<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 2, 1999
                                       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            (I.R.S. Employer Identification No.)
of incorporation or organization)
                              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 ___

  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 
March 31, 1999 as reported on the New York Stock Exchange, was approximately 
$220.5 million. 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 March 31, 1999, the Registrant had 12,496,050 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 19, 1999 (the "Proxy Statement") is incorporated
by reference in Part III of this Form 10-K to the extent stated therein.
                     --------------------------------------

This document consists of 52 pages.  The Exhibit Index appears at page 49 .

<PAGE>

                                     INDEX

<TABLE>
<CAPTION>

                                     PART I
  <S>           <C>                                                    <C>
  ITEM 1.       BUSINESS                                                3
  ITEM 2.       PROPERTIES                                             10
  ITEM 3.       LEGAL PROCEEDINGS                                      11
  ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS    11

                                     PART II

  ITEM 5.       MARKET FOR THE REGISTRANT'S COMMON STOCK AND
                     RELATED STOCKHOLDER MATTERS                       11
  ITEM 6.       SELECTED FINANCIAL DATA                                12
  ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     FINANCIAL CONDITION AND RESULTS OF OPERATIONS     14
  ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES
                     ABOUT MARKET RISK                                 22
  ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA            23
  ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                     ACCOUNTING AND FINANCIAL DISCLOSURE               43

                                     PART III

  ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT         44
  ITEM 11.      EXECUTIVE COMPENSATION                                 44
  ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                     OWNERS AND MANAGEMENT                             44
  ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS         44

                                     PART IV

  ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
                     REPORTS ON FORM 8-K                               45

  SIGNATURES                                                           47
</TABLE>

                                       2

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                                     PART I

        This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements include the
statements below marked with an asterisk (*). In addition, the Company may from
time to time make oral forward-looking statements through statements that
include the words "believes", "expects", "anticipates" or similar expressions.
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, including those set forth below under "Factors That
May Affect Future Operating Results" and "Impact of the Year 2000 Issue" within
Managagement's Discussion and Analysis of Financial Condition and Results of
Operations. The Company cautions the reader, however, that these factors may not
be exhaustive.


ITEM 1.  BUSINESS

        Monaco Coach Corporation ("the Company") is a leading manufacturer of
premium Class A motor coaches and towable recreational vehicles. The Company's
product line consists of thirteen models of motor coaches and seven models of
towables (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 $65,000 to $900,000 for motor
coaches and from $15,000 to $70,000 for towables. Based upon retail
registrations in 1998, the Company believes it had a 23% share of the market for
diesel Class A motor coaches, a 6.3% share of the market for mid-to-high end
fifth wheel trailers (units with retail prices above $24,000) and a 24.5% share
of the market for mid-to-high end travel trailers (units with retail prices
above $20,000). The Company's products are sold through an extensive network of
263 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. The Company believes that developing
relationships with a broader base of first-time buyers, coupled with the
Company's strong emphasis on quality, customer service and design innovation,
will foster brand loyalty and increase the likelihood that, over time, more
customers will trade-up through the Company's line of products. Attracting
larger numbers of first-time buyers is important to the Company because of the
Company's belief that many recreational vehicle customers purchase multiple
recreational vehicles during their lifetime.


PRODUCTS

        The Company currently manufactures thirteen 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 in any other segment of the recreational
vehicle industry. In December 1997, the Company introduced the Diplomat, a
low-end diesel motor coach under the Monaco brand name and introduced two new
gasoline powered models, the La Palma, under the Monaco label, and the Admiral,
under the Holiday Rambler brand, in 1998. All three of these products were

                                       3

<PAGE>

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 product offerings as of March 1, 1999:


                            COMPANY MOTOR COACH PRODUCTS

<TABLE>
<CAPTION>

                                    CURRENT SUGGESTED 
MODEL                               RETAIL PRICE RANGE   BRAND
----------------------------------  ------------------   --------------------
<S>                                 <C>                  <C>
Royale Coach......................  $550,000-$900,000    Monaco
Signature Series..................  $365,000-$415,000    Monaco
Executive.........................  $265,000-$340,000    Monaco
Navigator.........................  $260,000-$330,000    Holiday Rambler
Dynasty...........................  $215,000-$270,000    Monaco
Imperial..........................  $190,000-$230,000    Holiday Rambler
Windsor...........................  $165,000-$200,000    Monaco
Endeavor-Diesel...................  $145,000-$155,000    Holiday Rambler
Diplomat..........................  $140,000-$150,000    Monaco
Endeavor-Gasoline.................  $ 80,000-$105,000    Holiday Rambler
Vacationer........................  $ 75,000-$ 85,000    Holiday Rambler
La Palma..........................  $ 70,000-$ 90,000    Monaco
Admiral...........................  $ 65,000-$ 85,000    Holiday Rambler


                              COMPANY TOWABLE PRODUCTS

<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 1998, the average unit wholesale selling prices of the Company's
motor coaches, fifth wheel trailers and travel trailers were approximately
$113,400, $29,900 and $22,000, 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.

                                       4

<PAGE>

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

        The Company expanded its dealer network over the past year from 208
dealerships at the beginning of 1998 to 263 dealerships primarily located in the
United States and Canada at January 2, 1999. 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 continue 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 Towables line.* The Company maintains an internal sales
organization consisting of 22 account executives who service the Company's
dealer network.

        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.

        As a result of the Holiday Acquisition, the Company acquired ten retail
dealerships (the "Holiday World Dealerships"). The Company subsequently sold all
of the Holiday World Dealerships in 1996 and 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. 

                                       5

<PAGE>

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 15,000
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 1800 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 up to one year from 
the date of retail sale (five years for the front and sidewall frame 
structure). In addition, customers are protected by the warranties of major 
component suppliers such as those of Cummins Engine Company, Inc. ("Cummins") 
(diesel engines), Spicer Heavy Axle & Brake Division of Dana Corporation 
("Dana") (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 parts 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 2, 1999, 
the Company had 263 dealerships providing service to owners of the Company's 
products. In addition, 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 had approximately 168 employees in 
customer service at January 2, 1999. 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.

         The Company is currently expanding its on-line dealer support network
to assist its service personnel and dealers in providing better service to the
Company's customers. Service personnel and dealerships will be able to access
information relating to specific models and sales orders, file warranty claims
and track their status, and view and order parts through an electronic parts
catalog.

                                       6
<PAGE>

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 Holiday Rambler 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 completed an upgrade and expansion of its Wakarusa motorized
facility in the first quarter of 1998 and is currently in the process of
upgrading and expanding its Coburg motorized facility to allow increased
production of its current mix of products as well as new capacity to build its
low-end diesel and gasoline powered motor coaches. The Company believes this
expansion will be completed by the fourth quarter of 1999.* The Company's motor
coach production capacity at the end of 1998 was three units per day at its
Coburg facility and 25 units per day at its Wakarusa facility. The Company
believes that when the Coburg expansion is complete motor coach production
capacity in Oregon will increase to 23 units per day.* The Company believes that
this expanded manufacturing capacity will free the Company from capacity
constraints on its motor coaches and allow the Company to gradually increase its
overall production volumes for motor coaches, consistent with anticipated market
demand.*

        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 enabled the Company to consolidate
all Indiana towable production into that facility in June 1998. This allowed the
Company to vacate existing leased towable manufacturing space in Wakarusa prior
to the expiration of that lease in July 1998. Subsequent to the consolidation
the Company expanded and upgraded the Elkhart towable facility. The Company's
current towables production capacity is a combined 21 units per day at its
Springfield and Elkhart facilities.

        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 two 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, Workhorse, Cummins, Dana, 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 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. In 1997, Allison put all chassis manufacturers on
allocation with respect to one of the transmissions the Company uses. The
Company presently believes that its allocation is 

                                       7

<PAGE>

sufficient to enable the unit volume increases that are planned for models 
using that transmission and does not forsee 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 2, 1999, the Company's backlog of orders
was $233.2 million compared to $170.8 million at January 3, 1998. 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. Many of the Company's competitors have significant financial
resources and extensive marketing capabilities. 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.

        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.

                                       8
<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 existing and new operations. The air permits have either been issued or
are in the process of being issued 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 cleanup 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 completed
all investigation and remediation at the Wakarusa and Elkhart sites and has
recommended to the relevant Indiana regulatory authority that no further action
be taken because all remaining contaminants are below the state's cleanup
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.* In Florida, because of recent regulatory
changes, the Company has submitted a recommendation to the relevant state
regulatory authority that no further action be taken because all remaining
contaminants are below the state's cleanup standards. The Company currently
expects that the regulatory 

                                       9

<PAGE>

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.* 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 2, 1999, the Company had 3,043 employees, including 2,547
in production, 62 in sales, 168 in service and 266 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
resulting from labor issues. 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 and
planned manufacturing facilities:

<TABLE>
<CAPTION>

                                                    APPROXIMATE
MANUFACTURING FACILITY               OWNED/LEASED  SQUARE FOOTAGE    PRODUCTS MANUFACTURED
-----------------------------------  ------------  ---------------------------------------
<S>                                  <C>           <C>               <C>
Coburg, Oregon.....................     Owned          330,000         Motor Coaches
Elkhart, Indiana...................     Owned          362,000         Towables
Elkhart, Indiana...................     Owned           30,000         Bus Conversions
Wakarusa, Indiana..................     Owned        1,154,000         Motor Coaches
Nappanee, Indiana..................     Owned          130,000         Wood Components
Springfield, Oregon................     Leased         100,000         Towables
</TABLE>

        The Company believes that after the recent expansion of its motor coach
and towable facilities in Indiana, its existing facilities, along with the
future expansion in Coburg, will be 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.*

                                       10

<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. In addition, in connection
with the Holiday Acquisition, the Company assumed most of the liabilities of
that business, including product liability and warranty claims. 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.


                                     PART II

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

        The Company's Common Stock is traded on the New York Stock Exchange
under the symbol "MNC." The following table sets forth for the periods indicated
the high and low closing sale prices for the Common Stock (rounded to the
nearest $.01 per share).

<TABLE>
<CAPTION>

                                      HIGH                LOW
<S>                                  <C>                 <C>
1997
    First Quarter                    $ 9.56              $ 6.89
    Second Quarter                   $10.33              $ 7.33
    Third Quarter                    $11.44              $ 9.33
    Fourth Quarter                   $11.44              $ 9.89

1998
    First Quarter                    $17.78              $11.22
    Second Quarter                   $19.75              $15.67
    Third Quarter                    $19.58              $13.08
    Fourth Quarter                   $26.50              $14.25
</TABLE>

        On March 31, 1999 the last reported sale price of the Company's 
Common Stock on the New York Stock Exchange was $23.0625. As of March 31, 
1999, there were approximately 295 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 lenders' 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.

                                       11

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The Consolidated Statements of Income Data set forth below with respect
to fiscal years 1996, 1997 and 1998, and the Consolidated Balance Sheet Data at
January 3, 1998 and January 2, 1999, 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 1994 and 1995 and the Consolidated Balance Sheet Data at December 31,
1994, December 30, 1995 and December 28, 1996 are derived from audited financial
statements of the Company, which are not included in this Annual Report on Form
10-K.

        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.

                                       12

<PAGE>

FIVE-YEAR SELECTED FINANCIAL DATA

The following table sets forth financial data of Monaco Coach Corporation for
the years indicated (in thousands of dollars, except share and per share data
and consolidated operating data).

<TABLE>
<CAPTION>

                                                                          Fiscal Year
                                            -------------------------------------------------------------------------
                                                1994          1995          1996 (1)       1997 (1)         1998
                                            -------------------------------------------------------------------------
<S>                                         <C>               <C>           <C>            <C>              <C>
CONSOLIDATED STATEMENTS OF INCOME DATA:
Net sales                                       $107,300      $141,611       $365,638       $441,895        $594,802
Cost of sales                                     89,894       124,592        317,909(2)     382,367         512,570
---------------------------------------------------------------------------------------------------------------------
     Gross profit                                 17,406        17,019         47,729         59,528          82,232
Selling, general and
     administrative expenses                       7,256         8,147         33,371         36,307          41,571
Amortization of goodwill                             517           517            617            594             645
---------------------------------------------------------------------------------------------------------------------
     Operating income                              9,633         8,355         13,741         22,627          40,016
Other expense (income), net                         (153)           40           (244)          (468)           (607)
Interest expense                                      69           298          3,914          2,379           1,861
Gain on sale of dealership assets                                                                539
---------------------------------------------------------------------------------------------------------------------
     Income before provision
          for income taxes                         9,717         8,017         10,071         21,255          38,762
Provision for income taxes                         3,776         3,119          4,162          8,819          16,093
---------------------------------------------------------------------------------------------------------------------
     Net income                                    5,941         4,898          5,909         12,436          22,669
Redeemable preferred stock dividends                                              (75)
Accretion of redeemable preferred stock                                           (84)          (317)
---------------------------------------------------------------------------------------------------------------------
Net income attributable to common stock            5,941         4,898          5,750         12,119          22,669
---------------------------------------------------------------------------------------------------------------------
Earnings per common share:
   Basic                                           $0.60         $0.49          $0.58(3)       $1.08           $1.82
   Diluted                                         $0.59         $0.49          $0.56(3)       $1.06           $1.78
Weighted average shares outstanding:
   Basic                                       9,893,884     9,916,485      9,949,920     11,243,895      12,438,669
   Diluted                                    10,056,901    10,065,111     10,495,777     11,696,976      12,721,323

CONSOLIDATED OPERATING DATA:
Units sold: (4)
     Motor coaches                                   717           982          2,733          3,347           4,768
     Towables                                                                   1,977          2,397           2,217
Dealerships at end of period                          48            49            159            208             263

CONSOLIDATED BALANCE SHEET DATA:
Working capital                                   $5,910        $3,795         $4,502        $10,412         $23,676
Total assets                                      48,219        68,502        135,368        159,832         190,127
Long-term borrowings, less current portion                       5,000         16,500         11,500           5,400
Redeemable preferred stock                        -             -               2,687              0               0
Total stockholders' equity                        32,945        37,930         43,807         74,748          98,193
</TABLE>

(1) 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.
(2) 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.
(3) Includes a one time charge of $0.10 per share, net of tax effect, related to
    the inventory write-up described in Note 2 above. Excluding this charge,
    diluted earnings per common share would have been $0.66 per share.
(4) Excludes units sold by the Holiday World Dealerships that were either
    previously owned or not Holiday Rambler units.

                                       13

<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 (the
"Predecessor") 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 1996, 1997 and 1998
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 (the "Holiday Acquisition") in exchange for $21.5
million in cash, 65,217 shares of Redeemable Preferred Stock (which was
subsequently converted into 230,767 shares of Common Stock), and the assumption
of most of the liabilities of Holiday Rambler. Concurrently, the Company
acquired ten 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 acquired operations were incorporated
into the Company's consolidated financial statements. The Company's consolidated
financial statements for the fiscal years ended December 28, 1996, January 3,
1998 and January 2, 1999 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

        1998 COMPARED WITH 1997

        Net sales increased 34.6% from $441.9 million in 1997 to $594.8 million
in 1998. Included in net sales in 1997 were $10.1 million of 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 21.6% from 5,744 units in 1997 to 6,985 units in
1998 (excluding 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 43.2% in 1998 on the motorized side and down 7.9% for towables.
The Company's 1998 sales of motorized units were helped by the introduction of
three new motorized products in 1998 which accounted for 989 of the 1,439 unit
increase in motorized unit sales. The Company's sales of towable units were
dampened in 1998 by the consolidation of the two Indiana-based towable
facilities into one Company-owned facility in Elkhart, Indiana. This
consolidation slowed unit production volume in that facility in the second
quarter of 1998, and production of towables in Indiana was constrained in the
second half of 1998 while that plant was expanded and remodeled. The remodeling
and expansion of the Elkhart facility was completed by the end of the year and
Indiana towable production capacity has now returned to pre-consolidation
levels. 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 from $76,900 in 1997 to $86,100 in 1998
reflecting the strong showing of the Company's motorized products.

        Gross profit increased by $22.7 million from $59.5 million in 1997 to
$82.2 million in 1998 and gross margin increased from 13.5% in 1997 to 13.8% in
1998. In 1998 gross margin was aided by manufacturing efficiencies resulting
from higher volume in both motorized production facilities. This improvement was
dampened by lower gross margins in the three towable plants in the first half of
1998 due to reduced production volumes in 

                                       14

<PAGE>

those plants and by costs incurred in the second quarter of 1998 related to 
consolidation of the two Indiana-based towable plants into one Company-owned 
facility in Elkhart, Indiana. 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 $5.3 million
from $36.3 million in 1997 to $41.6 million in 1998 and decreased as a
percentage of net sales from 8.2% in 1997 to 7.0% in 1998. The decrease in
selling, general, and administrative expenses as a percentage of sales reflected
efficiencies arising from the Company's increased sales level as well as savings
derived from consolidation of Indiana-based office staff into office space built
in conjunction with the expansion of production facilities in Wakarusa, Indiana.

        Amortization of goodwill was $594,000 in 1997 and $645,000 in 1998. At
January 2, 1999, goodwill arising from the Predecessor Acquisition, net of
accumulated amortization, was $17.7 million, which is currently being amortized
on a straight-line basis over 40 years. Goodwill from the Holiday Acquisition,
net of accumulated amortization, was $2.2 million, and is being amortized over
20 years.

        Operating income increased $17.4 million from $22.6 million in 1997 to
$40.0 million in 1998. 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 5.1% in 1997 to 6.7%
in 1998.

        Interest expense decreased from $2.4 million in 1997 to $1.9 million in
1998. The Company's 1997 interest expense included approximately $281,000 of
floor plan interest expense relating to the Holiday World dealerships.
Additionally, interest expense included $411,000 in both years 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 $643,000 of interest in 1997 and $44,000 in 1998
related to the construction in progress at the manufacturing facilities in
Wakarusa, Indiana.
                  In the third quarter of 1997 the Company had other income from
the sale of its two remaining Holiday World retail dealerships which resulted in
a pretax gain on the sale of the buildings and fixed assets from the stores of
$539,000. The impact was $315,000, net of tax, or 2.7 cents per share. The
Company had other income of $523,000 in the third quarter of 1998 related to
insurance reimbursement of income loss from the fire at our Coburg manufacturing
plant in July of 1997. The impact was $306,000, net of tax, or 2.4 cents per
share.

        The Company reported a provision for income taxes of $8.8 million, or an
effective tax rate of 41.5%, for 1997 compared to $16.1 million, or an effective
tax rate of 41.5%, for 1998.

        Net income increased by $10.3 million from $12.4 million in 1997 to
$22.7 million in 1998 due to the increase in net sales combined with an
improvement in operating margin and a decrease in interest expense.


        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.


        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. In 1996 gross profit and gross margin were limited by a 

                                       15

<PAGE>

$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.

        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 had traditionally had a higher percentage than Monaco.

        Amortization of goodwill was $617,000 in 1996 compared with $594,000 in
1997.

        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
2.7 cents 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.


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, material shortages, 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 sold 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 

                                       16
<PAGE>

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, 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.

        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, the Company now
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, a decline in consumer confidence and/or a slowing of
the overall economy has had a material adverse effect on the recreational
vehicle market in the past. Recurrence of these conditions could have a material
adverse effect on the Company's business, results of operations and financial
condition.

        MANAGEMENT OF GROWTH Over the past three years 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 and 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 has significantly increased its
manufacturing capacity over the last few years and recently announced plans for
additional expansion of manufacturing facilities. In 1999 the Company plans to
greatly expand its existing Coburg, Oregon motorized facilities. The integration
of the Company's facilities and the expansion of the Company's manufacturing
operations involve a number of risks including unexpected building and
production difficulties. In the past the Company experienced startup
inefficiencies in manufacturing a new model and also has experienced difficulty
in increasing production rates at a plant. 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 setup of new models and scale-up of production facilities 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 setup 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 

                                       17
<PAGE>

by 263 dealerships located primarily in the United States and Canada at the 
end of 1998, 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 1998, the top two dealers accounted for 
approximately 14% 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. See "Business--Sales and Marketing."

        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 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 $292.7 million as of January 2, 1999, with approximately 2.8%
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 (Dana) for all diesel motor coaches other 
than the Holiday Rambler Endeavor Diesel model and chassis (Workhorse, Ford 
and Freightliner) for certain of its motorhome products. The Company has no 
long term supply contracts with these suppliers or their distributors, and 
there can be no assurance that these suppliers will be able to meet the 
Company's future requirements for these components. In 1997, Allison put all 
chassis manufacturers on allocation with respect to one of the transmissions 
the Company uses. The Company presently 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. See "Business-- 
Manufacturing."

        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 unexpected costs associated
with model changes have adversely affected the Company's gross margin in the
past. Future product introductions could 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, many of which have
significant financial resources and extensive distribution capabilities. 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 

                                       18

<PAGE>

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.

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
1998, the Company generated net cash from operations of $17.0 million. Net
income and non-cash expenses such as depreciation and amortization generated
approximately $27.6 million, which was partially offset by a net increase in the
Company's working capital accounts caused by the higher level of net sales and
increased production levels in the plants. Accounts receivable and inventories
increased by $24.9 million which was more than the $15.5 million increase in
accounts payable, accrued expenses and income taxes payable.

        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 the Eurodollar 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, 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 2, 1999, the Company was still holding approximately
$884,000 in notes receivable relating to the sales of the stores which will fall
under the provisions of subparagraph (ii) when payment is received. At January
2, 1999, the balance on the Term Loan was $10.4 million with $10.0 million at an
effective interest rate of 6.56% and $400,000 at 7.75%. At the election of the
Company, the Revolving Loans bear interest at variable interest rates based on
the Prime Rate or the Eurodollar. The Revolving Loans are due and payable in
full on March 1, 2001, and require monthly interest payments. As of January 2,
1999, $1.6 million was outstanding under the Revolving Loans, with an effective
interest rate of 7.75%. 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. The Company utilizes "zero balance" bank
disbursement accounts in which an advance on the line of credit is automatically
made for checks clearing each day. Since the balance of the disbursement account
at the bank returns to zero at the end of each day, the outstanding checks of
the Company are reflected as a liability. The oustanding check liability is
combined with the Company's positive cash balance accounts to reflect a net book
overdraft for financial reporting.

        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 2, 1999, the
Company had working capital of approximately $23.7 million, an increase of $13.3
million from working capital of $10.4 million at January 3, 1998. The Company
has been using short-term credit facilities and cash flow to finance its
construction of facilities and other capital expenditures.


        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's capital expenditures were
$10.3 million in 1998, primarily for the completion of the new Indiana paint
facility, expansion 

                                       19

<PAGE>

of the Elkhart, Indiana towable facilities and site preparation for the 
expansion of its Coburg, Oregon manufacturing facilities. The Company 
anticipates capital expenditures in 1999 will total approximately $20.0 
million, of which an estimated $15 million will be used to further expand its 
existing Coburg, Oregon manufacturing facilities.* The Company's remaining 
capital expenditures for 1999 are expected to be for computer system upgrades 
and various smaller-scale plant expansion or remodeling projects as well as 
normal replacement of outdated or worn-out equipment. 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. 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 2, 1999, approximately $292.7 million of
products sold by the Company to independent dealers were subject to potential
repurchase under existing floor plan financing agreements, with approximately
2.8% 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.

IMPACT OF THE YEAR 2000 ISSUE

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date sensitive software may recognize a date using "00" as the year 1900,
rather than the year 2000. To be in "Year 2000 compliance" a computer program
must be written using four digits to define years. As a result, before the end
of 1999, computer systems and/or software used by many companies may need to be
upgraded to comply with such "Year 2000" requirements. Without upgrades,
computer systems could fail or miscalculate causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices or engage in similar normal business activities.

The Company has identified its Year 2000 risk in four categories: internal
computer hardware infrastructure, application software (including a combination
of "canned" software applications and internally written or modified
applications for both financial and non-financial uses), imbedded chip
technology, and third-party suppliers and customers.

The Company's Year 2000 risk project phases consist of assessment of potential
year 2000 related problems, development of strategies to mitigate those
problems, remediation of the affected systems, and internal certification that
the process is complete through documentation and testing of remediation
efforts. None of the Company's other information technology (IT) projects has
been delayed due to the implementation of the Year 2000 Project.

INTERNAL COMPUTER HARDWARE INFRASTRUCTURE

During the Company's acquisition of Holiday Rambler in 1996, the Company decided
not to purchase the existing hardware or software that was being used by that
operation. Instead, the Company decided to convert the operation to a
client/server based hardware configuration which is Year 2000 compliant.
Following the conversion in the Wakarusa facilities to the new hardware
configurations during 1996, the Company has continued to upgrade the hardware
infrastructure at all other Company facilities in Indiana and Oregon. The
upgrading of computer hardware is on schedule and the Company estimates that
more than 90 percent of these upgrades had been completed by January 2, 1999.
The certification and testing phase is ongoing as affected components are
remediated and upgraded. All hardware infrastructure activities are expected to
be completed by the end of the second quarter of 1999.*

                                       20

<PAGE>

APPLICATION SOFTWARE

As part of the system conversion in Wakarusa in 1996, the Company decided to
convert company-wide to a fully integrated financial and manufacturing software
application. This Software implementation, which is expected to make
approximately 90 percent of the Company's business application software Year
2000 compliant, is scheduled for company-wide implementation by the end of the
second quarter of 1999.* Other application software that the Company uses is in
the remediation phase which is being accomplished through vendor software
replacements or upgrades. These application upgrades are expected to be
completed by the end of the second quarter of 1999.* The certification and
testing phase of all application software is ongoing and is expected to be
complete in the third quarter of 1999.

IMBEDDED CHIP TECHNOLOGY

The Year 2000 risk also exists among other types of machinery and equipment that
use imbedded computer chips or processors. For example: phone systems, security
alarm systems, or other diagnostic equipment may contain computer chips that
rely on date information to function properly. The Company began the assessment
phase of this category during the fourth quarter of 1998. The Company does not
expect that a significant amount of equipment used by the Company will be found
to have Year 2000 problems that will require extensive remediation efforts or
contingency plans.* All phases of this category are scheduled to be completed in
the second quarter of 1999.*

THIRD-PARTY SUPPLIERS AND CUSTOMERS

The third-party suppliers and customers category includes completing all phases
of the Year 2000 project using a prioritized list of third-parties most critical
to the Company's operations and communicating with them about their plans and
progress toward addressing the Year 2000 problem. The most significant
third-party relationships and dependencies exist with financial institutions,
along with suppliers of materials, communication services, utilities, and
supplies. The Company is currently behind the original schedule within this
category and is assessing the most critical third-parties' state of readiness
for Year 2000. These assessments will be followed by development of strategies
and contingency plans, with completion scheduled for mid-1999. Less critical
third-party dependencies will be in the assessment phase in the second quarter
of 1999 with contingency planning scheduled for completion by the latter part of
1999.

                                       21

<PAGE>

COSTS

From the time the Company began its hardware infrastructure and application
software upgrades in 1996, the Company has spent approximately $1,150,000
through January 2, 1999 and expects to spend a total of approximately $200,000
in the future to complete upgrades in these categories.* No significant costs
have been incurred in the categories of imbedded chip technology and third-party
suppliers and customers. Total future costs related to these two categories are
estimated to be less than $200,000.*

RISKS

        Although the Company expects its Year 2000 project to reduce the risk of
business interruptions due to the Year 2000 problem, there can be no assurance
that these results will be achieved. Failure to correct a Year 2000 problem
could result in an interruption in, or failure of, certain normal business
activities or operations. Factors that give rise to uncertainty include failure
to identify all susceptible systems, failure by third parties to address the
Year 2000 problem whose systems or products, directly or indirectly, are
depended on by the Company, loss of personnel resources within the Company to
complete the Year 2000 project, or other similar uncertainties. Based on an
assessment of the Company's current state of readiness with respect to the Year
2000 problem the Company believes that the most reasonably likely worst case
scenario would involve the noncompliance of one or more of the Company's
third-party financial institutions or key suppliers. Such an event could result
in a material disruption to the Company's operations. Specifically, the Company
could experience an interruption in its ability to collect funds from dealer
finance companies, process payments to suppliers, and receive key material
components from suppliers thus slowing or interrupting the production process.
If this were to occur it could, depending on its duration, have a material
impact on the Company's business, results of operations, financial condition and
cash flows.


NEWLY ISSUED FINANCIAL REPORTING PRONOUNCEMENTS

        The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards for reporting comprehensive income and its components in
financial statements. Comprehensive income, as defined, includes all changes in
equity (net assets) during a period from non-owner sources. To date, the Company
has not had any transactions that are required to be reported in comprehensive
income.

        The Company adopted the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131 requires
disclosure about significant reportable operating segments about which separate
financial information is available and is regularly evaluated by management. The
Company has determined that its various divisions and subsidiaries do not
constitute reportable operating segments as they have similar economic
characteristics and are similar in the nature of products, manufacturing
processes, customer characteristics, and distribution methods.

        Additionally, the Company implemented the disclosure requirements as
revised in SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." SFAS No. 132 standardizes the disclosure requirements
for pensions and other post retirement benefits plans. The Company has revised
its disclosures related to its defined contribution plan.





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

              Not Applicable

                                       22

<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                                                          24
      Consolidated Balance Sheets as of January 3, 1998 and January 2, 1999                      25
      Consolidated Statements of Income for the Fiscal Years Ended December 28, 1996,
         January 3, 1998 and January 2, 1999                                                     26
      Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended December
         28, 1996, January 3, 1998 and January 2, 1999                                           27
      Consolidated Statements of Cash Flows for the Fiscal Years Ended December 28, 1996,
         January 3, 1998 and January 2, 1999                                                     28
      Notes to Consolidated Financial Statements                                                 29

Schedule Included in Item 14(a):
      II Valuation and Qualifying Accounts                                                       48
</TABLE>

                                       23

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS




To the Stockholders' and Board of Directors of Monaco Coach Corporation:

In our opinion, the consolidated balance sheets and the related consolidated
statements of income, of stockholders' equity, and of cash flows listed in the
accompanying index present fairly, in all material respects, the financial
position of Monaco Coach Corporation and Subsidiaries (the Company) at January
3, 1998 and January 2, 1999, and the results of their operations and their cash
flows for each of the three years in the period ended January 2, 1999, in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements 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 of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.


/s/ PricewaterhouseCoopers LLP


Eugene, Oregon
January 22, 1999, except for the debt covenant 
         waiver information in Note 8, as to which 
         the date is March 4, 1999

                                       24

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                     JANUARY 3,        JANUARY 2,
                                                                                        1998              1999
                                                                                 ----------------  ----------------
<S>                                                                              <C>               <C>
ASSETS
Current assets:
   Trade receivables, net of $127 and $397, respectively                         $        25,309   $        36,073
   Inventories                                                                            45,421            59,566
   Prepaid expenses                                                                          928               143
   Deferred income taxes                                                                   8,222            10,978
   Notes receivable                                                                        1,552               141

            Total current assets                                                          81,432           106,901

Notes receivable, less current portion                                                     1,125               769
Property, plant and equipment, net                                                        55,399            61,655
Debt issuance costs, net of accumulated amortization
     of $755 and $1,184, respectively                                                      1,358               929
Goodwill, net of accumulated amortization of $2,739
     and $3,384, respectively                                                             20,518            19,873

            Total assets                                                         $       159,832   $       190,127


LIABILITIES
Current liabilities:
   Book overdraft                                                                $         6,762   $        10,519
   Line of credit                                                                          9,353             1,640
   Current portion of long-term note payable                                               4,375             5,000
   Accounts payable                                                                       23,498            28,498
   Income taxes payable                                                                    1,005             4,149
   Accrued expenses and other liabilities                                                 26,027            33,419

            Total current liabilities                                                     71,020            83,225


Note payable, less current portion                                                        11,500             5,400
Deferred income tax liability                                                              2,564             3,309

            Total liabilities                                                             85,084            91,934


Commitments and contingencies (Note 17)


STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 20,000,000 shares
     authorized, 5,496,499 and 12,481,095 issued
     and outstanding respectively                                                             55               125
Additional paid-in capital                                                                44,241            44,947
Retained earnings                                                                         30,452            53,121

            Total stockholders' equity                                                    74,748            98,193

            Total liabilities and stockholders' equity                           $       159,832   $       190,127
</TABLE>


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

                                       25

<PAGE>

                            MONACO COACH CORPORATION
                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 28, 1996, JANUARY 3, 1998
               AND JANUARY 2, 1999 (IN THOUSANDS OF DOLLARS, EXCEPT
                            SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                         1996             1997           1998
                                                                    -----------------------------------------------
<S>                                                                 <C>               <C>            <C>
Net sales                                                           $      365,638    $    441,895   $     594,802
Cost of sales                                                              317,909         382,367         512,570

      Gross profit                                                          47,729          59,528          82,232

Selling, general and administrative expenses                                33,371          36,307          41,571
Amortization of goodwill                                                       617             594             645

      Operating income                                                      13,741          22,627          40,016

Other income, net                                                              244             468             607
Interest expense                                                            (3,914)         (2,379)         (1,861)
Gain on sale of dealership assets                                                              539

      Income before income taxes                                            10,071          21,255          38,762

Provision for income taxes                                                   4,162           8,819          16,093

      Net income                                                             5,909          12,436          22,669

Preferred stock dividends                                                      (75)
Accretion of redeemable preferred stock                                        (84)           (317)

      Net income attributable to
        common stock                                                $        5,750    $     12,119   $      22,669


Earnings per common share:
      Basic                                                             $.58             $ 1.08          $ 1.82
      Diluted                                                           $.56             $ 1.06          $ 1.78

Weighted average common shares outstanding:
      Basic                                                              9,949,920      11,243,895      12,438,669
      Diluted                                                           10,495,777      11,696,976      12,721,323
</TABLE>



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

                                       26

<PAGE>

                            MONACO COACH CORPORATION
                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
                 FOR THE YEARS ENDED DECEMBER 28, 1996, JANUARY 3, 
                            1998 AND JANUARY 2, 1999
                 (IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                         Common Stock         Additional
                                                   -------------------------    Paid-in      Retained
                                                     Shares        Amount       Capital      Earnings      Total
                                                   ------------  --------------------------------------------------
<S>                                                <C>           <C>          <C>           <C>          <C>
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
Issuance of common stock                                72,420            1           590                      591
Tax benefit of stock options exercised                                                185                      185
Stock splits                                         6,912,176           69           (69)                       0
Net income                                                                                      22,669      22,669

Balances, January 2, 1999                           12,481,095   $      125   $    44,947   $   53,121   $  98,193
</TABLE>



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

                                       27

<PAGE>

                            MONACO COACH CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
       THE YEARS ENDED DECEMBER 28, 1996, JANUARY 3, 1998 AND JANUARY 2, 1999
           (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                      1996              1997              1998
                                                               ----------------------------------------------------
<S>                                                            <C>                   <C>               <C>
INCREASE (DECREASE) IN CASH:

Cash flows from operating activities:
   Net income                                                  $           5,909     $     12,436        $   22,669

   Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
      Gain on sale of dealership assets                                                      (539)
      Depreciation and amortization                                        3,005            3,641             4,947
      Loss (gain) on disposal of equipment                                    79                                (32)
      Deferred income taxes                                               (6,399)            (167)           (2,011)
      Change in assets and liabilities, net of effects 
           of business combination:
         Trade receivables, net                                            1,266          (10,423)          (10,764)
         Inventories                                                       9,702             (790)          (14,145)
         Prepaid expenses                                                   (810)             415               785
         Accounts payable                                                   (457)            (720)            5,000
         Income taxes payable                                              7,141           (6,357)            3,144
         Accrued expenses and other liabilities                            7,246            2,463             7,392

            Net cash provided by (used in) operating
              activities                                                  26,682              (41)           16,985

Cash flows from investing activities:
   Additions to property and equipment                                    (7,327)         (19,617)          (10,286)
   Proceeds from sale of equipment                                                                              189
   Payment for business acquisition                                      (24,645)
   Proceeds from sale of retail stores and collections
      on notes receivable, net of closing costs                           11,749            1,249             1,847
   Other                                                                      40                0               (80)

            Net cash used in investing activities                        (20,183)         (18,368)           (8,330)

Cash flows from financing activities:
   Book overdraft                                                          1,939            4,307             3,757
   Borrowings (payments) on line of credit, net                           (6,056)           5,564            (7,713)
   Payments on subordinated note                                         (12,000)
   Borrowings on long-term notes payable                                  20,000
   Debt issuance costs                                                    (2,060)
   Borrowings (payments) on floor financing, net                                           (4,650)
   Payments on long-term notes payable                                    (8,500)          (2,625)           (5,475)
   Issuance of common stock                                                                16,351               591
   Cost to issue shares of common stock                                                      (645)
   Other                                                                     178              107               185

            Net cash provided by (used in) financing
              activities                                                  (6,499)          18,409            (8,655)

Net change in cash                                                             0                0                 0
Cash at beginning of period                                                    0                0                 0

Cash at end of period                                          $               0     $          0        $        0
</TABLE>



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

                                       28

<PAGE>

                            MONACO COACH CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:

      BUSINESS

      Monaco Coach Corporation and its subsidiaries (the "Company") manufacture
      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.

      The Company has adopted SFAS No. 131, "Disclosures about Segments of an
      Enterprise and Related Information," effective for fiscal years beginning
      after December 31, 1997. SFAS No. 131 establishes a new framework for
      segment reporting which includes interim reporting requirements of
      selected segment information.

      The Company has determined that it has a single reportable operating
      segment consisting of the design, manufacture, and sale (wholesale) of
      recreational vehicles including motor coaches and towable fifth wheel and
      travel trailers. These product lines have similar economic characteristics
      and are similar in the nature of products, manufacturing processes,
      customer characteristics, and distribution methods.

      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 1998 was 52 weeks long, 1997 was 53
      weeks long and 1996 was 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 9%, 10%, and 6% of net revenues for the
      fiscal years ended December 28, 1996, January 3, 1998, and January 2, 1999
      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

                                       29
<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, Workhorse, Cummins, Dana, Ford and
      Freightliner. The Company does not have any long-term contracts with these
      suppliers or their distributors. In 1997, Allison put all chassis
      manufacturers on allocation with respect to one of the transmissions the
      Company uses. The Company presently 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
      from the date of retail sale (five years for the front and sidewall frame
      structure).

      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 $48,000
      in 1996, $643,000 in 1997 and $44,000 in 1998. 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.

                                       30

<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 2, 1999, the
      unamortized amount was $17.7 million. The goodwill arising from the
      Holiday Acquisition (as hereinafter defined) is being amortized on a
      straight-line basis over 20 years; at January 2, 1999, the unamortized
      amount was $2.2 million. At each balance sheet date, management assesses
      whether there has been permanent impairment in the value of goodwill and
      other long-lived assets. The amount of any such impairment is determined
      by comparing anticipated undiscounted future cash flows from operating
      activities with the associated carrying value. 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 $1.4 million at January 3, 1998 and
      $929,000 at January 2, 1999, 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. During 1998,
      approximately $6.8 million ($5.5 million in 1996 and $6.2 million in 1997)
      of advertising costs were expensed.

      RESEARCH AND DEVELOPMENT COSTS

      Research and development costs are charged to expense as incurred and 
      were $4.2 million for 1998 ($3.2 million in 1996 and $4.6 million for 
      1997).

      COMPREHENSIVE INCOME

      In 1998 the Company adopted the provisions of Statement of Financial
      Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
      SFAS No. 130 establishes standards for reporting comprehensive income and
      its components in financial statements. Comprehensive income, as defined,
      includes all changes in equity (net assets) during a period from non-owner
      sources. To date, the Company has not had any transactions that are
      required to be reported in comprehensive income.




      Continued

                                       31
<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


1.    BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

<TABLE>
<CAPTION>

      SUPPLEMENTAL CASHFLOW DISCLOSURES :
                                                                1996              1997              1998
                                                          -----------------  ----------------  ---------------
      <S>                                                 <C>                <C>               <C>
      Cash paid during the period for:
        Interest, net of amount capitalized of $244 in
            1996, $643 in 1997 and $44 in 1998            $          3,435   $         2,064   $        1,994

        Income taxes                                                 3,382            15,311           14,733

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


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 ("Holiday 
     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>


      Continued

                                       32

<PAGE>

                            MONACO COACH CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


2.   HOLIDAY ACQUISITION, CONTINUED:

     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.

     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 of 1997 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)
                                                                                                   1996
                                                                                              ---------------
          <S>                                                                                 <C>
          Net sales                                                                           $      419,440
          Net income                                                                                   4,699

          Diluted earnings per common share                                                            $ .45
</TABLE>

3.    INVENTORIES:

      Inventories consist of the following:

<TABLE>
<CAPTION>

                                                                                             (IN THOUSANDS)
                                                                                      January 3,         January 2,
                                                                                          1998              1999
                                                                                    ----------------   ---------------
          <S>                                                                       <C>                <C>
          Raw materials                                                             $        20,826    $       34,207
          Work-in-process                                                                    20,212            21,299
          Finished units                                                                      4,383             4,060

                                                                                    $        45,421    $       59,566
</TABLE>

                                       33

<PAGE>

                            MONACO COACH CORPORATION
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

4.    PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>

           Property and equipment consist of the following:                                   (IN THOUSANDS)
                                                                                      January 3,         January 2,
                                                                                          1998              1999
                                                                                    ----------------------------------
          <S>                                                                       <C>                <C>
          Land                                                                      $         3,830    $        4,149
          Buildings                                                                          37,385            44,442
          Equipment                                                                           8,579            12,549
          Furniture and fixtures                                                              3,574             4,204
          Vehicles                                                                              746               942
          Leasehold improvements                                                                540               619
          Construction in progress                                                            6,320             4,161

                                                                                             60,974            71,066
          Less accumulated depreciation and amortization                                      5,575             9,411

                                                                                    $        55,399    $       61,655
</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.


6.    ACCRUED EXPENSES AND OTHER LIABILITIES:

<TABLE>
<CAPTION>

                                                                                             (IN THOUSANDS)
                                                                                      January 3,         January 2,
                                                                                          1998              1999
                                                                                    -----------------------------------
          <S>                                                                       <C>                <C>
          Payroll, vacation and related accruals                                    $         6,393    $       11,200
          Payroll and property taxes                                                          1,241             1,381
          Provision for warranty claims                                                       9,981            11,906
          Provision for product liability claims                                              5,259             5,698
          Promotional and advertising                                                           654               946
          Other                                                                               2,499             2,288

                                                                                    $        26,027    $       33,419
</TABLE>

7.    LINE OF CREDIT:

      In connection with the Holiday Acquisition 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 $1.6 million at
      January 2, 1999 with an effective interest rate of 7.75%.

      The weighted average interest rate on the outstanding borrowings under the
      revolving line of credit was 9.6% and 8.4% for 1997 and 1998,
      respectively. Interest expense on the unused available portion of the line
      was $186,000 or 3.4% and $154,000 or 3.7% of weighted average outstanding
      borrowings for 1997 and 1998, respectively. The revolving line of credit
      expires March 1, 2001 and is collateralized by all the assets of the
      Company. The agreement contains restrictive covenants as to EBITDA
      (earnings before interest, taxes, depreciation and amortization), interest
      coverage ratio, leverage ratio and capital expenditures.

                                       34

<PAGE>

                            MONACO COACH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


  8. LONG-TERM BORROWINGS:

      In 1996, the Company obtained a term loan to finance the Holiday
      Acquisition, 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 2, 1999, there were outstanding borrowings of $10.4 million,
      with $10.0 million at an effective rate of 6.56% under a Eurodollar
      arrangement, and $400,000 at a rate of 7.75%. The term loan is
      collateralized by all the assets of the Company. The agreement contains
      restrictive covenants as to EBITDA, interest coverage ratio, leverage
      ratio and capital expenditures. The Company obtained a waiver from the
      lender for capital expenditures in 1998 that exceeded the restrictive
      covenant.

      The principal on the long-term debt is payable as follows:

<TABLE>
<CAPTION>

                                        (IN THOUSANDS)
          <S>                           <C>
          1999                           $       5,000
          2000                                   4,250
          2001                                   1,150

                                         $      10,400
</TABLE>

 9.   PREFERRED STOCK:

      The Company has authorized "blank check" preferred stock (2,000,000 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 or January
      2, 1999.

      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 Holiday Acquisition. 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. A total of
      34,783 unissued shares of Series A remain authorized with none outstanding
      at January 2, 1999.

      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.

                                       35
<PAGE>

                           MONACO COACH CORPORATION
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


10.   INCOME TAXES:

      The provision for income taxes for the years ended December 28, 1996, 
      January 3, 1998 and January 2, 1999 is as follows:

<TABLE>
<CAPTION>
                                                                                    (IN THOUSANDS)
                                                                       1996              1997               1998
                                                                 -----------------------------------------------------
          <S>                                                    <C>               <C>                <C>
          Current:
             Federal                                             $         8,563   $         7,349    $        14,985
             State                                                         1,998             1,637              3,119

                                                                          10,561             8,986             18,104
          Deferred:
             Federal                                                     (5,245)             (136)            (1,660)
             State                                                       (1,154)              (31)              (351)

                      Provision for income taxes                 $         4,162   $         8,819    $        16,093
</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)
                                                                       1996              1997               1998
                                                                 -----------------------------------------------------
          <S>                                                    <C>                <C>               <C>
          Expected U.S. federal income taxes at
               statutory rates                                   $         3,525    $        7,439    $        13,567
          State and local income taxes, net of
               federal benefit                                               541             1,106              1,799
          Other                                                               96               274                727

                                                                 $         4,162    $        8,819    $        16,093
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                             (IN THOUSANDS)
                                                                                      January 3,         January 2,
                                                                                          1998              1999
                                                                                    ----------------------------------
          <S>                                                                       <C>                <C>
          Current deferred income tax assets:
             Warranty liability                                                     $         3,994    $        4,717
             Product liability                                                                2,228             2,374
             Inventory reserves and other accruals                                            1,115             2,119
             Contingent dealer rebates                                                          158               219
             Payroll and related                                                                727             1,549

                                                                                    $         8,222    $       10,978
          Long-term deferred income tax liabilities:
             Depreciation                                                           $           979    $        1,301
             Amortization                                                                     1,585             2,008

                                                                                    $         2,564    $        3,309
</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:

      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. The
      weighted average number of common shares used in the computation of
      earnings per common share for the years ended December 28, 1996, January
      3, 1998 and January 2, 1999 are as follows:

<TABLE>
<CAPTION>

                                                                       1996               1997              1998
                                                                 ----------------   ----------------  ----------------
          <S>                                                    <C>                <C>               <C>
          BASIC
          Issued and outstanding shares (weighted
               average)                                                9,949,920         11,243,895        12,438,669

          EFFECT OF DILUTIVE SECURITIES
          Stock options                                                  119,470            214,275           282,654
          Convertible preferred stock                                    426,387            238,806    

          DILUTED                                                     10,495,777         11,696,976        12,721,323
</TABLE>

      STOCK SPLITS

      On March 16, 1998, the Board of Directors declared a three-for-two stock
      split in the form of a 50% stock dividend on the Company's Common stock.
      On November 2, 1998, an additional three-for-two stock split was declared
      in the form of a 50% stock dividend on the Company's Common stock.
      Accordingly, all historical weighted average share and per share amounts
      have been restated to reflect the stock splits. Share amounts presented in
      the Consolidated Statement of Stockholders' Equity reflect the actual
      share amounts outstanding for each period presented.


12.   LEASES:

      The Company leases administrative and production facilities under
      operating leases that expire in 2002 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 28,
      1996, January 3, 1998, and January 2, 1999 related to operating leases
      amounted to approximately $570,000, $1.1 million, and $1.1 million
      respectively.

      Approximate future minimum rental commitments under these leases at
      January 2, 1999 are summarized as follows:

<TABLE>
<CAPTION>

                       Fiscal Year
                       ------------                           (IN THOUSANDS)
                       <S>                                    <C>
                           1999                                    $490
                           2000                                     409
                           2001                                     358
                           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 28, 1996, January 3, 1998 and January 2, 1999 was
      $2.9 million , $4.3 million and $9.0 million, respectively.


14.   STOCK PURCHASE PLAN:

      The Company has an Employee Stock Purchase Plan (the "Purchase Plan") -
      1993, a Non employee 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 303,750 shares of Common Stock for
      issuance under the Purchase Plan. During the years ended January 3, 1998
      and January 2, 1999, 23,445 shares and 17,835 shares, respectively, were
      purchased under the Purchase Plan. The weighted-average fair value of
      purchase rights granted in 1997 and 1998 was $8.50 and $16.13,
      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
      90,000 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 18,000 shares of the Company's Common Stock. In connection with
      the effective date of the initial public offering on September 23, 1993,
      the Company granted options to purchase 18,000 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 3,600 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 2, 1999, no options
      have been exercised, and options to purchase 57,600 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
      1,181,250 shares of Common Stock have been reserved for issuance under the
      Option Plan. As of January 2, 1999, options to purchase 463,382 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's
      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 with corresponding weighted-average exercise prices as 
      follows (effected for the 1998 stock splits--see Note 11):

<TABLE>
<CAPTION>
                                                      Shares       Price
                                                    -----------  -----------
        <S>                                         <C>          <C>
        Outstanding at December 30, 1995               385,793      $ 4.28
           Granted                                     126,000        6.20
           Exercised                                   (31,792)       1.48
           Forfeited                                   (31,612)       4.52

        Outstanding at December 28, 1996               448,389        5.00
           Granted                                     152,832        8.10
           Exercised                                   (55,905)       3.63
           Forfeited                                   (42,249)       6.33

        Outstanding at January 3, 1998                 503,067        5.98
           Granted                                     125,552       17.40
           Exercised                                   (96,227)       4.30
           Forfeited                                   (11,410)       8.46

        Outstanding at January 2, 1999                 520,982      $ 8.99
</TABLE>

      For various price ranges, weighted average characteristics of all
      outstanding stock options at January 2, 1999 were as follows:

<TABLE>
<CAPTION>
                                Options Outstanding           Options Exercisable
                         ----------------------------------------------------------
           Range of                   Remaining    Weighted-              Weighted-
           Exercise                      Life       Average                Average
            Prices         Shares      (years)       Price     Shares       Price
        ---------------  ----------  -----------  ----------  ---------  ----------
        <S>              <C>         <C>          <C>         <C>        <C>
        $ 1.48              62,606       4.2        $ 1.48       62,606   $   1.48
        $ 5.11 - 7.01      148,342       6.0          6.21       67,155       6.17
        $ 7.11 - 8.74      164,232       6.8          7.72       48,132       7.53
        $10.50 - 11.33      21,600       8.6         11.19        3,600      11.33
        $16.83 - 17.44     124,202       9.3         17.40        ---        ---

                           520,982                              181,493
</TABLE>

Continued

                                       39
<PAGE>

                            MONACO COACH CORPORATION
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


14.   STOCK PURCHASE PLAN, CONTINUED:

      The Company complies with 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)
                                                                 1996         1997         1998
                                                              -----------   ---------   -----------
          <S>                                                 <C>           <C>         <C>
          Net income - as reported                            $    5,909    $ 12,436    $   22,669
          Net income - pro forma                                   5,752      12,158        22,226

          Diluted earnings per share - as reported            $      .56    $   1.06    $     1.78
          Diluted earnings per share - pro forma                     .55        1.04          1.75
</TABLE>

      The pro forma effect on net income for 1996, 1997 and 1998 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>
                                                             1996        1997       1998
                                                           ---------   ---------  ---------
          <S>                                              <C>         <C>        <C>
          Risk-free interest rate                            6.33%       6.14%      5.57%
          Expected life (in years)                           7.50        6.16       6.69
          Expected volatility                               60.60%      56.07%     56.58%
          Expected dividend yield                            0.00%       0.00%      0.00%
</TABLE>

15.   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 $2.7 million and $910,000 at January 3, 1998 and January 2, 1999,
      respectively, due to the short maturity of these instruments.

      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 $15.9 million and
      $10.4 million at January 3, 1998 and January 2, 1999, respectively.

      LINE OF CREDIT - The carrying amount outstanding on the revolving line of
      credit is $9.4 million and $1.6 million at January 3, 1998 and January 2,
      1999, respectively, which approximates the estimated fair value as this
      instrument requires interest payments at a market rate of interest plus a
      margin.


16.   401(K) DEFINED CONTRIBUTION PLAN

      The Company sponsors a 401(k) defined contribution plan covering
      substantially all full-time employees. Company contributions to the plan
      totaled $493,000 in 1998 ($370,000 in 1996 and $439,000 in 1997).

                                       40

<PAGE>


                            MONACO COACH CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


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 material net losses will be incurred
      under these agreements. No material net losses were incurred during the
      years ended December 28, 1996, January 3, 1998 or January 2, 1999. The
      approximate amount subject to contingent repurchase obligations arising
      from these agreements at January 2, 1999 is $292.7 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.

      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 1998, the Company began construction of a new production facility in
      Oregon. The new facility is expected to be completed in 1999 at a total
      estimated cost of $20.0 million. At January 2, 1999, the Company had
      incurred approximately $2.4 million in expenditures related to
      construction in progress on the facility.

                                       41

<PAGE>

                            MONACO COACH CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

18.    QUARTERLY RESULTS (UNAUDITED):

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 28, 1996(a)                              1st               2nd               3rd              4th
                                                         Quarter           Quarter           Quarter          Quarter
                                                ----------------------------------------------------------------------
<S>                                             <C>                       <C>               <C>               <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)            
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                                                   $0.06             $0.08             $0.19            $0.24
   Diluted                                                 $0.06             $0.08             $0.18            $0.23
                                                ----------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 3, 1998                                   1st               2nd               3rd              4th
                                                         Quarter           Quarter           Quarter          Quarter
                                                ----------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)            
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                                                   $0.27             $0.25             $0.26            $0.30
   Diluted                                                 $0.25             $0.24             $0.25            $0.30
                                                ----------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 2, 1999                                   1st               2nd               3rd              4th
                                                         Quarter           Quarter           Quarter          Quarter
                                                ----------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)            
Net sales                                               $137,176          $134,679          $153,223         $169,724
Gross profit                                              18,353            18,141            21,332           24,406
Operating income                                           7,616             8,173            10,770           13,457
Net income                                                 4,193             4,493             6,313            7,670
Net income attributable to common stock                    4,193             4,493             6,313            7,670
                                                ----------------------------------------------------------------------
Earnings per common share:
   Basic                                                   $0.34             $0.36             $0.51            $0.61
   Diluted                                                 $0.33             $0.35             $0.50            $0.60

                                                ----------------------------------------------------------------------
</TABLE>

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

                                       42

<PAGE>

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

         Not Applicable

                                       43

<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.

                                       44

<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 28,
1996, January 3, 1998 and January 2, 1999 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                    48

        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(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").

2.2(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.

2.3(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.

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

10.6(1)     Registration Agreement dated March 5, 1993 among the Registrant, 
            Monaco Capital Partners, Tucker Anthony Holding Corporation and 
            certain other stockholders of the Registrant.

                                       45

<PAGE>

10.7(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.

10.8(2)     Registration Rights Agreement dated as of March 4, 1996 among 
            Holiday Rambler LLC and Monaco Coach Corporation.

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


        ------
(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 2, 1999.

                                       46

<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 2, 1999                              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:

   Signature                             Title                         Date
--------------------------------------------------------------------------------

/s/ Kay L. Toolson      Chairman of the Board and Chief Executive  April 2, 1999
------------------      Officer (Principal Executive Officer)
(Kay L. Toolson)

/s/ John W. Nepute      Vice President of Finance and  Chief       April 2, 1999
------------------      Financial Officer (Principal Financial
(John W. Nepute)        and Accounting Officer)

/s/ Michael J. Kluger   Director                                   April 2, 1999
---------------------
(Michael J. Kluger)

/s/ Lee Posey           Director                                   April 2, 1999
----------------
(Lee Posey)

/s/ Carl E. Ring, Jr.   Director                                   April 2, 1999
---------------------
(Carl E. Ring, Jr.)

/s/ Richard A. Rouse    Director                                   April 2, 1999
--------------------
(Richard A. Rouse)

/s/ Roger A. Vandenberg Director                                   April 2, 1999
-----------------------
(Roger A. Vandenberg)

                                               47

<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>
Fiscal year ended December 28, 1996:
  Reserve for warranty....................      $  765         $6,593        $ 7,126      $ 5,965      $ 8,791

  Reserve for Product Liability...........      $1,037         $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

Fiscal year ended January 2, 1999:
  Reserve for warranty....................      $9,981                       $12,726      $10,801      $11,906

  Reserve for Product Liability...........      $5,259                       $ 3,872      $ 3,433      $ 5,698
</TABLE>

                                       48

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.                                 Exhibit
-----------       -----------------------------------------------------------
2.1(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").

2.2(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.

2.3(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.

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

10.6(1)           Registration Agreement dated March 5, 1993 among the
                  Registrant, Monaco Capital Partners, Tucker Anthony Holding
                  Corporation and certain other stockholders of the Registrant.

10.7(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.

10.8(2)           Registration Rights Agreement dated as of March 4, 1996 among 
                  Holiday Rambler LLC and Monaco Coach Corporation.

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

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

                                       49

<PAGE>

(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.

                                        50