS PER SHARE:

    In 1997, the Company adopted Statement of Financial Accounting Standards
    (SFAS) No. 128, "Earnings Per Share," which establishes new standards for
    computing and presenting earnings per share.  This statement requires
    presentation of basic and diluted earnings per share.  Basic earnings per
    common share is based on the weighted average number of shares outstanding
    during the period using net income attributable to common stock as the
    numerator.  Diluted earnings per common share is based on the weighted
    average number of shares outstanding during the period, after consideration
    of the dilutive effect of stock options and convertible preferred stock,
    using net income as the numerator.  Earnings per share information for 
    prior periods has been restated in accordance with this Statement.  The 
    weighted average number of common shares used in the computation of 
    earnings per common share for the years ended December 30, 1995, 
    December 28, 1996 and January 3, 1998 are as follows:

<TABLE>
<CAPTION>
                                                          1995           1996          1997
                                                       ---------      ---------      ---------
<S>                                                     <C>           <C>            <C>
BASIC
Issued and outstanding shares (weighted
  average)                                             4,407,327      4,422,187      4,997,287

EFFECT OF DILUTIVE SECURITIES
Stock options                                             66,056         53,098         95,233
Convertible preferred stock                                    0        189,505        106,136
                                                       ---------      ---------      ---------
DILUTED                                                4,473,383      4,664,790      5,198,656
                                                       ---------      ---------      ---------
                                                       ---------      ---------      ---------

</TABLE>

12. LEASES:

   The Company leases administrative and production facilities under 
   operating leases that expire in 2001 and has the option to renew the 
   leases annually for the two subsequent years.  Lease terms, upon renewal, 
   will be adjusted for changes in the Consumer Price Index since the date of 
   occupancy.   Total rental expense for the fiscal years ended December 30, 
   1995, December 28, 1996 and January 3, 1998 related to operating leases 
   amounted to approximately $375,000, $570,000 and $1.1 million, 
   respectively.
   
   Approximate future minimum rental commitments under these leases at January
   3, 1998 are summarized as follows:

<TABLE>
<CAPTION>

          Fiscal Year                                  (IN THOUSANDS)
          -----------
          <S>                                         <C>
             1998                                          $  649
             1999                                             431
             2000                                             355
             2001                                             322
             2002                                             212

</TABLE>


                                      37
<PAGE>

                           MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

13. BONUS PLAN:

    The Company has a discretionary bonus plan for certain key employees.  
    Bonus expense included in selling, general and administrative expenses 
    for the years ended December 30, 1995, December 28, 1996 and January 3, 
    1998 was $1.1 million , $2.9 million and $4.3 million, respectively.

14. STOCK PURCHASE PLAN:

    The Company has an Employee Stock Purchase Plan (the "Purchase Plan") -
    1993, a  Nonemployee Director Stock Option Plan (the "Director Plan") -
    1993, and an Incentive Stock Option Plan (the "Option Plan") - 1993:
   
    STOCK PURCHASE PLAN
   
    The Company's Purchase Plan qualifies under Section 423 of the Internal
    Revenue Code.  The Company has reserved 135,000 shares of Common Stock for
    issuance under the Purchase Plan.  During the years ended December 28, 1996
    and January 3, 1998, 5,450 shares and 10,420 shares, respectively, were
    purchased under the Purchase Plan.  The weighted-average fair value of
    purchase rights granted in 1996 and 1997 was $10.66 and $19.13,
    respectively.  Under the Purchase Plan, an eligible employee may purchase
    shares of common stock from the Company through payroll deductions of up to
    10% of base compensation, at a price per share equal to 85% of the lesser of
    the fair market value of the Company's Common Stock as of the first day
    (grant date) or the last day (purchase date) of each six-month offering
    period under the Purchase Plan.
   
    The Purchase Plan is administered by a committee appointed by the Board.
    Any employee who is customarily employed for at least 20 hours per week and
    more than five months in a calendar year by the Company, or by any majority-
    owned subsidiary designated from time to time by the Board, and who does not
    own 5% or more of the total combined voting power or value of all classes of
    the Company's outstanding capital stock, is eligible to participate in the
    Purchase Plan.
   
    DIRECTORS' OPTION PLAN
   
    The Board of Directors and the stockholders have authorized a total of
    40,000 shares of common stock for issuance pursuant to the Director Plan,
    which is currently administered by the Board.  Under the Director Plan, each
    non-employee director of the Company, other than directors affiliated with
    Liberty Partners, L.P. or Monaco Capital Partners, is entitled to
    participate.  Each eligible director will receive a nonstatutory option to
    purchase 8,000 shares of the Company's Common Stock.  In connection with the
    effective date of the initial public offering, the Company granted options
    to purchase 8,000 shares of Common Stock to a director.  In addition, as of
    September 30, 1994, each eligible director was granted an additional
    nonstatutory option to purchase 1,600 shares of Common Stock on September 30
    of each year if, on such date, they have served on the Board of Directors
    for at least six months.  Unless terminated sooner, the Director Plan will
    terminate in 2003.  The exercise price of each option granted under the
    Director Plan is equal to the fair market value of a share of the Company's
    Common Stock on the date of grant.  The initial option granted to each
    eligible director has a ten-year term and vests ratably over five years.
    Subsequent options granted under the Plan vest at the end of five years.  As
    of January 3, 1998, no options have been exercised, and options to purchase
    22,400 shares of Common Stock were outstanding.
   
    Continued




                                      38
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

14. STOCK PURCHASE PLAN, Continued:

    OPTION PLAN
   
    The Option Plan provides for the grant to employees of incentive stock
    options within the meaning of Section 422 of the Internal Revenue Code of
    1986, as amended (the "Code"), and for the grant to employees and
    consultants of the Company of nonstatutory stock options.  A total of
    525,000 shares of Common Stock have been reserved for issuance under the
    Option Plan.  As of January 3, 1998, options to purchase 201,201 shares of
    Common Stock were outstanding.  These options vest ratably over five years
    commencing with the date of grant.
   
    The exercise price of all incentive stock options granted under the Option
    Plan must be at least equal to the fair market value of a share of the
    Company's Common Stock on the date of grant.  With respect to any
    participant possessing more than 10% of the voting power of the Company
    outstanding capital stock, the exercise price of any option granted must
    equal at least 110% of the fair market value on the grant date, and the
    maximum term of the option must not exceed five years.  The terms of all
    other options granted under the Option Plan may not exceed ten years.
   
    Transactions involving the Director Plan and the Option Plan are summarized
    as follows:
   

<TABLE>
<CAPTION>


                                                                1995                  1996                   1997
                                                          -----------------     ------------------      -----------------
                                                                   Weighted-              Weighted-              Weighted-
                                                                    Average                Average                Average
                                                                   Exercise               Exercise               Exercise
                                                          Shares     Price      Shares      Price       Shares     Price
<S>                                                       ------    -------     ------     -------      ------    -------
Outstanding at                                          <C>       <C>         <C>        <C>          <C>        <C>
beginning of year                                        141,884    $  7.36    179,249    $   9.68     198,996     $11.27
  Granted                                                 46,600      16.06     56,000       13.97      67,925      18.23
  Exercised                                               (6,935)      3.35    (14,128)       3.35     (24,845)      8.18
  Forfeited                                               (2,300)     14.92    (22,125)      10.26     (18,475)     14.27
                                                        --------              --------                --------
Outstanding at end of year                               179,249    $  9.68    198,996    $  11.27     223,601     $13.48
                                                        --------              --------                --------
                                                        --------              --------                --------
</TABLE>

    The following table summarizes information about all stock options
    outstanding at January 3, 1998:

<TABLE>
<CAPTION>

                              Options Outstanding                      Options Exercisable
                 -------------------------------------------         -----------------------
                  Number of        Weighted-                          Number of
                 Outstanding        Average        Weighted-         Exercisable   Weighted-
 Range of            at            Remaining        Average              at         Average
 Exercise         January 3,      Contractual      Exercise           January 3,   Exercise
  Prices            1998             Life            Price              1998        Price
 --------        -----------      -----------      ---------         -----------   ---------
<S>               <C>              <C>            <C>                <C>         <C>
$ 3.35             47,346             5.2           $  3.35            31,614      $  3.35
$11.50 - 15.77     84,275             6.6             14.07            29,725        14.05
$16.00 - 19.66     82,380             7.8             17.34            11,080        16.29
$23.63 - 25.50      9,600             9.6             25.19                 0          --
               ----------                                           ---------
                  223,601                                              72,419
               ----------                                           ---------
               ----------                                           ---------
</TABLE>

   Continued

                                      39
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

14. STOCK PURCHASE PLAN, Continued:

    The Company adopted the disclosure-only provisions of SFAS No. 123,
    "Accounting for Stock-Based Compensation", and thus no compensation cost has
    been recognized for the Director Plan, the Option Plan or the Purchase Plan.
    Had compensation cost for the three stock-based compensation plans been
    determined based on the fair value of options at the date of grant
    consistent with the provisions of SFAS No. 123, the Company's pro forma net
    income and pro forma earnings per share would have been as follows:
   
<TABLE>
<CAPTION>
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                            1995           1996          1997
                                                          --------       --------      --------
<S>                                                     <C>            <C>
Net income - as reported                                  $ 4,898        $ 5,909       $ 12,436
Net income - pro forma                                      4,824          5,752         12,158

Diluted earnings per share - as reported                  $  1.09        $  1.27       $   2.39
Diluted earnings per share - pro forma                       1.08           1.23           2.34

</TABLE>

    The pro forma effect on net income for 1995, 1996 and 1997 is not
    representative of the pro forma effect in future years because compensation
    expense related to grants made in prior years is not considered.  For
    purposes of the above pro forma information, the fair value of each option
    grant was estimated at the date of grant using the Black-Scholes option
    pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>

                                       1995           1996           1997
                                     --------       --------       --------
<S>                                 <C>            <C>            <C>
Risk-free interest rate                7.20%          6.33%          6.14%
Expected life (in years)               7.50           7.50           6.16
Expected volatility                   60.60%         60.60%         56.07%
Expected dividend yield                0.00%          0.00%          0.00%

</TABLE>

15. 401(K) DEFINED CONTRIBUTION PLAN:

    The Company sponsors a 401(k) defined contribution plan covering
    substantially all full-time employees. The plan has a one-quarter match of
    participants' contributions up to 4% of compensation.   In addition,
    contributions may be made at the discretion of the Company's Board of
    Directors and are allocated ratably based on each participant's compensation
    to total compensation.  Participants may make salary deferral contributions
    up to the lesser of 16% of their regular monthly compensation or the
    statutory limit.  Company contributions to the plan totaled $439,000 in
    1997 ($49,000 in 1995 and $370,000 in 1996).


                                      40
<PAGE>

                            MONACO COACH CORPORATION
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

16. FAIR VALUE OF FINANCIAL INSTRUMENTS:

    The fair value of the Company's financial instruments are presented below.
    The estimates require subjective judgments and are approximate.  Changes in
    methodologies and assumptions could significantly affect estimates.
   
    LONG-TERM RECEIVABLES  - The estimated fair value approximates the carrying
    value of $1.7 million and $2.7 million at December 28, 1996 and January 3,
    1998, respectively.
   
    LONG-TERM BORROWINGS  - The estimated fair values of long-term borrowings
    were determined by discounting estimated future cash flows using the
    Company's incremental borrowing rate.  Based on this calculation, the
    estimated fair value approximates the carrying value of $18.5 million and
    $15.9 million at December 28, 1996 and January 3, 1998, respectively.
   
    SHORT-TERM BORROWINGS  - The carrying amount outstanding against the
    revolving line of credit is $3.8 million and $9.4 million at December 28,
    1996 and January 3, 1998, respectively, which approximates the estimated
    fair value.  The carrying amount on other outstanding short-term loans of
    $6.2 million at December 28, 1996 also approximated market.
   
17. COMMITMENTS AND CONTINGENCIES:

    REPURCHASE AGREEMENTS
   
    Substantially all of the Company's sales to independent dealers are made on
    terms requiring cash on delivery.  The Company does not finance dealer
    purchases.  However, most purchases are financed on a "floor plan" basis by
    a bank or finance company which lends the dealer all or substantially all of
    the wholesale purchase price and retains a security interest in the
    vehicles.  Upon request of a lending institution financing a dealer's
    purchases of the Company's product, the Company will execute a repurchase
    agreement.  These agreements provide that, for up to 18 months after a unit
    is shipped, the Company will repurchase a dealer's inventory in the event of
    a default by a dealer to its lender.
   
    The Company's liability under repurchase agreements is limited to the unpaid
    balance owed to the lending institution by reason of its extending credit to
    the dealer to purchase its vehicles, reduced by the resale value of vehicles
    which may be repurchased.  The risk of loss is spread over numerous dealers
    and financial institutions.
   
    The Company does not anticipate any significant losses will be incurred
    under these agreements.  No significant charges were incurred during the
    years ended December 30, 1995, December 28, 1996 or January 3, 1998.  The
    approximate amount subject to contingent repurchase obligations arising from
    these agreements at January 3, 1998 is $141.5 million.  If the Company were
    obligated to repurchase a significant number of recreational vehicles in the
    future, losses and reduction in new recreational vehicle sales could result.

    Continued

                                      41
<PAGE>

                           MONACO COACH CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

17. COMMITMENTS AND CONTINGENCIES, Continued:

    OBLIGATION TO PURCHASE CONSIGNED INVENTORIES

    The Company obtains vehicle chassis for certain of its recreational and
    specialized vehicle products directly from automobile manufacturers under
    converter pool agreements.  The agreements generally provide that the
    manufacturer will provide a supply of chassis at the Company's various
    production facilities under the terms and conditions as set forth in the
    agreement.  Chassis are accounted for as consigned inventory until either
    assigned to a unit in the production process or 90 days have passed.  At the
    earlier of these dates, the Company is obligated to purchase the chassis and
    it is recorded as inventory.  Chassis inventory, accounted for as consigned
    inventory, was approximated $3.0 million at December 28, 1996 and $2.0
    million at January 3, 1998.
   
    WARRANTY AND PRODUCT LIABILITY
   
    The Company is subject to regulations which may require the Company to
    recall products with design or safety defects, and such recall could have a
    material adverse effect on the Company's business, results of operations and
    financial condition.
   
    The Company has from time to time been subject to product liability claims.
    To date, the Company has been successful in obtaining product liability
    insurance on terms the Company considers acceptable.  The terms of the
    policy contain a self-insured retention amount per occurrence and an annual
    aggregate "stop loss" amount.  In addition, the Company has obtained excess
    umbrella policies.  There can be no assurance that the Company will be able
    to obtain insurance coverage in the future at acceptable levels or that the
    cost of insurance will be reasonable.  Furthermore, successful assertion
    against the Company of one or a series of large uninsured claims, or of one
    or a series of claims exceeding any insurance coverage, could have a
    materially adverse effect on the Company's business, results of operations
    and financial condition.
   
    LITIGATION
   
    The Company is involved in various legal proceedings which are incidental to
    the industry and for which certain matters are covered in whole or in part
    by insurance or, otherwise, the Company has recorded accruals for estimated
    settlements.  Management believes that any liability which may result from
    these proceedings will not have a material adverse effect on the Company's
    consolidated financial statements.
   
    OTHER COMMITMENTS
   
    In 1997, the Company began construction of a new paint facility in Indiana.
    The new facility is expected to be completed in 1998 at a total estimated
    cost of $8.6 million.  At January 3, 1998, the Company had incurred
    approximately $5.8 million in expenditures related to construction in
    progress on the facility.


                                      42
<PAGE>

18. STOCK OFFERING

    On June 23, 1997, the Company completed a secondary public offering of
    800,000 new shares of its common stock.  In connection with the offering,
    65,217 shares of preferred stock were converted into 230,767 shares of
    common stock.  The fair value of these shares at the conversion date was
    $5.1 million, based upon the closing price of the Common Stock on June 23,
    1997 as reported on the Nasdaq National Market.  The net proceeds of $15.4
    million received by the Company were used to reduce amounts outstanding
    under short-term borrowings with the remainder being added to working
    capital.
   
19. QUARTERLY RESULTS (UNAUDITED):

<TABLE>
<CAPTION>

                                                             1st            2nd            3rd            4th
YEAR ENDED DECEMBER 28, 1996(a)                          Quarter        Quarter        Quarter        Quarter
                                                     ---------------------------------------------------------
(In thousands, except per share data)
<S>                                                      <C>           <C>            <C>             <C>
Net sales                                               $ 61,964      $ 106,729      $ 102,065       $ 94,880
Gross profit                                               6,727         12,408         14,944         13,650
Operating income                                           1,930          2,934          4,109          4,768
Net income                                                   634            891          1,957          2,427
Net income attributable to common stock                      634            828          1,894          2,394
                                                     ---------------------------------------------------------
Earnings per common share:
   Basic                                                $   0.14      $    0.19      $    0.43       $   0.54
   Diluted                                              $   0.14      $    0.19      $    0.42       $   0.51
                                                     ---------------------------------------------------------
--------------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

                                                             1st            2nd            3rd            4th
YEAR ENDED JANUARY 3, 1996                               Quarter        Quarter        Quarter        Quarter
                                                     ---------------------------------------------------------
(In thousands, except per share data)
<S>                                                    <C>            <C>            <C>            <C>       
Net sales                                              $ 109,024      $ 105,981      $ 105,796      $ 121,094
Gross profit                                              15,034         14,329         14,084         16,081
Operating income                                           5,391          5,341          5,361          6,534
Net income                                                 2,697          2,816          3,159          3,764
Net income attributable to common stock                    2,672          2,524          3,159          3,764
                                                     ---------------------------------------------------------
Earnings per common share:
   Basic                                               $    0.60      $    0.55      $    0.58      $    0.68
   Diluted                                             $    0.57      $    0.55      $    0.56      $    0.67
                                                     ---------------------------------------------------------

</TABLE>

(a)  Includes results of operations of Holiday Rambler and Holiday World after
     March 4, 1996.


                                      43
<PAGE>

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

     Not applicable.








                                      44
<PAGE>

                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

     Information required by this Item regarding directors and executive 
officers set forth under the captions "Proposal 1 - Election of Directors" 
and "Compliance with Section 16(a) of the Securities Exchange Act" in the 
Registrant's definitive Proxy Statement is incorporated herein by reference.
     
ITEM 11.  EXECUTIVE COMPENSATION

     Information required by this Item regarding compensation of the 
Registrant's directors and executive officers set forth under the captions 
"Proposal 1 - Election of Directors - Compensation of Directors" and 
"Additional Information - Executive Compensation" in the Proxy Statement is 
incorporated herein by reference.
     
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information required by this Item regarding beneficial ownership of the 
Registrant's Common Stock by certain beneficial owners and management of the 
Registrant set forth under the caption "Security Ownership of Certain 
Beneficial Owners and Management" in the Proxy Statement is incorporated 
herein by reference.
     
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information required by this Item regarding certain relationships and 
related transactions with management set forth under the caption "Additional 
Information - Compensation Committee Interlocks and Insider Participation" in 
the Proxy Statement is incorporated herein by reference.




                                      45

<PAGE>

                                   PART IV

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

     (a)  The following documents are filed as part of this Report on Form 10-K:
     
     1.   FINANCIAL STATEMENTS.  The Consolidated Financial Statements of 
Monaco Coach Corporation and the Report of Independent Accountants are filed 
in Item 8 within this Annual Report on Form 10-K.
     
     2.   FINANCIAL STATEMENT SCHEDULES.  The following financial statement 
schedule of Monaco Coach Corporation for the fiscal year ended December 30, 
1995, December 28, 1996 and January 3, 1998 is filed as part of this Annual 
Report on Form 10-K and should be read in conjunction with the Consolidated 
Financial Statements, and related notes thereto, of Monaco Coach Corporation.


     
          Schedule                                            Page
          --------                                            ----
             II        Valuation and Qualifying Accounts       50


Schedules not listed above have been omitted because they are not applicable 
or are not required or the information required to be set forth therein is 
included in the consolidated financial statements or notes thereto.

     3.   EXHIBITS.  The following Exhibits are filed as part of, or 
incorporated by reference into, this Report on Form 10-K.
     
2.1(1)    Asset Purchase Agreement dated February 4, 1993 between the
          Registrant, Warrick Industries, Inc., William L. Warrick, Arlen J.
          Paul, Kay L. Toolson, Jay M. DeVoss and James A. Krider.

2.2(1)    First Amendment to Asset Purchase Agreement dated March 5, 1993
          between the Registrant, Warrick Industries, Inc., William L. Warrick,
          Arlen J. Paul, Kay L. Toolson, Jay M. DeVoss and James A. Krider.

2.3(1)    Assumption Agreement dated March 5, 1993 between the Registrant and
          Warrick Industries, Inc.

2.4(1)    Letter Agreement dated August 10, 1993 between the Registrant,
          Warrick Industries, Inc., William L. Warrick, Arlen J. Paul, Jay M.
          DeVoss, James A. Krider and Kay L. Toolson.

2.5(2)    Asset Purchase Agreement dated as of January 21, 1996 among Harley-
          Davidson, Inc., Holiday Rambler LLC, State Road Properties L.P., and
          the Registrant (the "HR Asset Purchase Agreement").

2.6(2)    Amendment No. 1 to the HR Asset Purchase Agreement dated as of March
          4, 1996 among Harley-Davidson, Inc., Holiday Rambler LLC, State Road
          Properties L.P., and the Registrant.

2.7(2)    Asset Purchase Agreement dated as of March 4, 1996 among Harley-
          Davidson, Inc., Holiday Holding Corp., Holiday World, Inc., a
          California corporation, Holiday World, Inc., a Texas corporation,
          Holiday World, Inc., a Florida corporation, Holiday World, Inc., an
          Oregon corporation, Holiday World, Inc., an Indiana corporation,
          Holiday World, Inc., a Washington corporation, Holiday World, Inc., a
          New Mexico corporation, the Registrant and MCC Acquisition
          Corporation.

2.8(2)    Subordinated Promissory Note, dated as of March 4, 1996, issued to
          Holiday Holding Corp. by MCC Acquisition Corporation.

3.1(3)    Amended and Restated Certificate of Incorporation of the Registrant.




                                      46



<PAGE>

3.2(3)    Bylaws of Registrant, as amended to date.

3.3(2)    Certificate of Designations of Rights, Preferences and Privileges of
          Series A Convertible Preferred Stock of the Registrant.

10.1(1)   Form of Indemnification Agreement for directors and executive
          officers.

10.2(1)+  1993 Incentive Stock Option Plan and form of option agreement
          thereunder.

10.3(1)+  1993 Director Option Plan.

10.4(1)+  1993 Employee Stock Purchase Plan and form of subscription agreement
          thereunder.

10.5(1)   Amended and Restated Management Agreement dated August 10, 1993
          between the Registrant and Cariad Capital, Inc.

10.6(1)   Registration Agreement dated March 5, 1993 between the Registrant,
          Liberty Investment Partners, II and SBA.

10.7(1)   Registration Agreement dated March 5, 1993 among the Registrant,
          Monaco Capital Partners, Tucker Anthony Holding Corporation and
          certain other stockholders of the Registrant.

10.8(2)   Credit Agreement dated as of March 5, 1996 among BT Commercial
          Corporation, Deutsche Financial Services Corporation, Nationsbank of
          Texas, N.A., LaSalle National Bank and Monaco Coach Corporation.

10.9(2)   Registration Rights Agreement dated as of March 4, 1996 among Holiday
          Rambler LLC and Monaco Coach Corporation.

10.10(4)  Agreement of Lease dated March 4, 1996, with First Amendment dated as
          of March 4, 1996, pertaining to 3 State Road 19, Wakarusa, Indiana
          46573.

10.11(4)  Agreement of Lease dated March 4, 1996, with First Amendment dated as
          of March 4, 1996, pertaining to 5 State Road 19, Wakarusa, Indiana
          46573.

10.12(4)  Agreement of Lease dated March 4, 1996, with First Amendment dated as
          of March 4, 1996, pertaining to 6 State Road 19, Wakarusa, Indiana
          46573.

10.13(4)  Agreement of Lease dated March 4, 1996, with First Amendment dated as
          of March 4, 1996, pertaining to 7 State Road 19, Wakarusa, Indiana
          46573.

10.14(4)  Agreement of Lease dated March 4, 1996 pertaining to 8 State Road
          19, Wakarusa, Indiana 46573.

10.15(4)  Form of Lease dated April 1, 1997 pertaining to 5280 High Banks
          Road, Springfield, Oregon.

10.16(4)  Lease Agreement dated April 1, 1995 pertaining to 1330 Wade Drive,
          Elkhart, Indiana.

11.1      Computation of earnings per share (see Note 11 of Notes to
          Consolidated Financial Statements included in Item 8 hereto).

21.1      Subsidiaries of Registrant.

23.1      Consent of Independent Accountants.




                                      47
<PAGE>

24.1      Power of Attorney (included on the signature pages hereof).

27        Financial Data Schedule (see page 51).


------
(1)       Incorporated by reference to exhibits filed in response to Item
          16(a), "Exhibits," of the Company's Registration Statement on Form 
          S-1 (File No. 33-67374) declared effective on September 23, 1993.

(2)       Incorporated by reference to exhibits filed in response to Item 7,
          "Financial Statements and Exhibits," of the Company's Current Report
          on Form 8-K dated March 4, 1996.

(3)       Incorporated by reference to exhibits filed in response to Item
          14(a), "Exhibits, Financial Statement Schedules, and Reports on 
          Form-8-K," of the Company's Form 10-K Annual Report for the year 
          ended January 1, 1994.

(4)       Incorporated by reference to exhibits filed in response to Item
          16(a), "Exhibits," of the Company's Registration Statement on Form 
          S-2 (File No. 333-23591) declared effective on June 17, 1997.

+         The item listed is a compensatory plan.

     (b)  REPORTS ON FORM 8-K.  No reports on Form 8-K were filed by the 
Company during the quarter ended January 3, 1998.




                                      48
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K 
to be signed on its behalf by the undersigned, thereunto duly authorized.


     April 3, 1998                     MONACO COACH CORPORATION

                                       By: /s/ Kay L. Toolson
                                          -----------------------------
                                               Kay L. Toolson
                                               Chief Executive Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature 
appears below constitutes and appoints Kay L. Toolson and John W. Nepute, and 
each of them, jointly and severally, his attorneys-in-fact, each with the 
power of substitution, for him in any and all capacities, to sign any and all 
amendments to this Report on Form 10-K and to file the same, with exhibits 
thereto and other documents in connection therewith, with the Securities and 
Exchange Commission, hereby ratifying and confirming all that each of said 
attorneys-in-fact, or his substitute or substitutes, may do or cause to be 
done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, 
this Report on 10-K has been signed by the following persons in the 
capacities and on the dates indicated:

<TABLE>
<CAPTION>

              Signature                  Title                                                      Date 
-----------------------------------------------------------------------------------------------------------------
<S>                    <C>                                                                  <C>
/s/ Kay L. Toolson        Chairman of the Board and Chief Executive
-----------------------   Officer (Principal Executive Officer)                               April 3, 1998
(Kay L. Toolson)          

/s/ John W. Nepute        Vice President of Finance and Chief Financial
-----------------------   Officer (Principal Financial and Accounting                         April 3, 1998
(John W. Nepute)          Officer)

/s/ Michael J. Kluger     Director                                                            April 3, 1998
-----------------------
(Michael J. Kluger)

/s/ Lee A. Posey          Director                                                            April 3, 1998
-----------------------
(Lee A. Posey)

/s/ Carl E. Ring, Jr.     Director                                                            April 3, 1998
-----------------------
(Carl E. Ring, Jr.)

/s/ Richard A. Rouse      Director                                                            April 3, 1998
-----------------------
(Richard A. Rouse)

/s/ Roger A. Vandenberg   Director                                                            April 3, 1998
-----------------------
(Roger A. Vandenberg)

</TABLE>

                                      49
<PAGE>

                           MONACO COACH CORPORATION
                                       
               SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

                                (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                       Liability
                                                        Balance at     Assumed as      Charge                        Balance at
                                                        Beginning    as part of the      to            Claims          End of
Description                                             of Period      Acquisition     Expense          Paid           Period
-----------                                             ----------   --------------    -------         ------        ----------
<S>                                                     <C>         <C>              <C>            <C>            <C>
Fiscal year ended December 30, 1995:
    Reserve for warranty and other claims..............    $  765                      $  3,245       $  2,873         $1,137(1)
                                                           ------                      --------       --------         ------
                                                           ------                      --------       --------         ------
Fiscal year ended December 28, 1996:
    Reserve for warranty...............................    $1,037         $6,593       $  7,126       $  5,965         $8,791
                                                           ------         ------       --------       --------         ------
                                                           ------         ------       --------       --------         ------

    Reserve for Product Liability......................    $  100         $1,760       $  3,404       $    757         $4,507
                                                           ------         ------       --------       --------         ------
                                                           ------         ------       --------       --------         ------
Fiscal year ended January 3, 1998:

    Reserve for warranty...............................    $8,791                      $ 14,697       $ 13,507         $9,981
                                                           ------                      --------       --------         ------
                                                           ------                      --------       --------         ------

    Reserve for Product Liability......................    $4,507                      $  3,929       $  3,177         $5,259
                                                           ------                      --------       --------         ------
                                                           ------                      --------       --------         ------

-------------------------------------------
(1) Includes warranty and product liability.

</TABLE>



                                      50
<PAGE>

             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES

     Our report on the consolidated financial statements of Monaco Coach 
Corporation is included on page 21 of this Form 10-K.  In connection with our 
audits of such financial statements, we have also audited the related 
financial statement schedule on page 50 of this Form 10-K.

     In our opinion, the financial statement schedule referred to above, when 
considered in relation to the financial statements taken as a whole, presents 
fairly, in all material respects, the information required to be included 
therein.

                                       /s/  Coopers & Lybrand L.L.P.


Eugene, Oregon
January 30, 1998, except for stock split
 information in Note 1, as to which the
 date is March 16, 1998.



                                      51

<PAGE>

<TABLE>
<CAPTION>
                                  EXHIBIT INDEX

 Exhibit                             
  No.                                Exhibit
---------  --------------------------------------------------------------------
<S>       <C>
2.1(1)     Asset Purchase Agreement dated February 4, 1993 between the
           Registrant, Warrick Industries, Inc., William L. Warrick, Arlen J. 
           Paul, Kay L. Toolson, Jay M. DeVoss and James A. Krider.

2.2(1)     First Amendment to Asset Purchase Agreement dated March 5, 1993
           between the Registrant, Warrick Industries, Inc., William L. Warrick,
           Arlen J. Paul, Kay L. Toolson, Jay M. DeVoss and James A. Krider.

2.3(1)     Assumption Agreement dated March 5, 1993 between the Registrant and
           Warrick Industries, Inc.

2.4(1)     Letter Agreement dated August 10, 1993 between the Registrant, 
           Warrick Industries, Inc., William L. Warrick, Arlen J. Paul, Jay M.
           DeVoss, James A. Krider and Kay L. Toolson.

2.5(2)     Asset Purchase Agreement dated as of January 21, 1996 among Harley-
           Davidson, Inc., Holiday Rambler LLC, State Road Properties L.P., and
           the Registrant (the "HR Asset Purchase Agreement").

2.6(2)     Amendment No. 1 to the HR Asset Purchase Agreement dated as of March
           4, 1996 among Harley-Davidson, Inc., Holiday Rambler LLC, State Road
           Properties L.P., and the Registrant.

2.7(2)     Asset Purchase Agreement dated as of March 4, 1996 among Harley-
           Davidson, Inc., Holiday Holding Corp., Holiday World, Inc., a 
           California corporation, Holiday World, Inc., a Texas corporation, 
           Holiday World, Inc., a Florida corporation, Holiday World, Inc., an
           Oregon corporation, Holiday World, Inc., an Indiana corporation,
           Holiday World, Inc., a Washington corporation, Holiday World, Inc., a
           New Mexico corporation, the Registrant and MCC Acquisition Corporation.

2.8(2)     Subordinated Promissory Note, dated as of March 4, 1996, issued to
           Holiday Holding Corp. by MCC Acquisition Corporation.

3.1(3)     Amended and Restated Certificate of Incorporation of the Registrant.

3.2(3)     Bylaws of Registrant, as amended to date.

3.3(2)     Certificate of Designations of Rights, Preferences and Privileges of
           Series A Convertible Preferred Stock of the Registrant.

10.1(1)    Form of Indemnification Agreement for directors and executive
           officers.

10.2(1)+   1993 Incentive Stock Option Plan and form of option agreement
           thereunder.

10.3(1)+   1993 Director Option Plan.

10.4(1)+   1993 Employee Stock Purchase Plan and form of subscription agreement
           thereunder.

10.5(1)    Amended and Restated Management Agreement dated August 10, 1993
           between the Registrant and Cariad Capital, Inc.

10.6(1)    Registration Agreement dated March 5, 1993 between the Registrant,
           Liberty Investment Partners, II and SBA.

10.7(1)    Registration Agreement dated March 5, 1993 among the Registrant,
           Monaco Capital Partners, Tucker Anthony Holding Corporation and 
           certain other stockholders of the Registrant.
</TABLE>

                                      52
<PAGE>
<TABLE>
<S>       <C>
10.8(2)    Credit Agreement dated as of March 5, 1996 among BT Commercial
           Corporation, Deutsche Financial Services Corporation, Nationsbank of
           Texas, N.A., LaSalle National Bank and Monaco Coach Corporation.

10.9(2)    Registration Rights Agreement dated as of March 4, 1996 among Holiday
           Rambler LLC and Monaco Coach Corporation. 

10.10(4)   Agreement of Lease dated March 4, 1996, with First Amendment dated
           as of March 4, 1996, pertaining to 3 State Road 19, Wakarusa, Indiana
           46573.

10.11(4)   Agreement of Lease dated March 4, 1996, with First Amendment dated as
           of March 4, 1996, pertaining to 5 State Road 19, Wakarusa, Indiana 
           46573.

10.12(4)   Agreement of Lease dated March 4, 1996, with First Amendment dated as
           of March 4, 1996, pertaining to 6 State Road 19, Wakarusa, Indiana 
           46573.

10.13(4)   Agreement of Lease dated March 4, 1996, with First Amendment dated as
           of March 4, 1996, pertaining to 7 State Road 19, Wakarusa, Indiana 
           46573.

10.14(4)   Agreement of Lease dated March 4, 1996 pertaining to 8 State Road 19,
           Wakarusa, Indiana 46573.

10.15(4)   Form of Lease dated April 1, 1997 pertaining to 5280 High Banks Road,
           Springfield, Oregon.

10.16(4)   Lease Agreement dated April 1, 1995 pertaining to 1330 Wade Drive,
           Elkhart, Indiana.

11.1       Computation of earnings per share (see Note 11 of Notes to 
           Consolidated Financial Statements included in Item 8 hereto).

21.1       Subsidiaries of Registrant.

23.1       Consent of Independent Accountants.

24.1       Power of Attorney (included on the signature pages hereof).

27         Financial Data Schedule
</TABLE>

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

(1)  Incorporated by reference to exhibits filed in response to Item 16(a),
     "Exhibits," of the Company's Registration Statement on Form S-1 (File No. 
     33-67374) declared effective on September 23, 1993.

(2)  Incorporated by reference to exhibits filed in response to Item 7,
     "Financial Statements and Exhibits," of the Company's Current Report on 
     Form 8-K dated March 4, 1996.

(3)  Incorporated by reference to exhibits filed in response to Item 14(a),
     "Exhibits, Financial Statement Schedules, and Reports on Form-8-K," of 
     the Company's Form 10-K Annual Report for the year ended January 1, 1994.

(4)  Incorporated by reference to exhibits filed in response to Item 16(a),
     "Exhibits," of the Company's Registration Statement on Form S-2 (File No. 
     333-23591) declared effective on June 17, 1997.

+  The item listed is a compensatory plan.


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