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

(Mark One)

|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

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 1-9511

THE COAST DISTRIBUTION SYSTEM, INC.
(Exact name of Registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 94-2490990
(I.R.S. Employer Identification No.)

|                                                                                      |  |                 
|------------------------------------------------------------------------------------- |  | ----------------
|350 Woodview Avenue, Morgan Hill, California
(Address of principal executive offices) |  | 95037
(Zip Code)

(408) 782-6686
(Registrants telephone number, including area code)

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

|                                         |  |                                            
|---------------------------------------- |  | -------------------------------------------
|Common Stock, par value, $.001 per share |  | American Stock Exchange                    
|                                         |  |                                            
|(Title of Class)                         |  | (Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

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

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

As of March 15 ,2002, the aggregate market value of the Common Stock held
by non-affiliates was approximately $4,385,000.

As of March 15, 2002, a total of 4,366,880 shares of Registrants Common
Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of the Form 10-K is incorporated by reference from Registrants
Definitive Proxy Statement for its Annual Meeting which is expected to be filed
on or before April 30, 2002.





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TABLE OF CONTENTS



|                  |                                                                                               |  |  |  |  |  |  | 
|----------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I           
|                  | ITEM 1. BUSINESS                                                                             
|                  | ITEM 2. PROPERTIES                                                                           
|                  | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II          
|                  | ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED SECURITY HOLDER MATTERS         
|                  | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                  | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                  | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                  | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                   
|                  | ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                 
|PART III         
|                  | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                  | ITEM 11. EXECUTIVE COMPENSATION                                                              
|                  | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                  | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV          
|                  | ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K                   
|SIGNATURES       
|INDEX TO EXHIBITS
|EXHIBIT 21       
|EXHIBIT 23.1     



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THE COAST DISTRIBUTION SYSTEM, INC.
ANNUAL REPORT ON FORM 10K
FOR THE YEAR ENDED DECEMBER 31, 2000

TABLE OF CONTENTS

|                                                                                                     |  |          |     | 
|---------------------------------------------------------------------------------------------------- |  | -------- | --- | 
|                                                                                                     |  | Page No.
|                                                                                                     |  |         
|Forward Looking Statements                                                                           |  |          | 1   | 
|Part I                                                                                               |  |          |     | 
|Item 1. Business                                                                                     |  |          | 1   | 
|Item 2. Properties                                                                                   |  |          | 5   | 
|Item 3. Legal Proceedings                                                                            |  |          | 5   | 
|Item 4. Submission of Matters to a Vote of Securities Holders                                        |  |          | 5   | 
|Executive Officers of the Registrant                                                                 |  |          | 6   | 
|Part II                                                                                              |  |          |     | 
|Item 5. Market for Registrants Common Equity and Related Stockholder Matters                        |  |          | 7   | 
|Item 6. Selected Financial Data                                                                      |  |          | 8   | 
|Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations        |  |          | 9   | 
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                  |  |          | 14  | 
|Certain Factors That Could Affect Future Performance                                                 |  |          | 15  | 
|Item 8. Financial Statements and Supplementary Data                                                  |  |          | 16  | 
|Report of Independent Public Accountants                                                             |  |          | 17  | 
|Consolidated Balance Sheets at December 31, 2001 and 2000                                            |  |          | 18  | 
|Consolidated Statements of Operations for the Years ended
December 31, 2001, 2000 and 1999           |  |          | 19  | 
|Consolidated Statements of Cash Flows for the Years ended
December 31, 2001, 2000 and 1999           |  |          | 20  | 
|Consolidated
Statements of Shareholders Equity
for the Years ended December 31, 2001, 2000 and 1999 |  |          | 21  | 
|Notes to Consolidated Financial Statements                                                           |  |          | 22  | 
|Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures        |  |          | 31  | 
|Part III                                                                                             |  |          |     | 
|Item 10. Directors and Executive Officers of the Registrant                                          |  |          | 31  | 
|Item 11. Executive Compensation                                                                      |  |          | 31  | 
|Item 12. Security Ownership of Certain Beneficial Ownership and
Management                           |  |          | 31  | 
|Item 13. Certain Relationships and Related Party Transactions                                        |  |          | 31  | 
|Part IV                                                                                              |  |          |     | 
|Item 14. Exhibits, Financial Statement Schedules,
Reports on Form 8-K                                |  |          | 32  | 
|Signature Page                                                                                       |  |          | S-1 | 
|Index to Exhibits                                                                                    |  |          | E-1 | 





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FORWARD LOOKING STATEMENTS

Statements contained in this Annual Report on Form 10-K (the Report)
that are not historical facts or that discuss our expectations or beliefs
regarding our future operations or financial performance or trends in our
business constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the 1933 Act) and Section 21E
of the Securities Exchange Act of 1934, as amended (the 1934 Act).
Forward-looking statements are estimates of, or expectations or beliefs
regarding our future operations and future financial performance that are based
on current information and that are subject to a number of risks and
uncertainties that could cause our actual operating results or financial
condition in the future to differ significantly from those expected at the
current time. Those risks and uncertainties are described in Part II of this
Report under the caption Managements Discussion and Analysis of Financial
Condition and Results of Operations  Cautionary Statements Regarding
Expectations About Our Future Financial Performance and readers of this Report
are urged to read the cautionary statements contained in that Section of this
Report.




PART I




ITEM 1. BUSINESS

GENERAL

The Coast Distribution System, Inc. (which, for convenience, will be
referred to in this Report as we or us or the Company), was incorporated
in California in November 1977, and reincorporated in Delaware in April 1998.
We believe that we are one of the largest wholesale suppliers of replacement
parts, supplies and accessories for recreational vehicles (RVs), and boats in
North America. We supply more than 25,000 products and serve more than 15,000
customers throughout the United States and Canada, from 13 regional
distribution centers in the United States that are located in California,
Texas, Oregon, Arizona, Colorado, Utah, Indiana, Pennsylvania, New York,
Georgia, Florida and Wisconsin and 4 regional distribution centers in Canada
located, respectively, in Montreal, Toronto, Calgary and Vancouver. Reference
is made to Note G to the Consolidated Financial Statements of the Company,
contained elsewhere in this Report, for certain information regarding the
respective operating results of the Companys operations in the United States
and Canada. The Companys customers are comprised primarily of RV and boat
dealers and RV and boating parts supply stores and service centers
(After-Market Customers), who resell the products they purchase from the
Company, at retail, to consumers that own or use RVs and boats.

We have introduced into the marketplace a number of products that have
been designed specifically for us by independent product design firms and are
manufactured for us, generally on an exclusive basis, by a number of different
independent manufacturers (proprietary products). These proprietary products
are marketed by us under our own brand-names in competition with brand name
products from traditional suppliers of RV and boating parts, supplies and
accessories. We are able to obtain the proprietary products at prices that
generally are below those we would have to pay for functionally equivalent
brand name products. For additional information regarding our proprietary
products, see the Section of this Part I of this Report entitled
PRODUCTS Proprietary Products below.

In an effort to improve our customer service levels and optimize our
inventory levels, in late 2000 we began the implementation of a new and ambitious
inventory management and deployment program. This program, the development and
implementation of which is now largely completed, is designed to enable us to
place fewer, but larger, orders with our suppliers and thereby consolidate
product shipments, reduce our inventory levels and improve service levels to
our customers. Our costs of doing business increased and service levels did
suffer during the implementation phase of this program. However, we believe
that this program will enable us to increase our gross margins through vendor
price concessions and freight reimbursements, reduce our operating expenses
and, at the same time improve the level and responsiveness of service that we
are able to provide our customers. See Business  Distribution in this Part
I. and Managements Discussion and Analysis of Financial Condition and Results
of Operations in Part II, of this Report.





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We utilize a computer-based order entry and warehousing system which
enables customers to transmit orders either telephonically or
electronically to us, and enables us to prepare and invoice most orders within 24 hours of
receipt. We also have established a national customer service center to enable
customers to obtain product information and place orders by telephone using
Company toll-free telephone numbers. We believe that the breadth of our
product lines, the proprietary products we are able to offer to our customers,
the computer integration of our operations, and our inventory deployment
program distinguishes us from other distributors of RV and boating parts,
supplies and accessories.

THE PARTS, SUPPLIES AND ACCESSORIES AFTER-MARKETS

Many manufacturers of RV and boating replacement parts, supplies and
accessories rely on independent distributors, such as the Company, to market
and distribute their products or to augment their own product distribution
operations. Distributors relieve manufacturers of a portion of the costs
associated with distribution of their products while providing geographically
dispersed selling, order processing and delivery capabilities. At the same
time, distributors offer retailers access to a broad line of products and the
convenience of rapid delivery of orders.

The market for RV parts, supplies and accessories distributed by the
Company includes both RV dealers and RV supply stores and service centers. The
products that we sell include optional equipment and accessories, such as
awnings, trailer hitches, air conditioning units, water heaters and other
accessories, and replacement and repair parts and maintenance supplies. The
market for boating parts, supplies and accessories is comprised primarily of
independent boat dealers that sell boats and boating parts, supplies and
accessories at retail. Independent boat dealers purchase primarily replacement
parts, boating supplies and smaller accessories from the Company. See
Business  Products.

PRODUCTS

General. We carry a full line of more than 15,000 recreational vehicle
parts, supplies and accessories which we purchase from more than 500
manufacturers. Recreational vehicle products distributed by the Company
include awnings, antennae, vents, electrical items, towing equipment and
hitches, appliances such as air conditioners, refrigerators, ranges and
generators, LP gas equipment, portable toilets and plumbing parts, hardware and
tools, specialized recreational vehicle housewares, chemicals and supplies, and
various accessories, such as ladders, jacks, fans, load stabilizers, mirrors
and compressors.

Boating and marine products that we distribute include boat covers,
stainless steel hardware, depth sounders, anchors, life jackets and other
marine safety equipment and fishing equipment.

Proprietary Products. We have introduced into the RV and boating
Aftermarkets a number of proprietary products, which are manufactured
specifically for us, generally on an exclusive basis, by a number of different
independent manufacturers. The proprietary products, which are designed for us
by independent professional product design firms or by the independent
manufacturers that we have retained to manufacture the products for us, include
trailer hitches, plastic wastewater tanks, vent lids and stabilizing jacks. We
market these proprietary products under our own brand-names in competition with
brand name products from traditional suppliers, which usually sell their
products to a number of distributors and into other markets. However, some of
our proprietary products currently lack the same name brand recognition as the
competitive products manufactured by traditional suppliers, which may have a
limiting effect on unit sales of and on the prices that we are able to charge
for our proprietary products. It also means that the costs of marketing the
proprietary products generally is greater than for brand-name products, which
somewhat offsets the margin advantage we gain on sales of our proprietary
products.

MARKETING AND SALES

Our Customers. Our customers include (i) RV dealers, which primarily
purchase optional equipment and accessories for new recreational vehicles and
replacement and repair parts for their service departments, (ii) independent
recreational vehicle supply stores and service centers
that purchase parts, supplies and accessories for resale to owners of RVs and
for their service centers, and (iii) independent boat dealers that purchase
small accessories for new boats and replacement parts and boating supplies for
resale to boat owners and operators. We are not dependent on any single
customer for any material portion of our business and no single customer
accounted for as much as 5% of our sales in 1999, 2000 or 2001.

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Our Customer Service Center and Computerized Order Entry and Warehousing
System. We have designed and implemented a computer-based order entry and
warehousing system which enables our customers to transmit orders
electronically to our central computers and also enables us, subject to product
availability, to prepare and invoice most customer orders within 24 hours of
receipt.

We also operate a national customer sales and service center, located in
Northern California, through which our customers can obtain product information
and place orders by telephone using our toll-free telephone numbers. With the
exception of holidays, our customer sales and service center is operational for
a total of 13 hours per day, Monday through Friday and is staffed by sales
personnel who are trained to promote the sale of our products and to handle
customer service issues. Currently, the number of customer calls handled by
our national customer sales and service center, which can be accessed by
virtually all of the Companys customers in the United States and Canada,
ranges from 2,000 to 6,000 per day and the customer service center has enabled
the Company to improve customer service and at the same time reduce our selling
expenses.

Orders transmitted from customers either electronically or by telephone to
the national customer sales and service center are input into our IBM AS 400
computer and then are relayed to the regional distribution center selected by
the customer, where the products are selected, packed and shipped. At the time
the order is received, the customer is informed, either by electronic
confirmation, or by the sales person handling the customers call at the
customer service center, that the order has been accepted and whether any items
are not currently in stock. In addition, we offer to participating customers a
split shipment program by which a customers order for a product that is not
available from the Companys distribution center closest to the customer, will
be shipped to that customer from another of the Companys distribution centers
that has been pre-selected by that customer as a back-up distribution center,
when that product is available at that back-up distribution center. One of the
objectives of our new inventory management and deployment program is to improve
our ability to fulfill customer orders from the distribution centers closest to
the customer and thereby improve the level and reduce the cost of service to
the customer. See DISTRIBUTION below.

DISTRIBUTION

General. Our regional distribution and warehouse centers in North America
carry an inventory of up to approximately 15,000 recreational vehicle parts,
supplies and accessories. In addition, our distribution centers stock, in
varying quantities, up to approximately 10,000 boating and marine parts,
supplies and accessories.

We rely primarily on independent freight companies to ship our products to
our customers.

Inventory Management and Deployment Program. Over the past 18 months we
have developed and have been implementing a new and ambitious inventory
management and deployment program that involved an internal reorganization and
a better integration of the operations of our distribution centers in the
United States and Canada. This program, the development and implementation of
which is now largely completed, is designed to enable us to place fewer, but
larger, orders with our suppliers and thereby consolidate product shipments, to
reduce our inventory levels, and to provide greater flexibility to meet changing
customer demands, with the overall objectives of improving service levels to
our customers, improving our gross margins, and reducing freight costs and
other costs of operations. The development and implementation of this program
did cause some disruptions in our operations and increases in our costs.
However, now that implementation is largely complete, we believe that the
program will enable us to improve our service levels and will produce greater
efficiencies and costs savings in our operations. See "MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" in Part II of this Report.

ARRANGEMENTS WITH MANUFACTURERS

General. The products which we distribute are purchased from more than
500 different manufacturers. As is typical in the industry, in most instances
we acquire those products on a purchase order basis and we have no guaranteed
price or delivery agreements with manufacturers, including the manufacturers
that manufacture proprietary products for us. As a result, short-term
inventory shortages can occur. We sometimes choose to carry only a single
manufacturers products for certain of the brand-name product lines that we
sell, although comparable products usually are available from multiple sources.
In addition, we obtain each of our proprietary products from a single source
manufacturer, although in most instances we own the tooling required for their
manufacture.

3



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Dependence on a single manufacturer for any product or line of related
products, however, presents some risks, including the inability to readily
obtain alternative product supply sources in the event that a single source
supplier (i) encounters quality or other production problems, (ii) decides to
enter into an exclusive supply arrangement or alliance with a competing
distributor, or (iii) decides to vertically integrate its operations to include
not only manufacturing, but also distribution, of its products. A termination
of a sole source supply relationship could adversely affect the Companys sales
and operating income, possibly to a significant extent.

No manufacturer or supplier of products to the Company accounted for more
than 5% of the Companys product purchases in 2001, 2000 or 1999, other than
Airxcel, Inc. (Airxcel). Airxcel supplies the Company with its requirements
for RV air conditioners sold under the Coleman® brand name, under a multi-year
product supply agreement. In the years ended December 31, 2001, 2000, and
1999, the products supplied by Airxcel accounted for approximately 12%, 12% and
13%, respectively, of the Companys net sales in those years.

Manufacturers generally warrant the products distributed by the Company
and allow the Company to return defective products, including those that have
been returned to the Company by its customers. The Company does not
independently warrant the products that it distributes.

COMPETITION

The Company faces significant competition. There are a number of national
and regional distributors of recreational vehicle and boating parts, supplies
and accessories that compete with the Company. There also are mass
merchandisers, catalog houses and national and regional retail chains
specializing in the sale of recreational vehicle or boating parts, supplies and
accessories that purchase such products directly from manufacturers. The mass
merchandisers and national and regional chains compete directly with the RV and
boating supply stores and service centers that purchase products from the
Company. This competition affects both the volume of Companys sales, and the
prices it is able to charge for the products it sells, to RV and boating supply
stores. Additionally, there is no assurance that changes in supply
relationships or new alliances within the recreational or boating products
industry will not occur that would further increase competition. See
Managements Discussion and Analysis of Financial Condition and Results of
Operations in Part II of this Report.

The Company, like most of its competitors, competes on the basis of the
quality, speed and reliability of its service, the breadth of its product lines
and price. The Company believes that it is highly competitive in each of those
areas.

EMPLOYEES

At December 31, 2001, the Company had approximately 330 full-time
employees, which includes employees in Canada. During the peak summer months,
the Company also employs part-time workers at its regional distribution
centers. None of the Companys employees is represented by a labor union.

4



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ITEM 2. PROPERTIES

The Company operates 13 regional distribution centers in 12 states in the
United States and 4 regional distribution centers, each located in a different
Province, in Canada. All of these facilities are leased under triple net
leases which require the Company to pay, in addition to rent, real property
taxes, insurance and maintenance costs. The following table sets forth certain
information regarding those facilities.

|                            |  |         |         |                 |  |                   
|--------------------------- |  | ------- | ------- | --------------- |  | ------------------
|                            |  |         |         |                 |  | Lease             
|                            |  | Square  |         |                
|Location                    |  | Footage |         | Expiration Date
|                            |  |         |         |                
|Wilsonville, Oregon         |  |         | 57,000  |                 |  | December 31, 2006 
|Visalia, California         |  |         | 70,000  |                 |  | February 28, 2007 
|Fort Worth, Texas           |  |         | 90,670  |                 |  | April 30, 2004    
|San Antonio, Texas          |  |         | 27,300  |                 |  | April 30, 2003    
|Denver, Colorado            |  |         | 50,000  |                 |  | September 30, 2004
|Elkhart, Indiana            |  |         | 109,000 |                 |  | December 31, 2005 
|Lancaster, Pennsylvania     |  |         | 64,900  |                 |  | February 29, 2004 
|Atlanta, Georgia            |  |         | 66,800  |                 |  | August 31, 2004   
|Tampa, Florida              |  |         | 53,100  |                 |  | September 30, 2003
|Phoenix, Arizona            |  |         | 36,500  |                 |  | March 31, 2007    
|Salt Lake City, Utah        |  |         | 37,800  |                 |  | March 31, 2003    
|Albany, New York            |  |         | 52,500  |                 |  | April 30, 2004    
|Eau Claire, Wisconsin       |  |         | 36,000  |                 |  | October 31, 2004  
|Montreal, Quebec            |  |         | 40,715  |                 |  | January 1, 2010   
|Toronto, Ontario            |  |         | 34,020  |                 |  | December 1, 2006  
|Calgary, Alberta            |  |         | 30,750  |                 |  | December 1, 2003  
|Vancouver, British Columbia |  |         | 22,839  |                 |  | June 1, 2005      

The Companys executive offices are located in Morgan Hill, California, a
suburb of San Jose, where it leases 26,000 square feet of office space. The
Companys address is 350 Woodview Avenue, Morgan Hill, California 95037 and its
telephone number at that location is (408) 782-6686.

The Company also leases 1,500 square feet of office space in Seattle,
Washington and 2,000 square feet in Anchorage, Alaska where the Company
maintains sales offices.




ITEM 3. LEGAL PROCEEDINGS

The Company from time to time is named as a defendant, sometimes along
with product manufacturers and others, in product liability and personal injury
litigation. The Company believes that this type of litigation is incident to
its operations, and since it has insurance, and in many instances also
indemnities from manufacturers, covering any potential liability, it believes
that such litigation will not materially affect the Company.




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

None.

5



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EXECUTIVE OFFICERS OF REGISTRANT

|                     |  |     |    |          |  |                                                                             
|-------------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------------------
|Name                 |  | Age |    | Position
|                     |  |     |    |         
|Thomas R. McGuire    |  |     | 58 |          |  | Chairman of the Board and Chief Executive Officer                           
|Sandra A. Knell      |  |     | 44 |          |  | Executive Vice President  Finance and Chief Financial Officer
and Secretary
|David A. Berger      |  |     | 48 |          |  | Executive Vice President  Marketing  Marine Products Division             
|Dennis A. Castagnola |  |     | 54 |          |  | Executive Vice President  Sales                                            

Set forth below is certain information regarding the Companys executive
officers.

THOMAS R. MCGUIRE. Mr. McGuire is a founder of the Company and has been
Chairman of the Board and Chief Executive Officer of the Company since the
Companys inception. From 1981 until August 1985 he also served as the
Companys Chief Financial Officer and Secretary.

SANDRA A. KNELL. Mrs. Knell has been the Companys Executive Vice
President  Finance, Chief Financial Officer and Secretary since August 1985.
From 1984 until she joined the Company, Mrs. Knell was an Audit Manager, and
for the prior four years was a senior and staff accountant, with Grant Thornton
LLP (formerly Alexander Grant & Co.). Mrs. Knell is a Certified Public
Accountant.

DAVID A. BERGER. Mr. Berger served as Executive Vice President -
Marketing from May 1988 until September 1993. Due to the growth of the
Companys marine products sales, in September 1993 the Companys marketing
department was restructured into two separate departments, one for marine
products and the other for RV products, and Mr. Berger was placed in charge of
marketing for the Companys marine products division. From August 1986 to May
1988, Mr. Berger was Senior Vice President Purchasing of the Company. For the
prior 14 years he held various management positions with C/P Products Corp., a
distributor of recreational vehicle parts and accessories acquired by the
Company in 1985.

DENNIS A. CASTAGNOLA. Mr. Castagnola was appointed to his current
position of Executive Vice President  Sales in November 2000. From May 1994
through November 2000, he served as Senior Vice President  Proprietary
Products, where he directed the Companys proprietary products program. For
the prior 19 years, he held various positions with the Company, including Vice
President/Division Manager of the Companys Portland, Oregon Distribution
Center.

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PART II






|        |                                                                             
|------- | ----------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

The Companys shares of common stock are listed and trade on the American
Stock Exchange under the trading symbol CRV.

The following table sets forth for the calendar quarters indicated the
range of the high and low sales prices per share of the Companys common stock
on the American Stock Exchange.

|     |                |  |      |      |     |  |   |      | 
|---- | -------------- |  | ---- | ---- | --- |  | - | ---- | 
|     |                |  | HIGH |      | LOW
|     |                |  |      |      |    
|2001 |                |  |      |      |     |  |   |     
|     | First Quarter  |  | $    | 1.13 |     |  | $ | 0.56 | 
|     | Second Quarter |  |      | 0.72 |     |  |   | 0.52 | 
|     | Third Quarter  |  |      | 0.75 |     |  |   | 0.37 | 
|     | Fourth Quarter |  |      | 0.60 |     |  |   | 0.41 | 
|2000 |                |  |      |      |     |  |   |     
|     | First Quarter  |  | $    | 2.38 |     |  | $ | 1.88 | 
|     | Second Quarter |  |      | 2.25 |     |  |   | 1.13 | 
|     | Third Quarter  |  |      | 1.75 |     |  |   | 1.00 | 
|     | Fourth Quarter |  |      | 1.44 |     |  |   | 0.63 | 

On March 15, 2002 the closing price per share of the Companys common
stock on the American Stock Exchange was $1.20 and there were approximately
1,240 holders of record of the Companys common stock.

DIVIDENDS AND SHARE REPURCHASES

The Company has a policy of retaining earnings to support the growth of
its business and, therefore, does not anticipate that any cash dividends will
be paid in the foreseeable future. In addition, payment of cash dividends by
the Company is restricted by its loan agreements. See Note C to the Companys
Consolidated Financial Statements.

In early 1999 the Company commenced an open market and private stock
repurchase program. The Company made purchases of $2,975,000 of shares under
that program, that were funded with borrowings under a term loan from the same
lender with which it has its revolving credit facility. We do not currently
expect to make any purchases of shares in 2002. See Managements Discussion
and Analysis of Financial Condition and Results of Operations  Liquidity and
Capital Resources.

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ITEM 6. SELECTED FINANCIAL DATA

The selected operating data set forth below for the fiscal years ended
December 31, 2001, 2000 and 1999, and the selected balance sheet data at
December 31, 2001 and 2000, are derived from the Companys audited financial
statements included elsewhere in this Report and should be read in conjunction
with those financial statements. The selected financial data for the fiscal
years ended December 31, 1998 and 1997 and at December 31, 1999, 1998 and 1997
are derived from audited financial statements which are not included in this
report.

|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |        |  
|----------------------------------------------------------- | ------------------- | - | ------------------------------------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | -
|                                                            |                     |   | Year Ended December 31,              
|                                                            |                     |   |                                      
|                                                            |                     |   | 2001                                  |        | 2000 |   | 1999    |        | 1998 |   | 1997   
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |        
|                                                            |                     |   | (In thousands, except per share data)
|Operating Data:                                             |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|Net Sales                                                   |                     | $ | 134,958                               |        |      | $ | 147,491 |        |      | $ | 154,800 |        |  | $ | 148,680 |        |  | $ | 135,952 |       
|Cost of sales (including distribution costs)                |                     |   | 115,740                               |        |      |   | 125,426 |        |      |   | 128,804 |        |  |   | 124,452 |        |  |   | 117,272 |       
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                                            | Gross margin        |   |                                       | 19,218 |      |   |         | 22,065 |      |   |         | 25,996 |  |   |         | 24,228 |  |   |         | 18,680 |  
|Selling, general and administrative expenses                |                     |   | 22,044                                |        |      |   | 24,302  |        |      |   | 23,140  |        |  |   | 20,301  |        |  |   | 20,147  |       
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                                            | Operating margin    |   |                                       | (2,826 | )    |   |         | (2,237 | )    |   |         | 2,856  |  |   |         | 3,927  |  |   |         | (1,467 | )
|Equity in net earnings (loss) of affiliated companies       |                     |   | 107                                   |        |      |   | 50      |        |      |   | 76      |        |  |   | (170    | )      |  |   | 673     |       
|Other income (expense)                                      |                     |   | (974                                  | )      |      |   | (1,804  | )      |      |   | (2,386  | )      |  |   | (2,704  | )      |  |   | (5,775  | )     
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|Earnings (loss) before income taxes                         |                     |   | (3,693                                | )      |      |   | (3,991  | )      |      |   | 546     |        |  |   | 1,053   |        |  |   | (6,569  | )     
|Income tax provision (benefit)                              |                     |   | (1,198                                | )      |      |   | (1,150  | )      |      |   | 536     |        |  |   | 927     |        |  |   | (1,303  | )     
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                                            | Net earnings (loss) |   | $                                     | (2,495 | )    |   | $       | (2,841 | )    |   | $       | 10     |  |   | $       | 126    |  |   | $       | (5,266 | )
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|Net earnings (loss) per share-diluted(1)                    |                     | $ | (.57                                  | )      |      | $ | (.66    | )      |      | $ | .00     |        |  | $ | .02     |        |  | $ | (1,01   | )     
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|Shares used in computation
of net earnings (loss) per share |                     |   | 4,360                                 |        |      |   | 4,324   |        |      |   | 4,641   |        |  |   | 5,282   |        |  |   | 5,239   |       
|                                                            |                     |   |                                       |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       

|                         |  |                 |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|------------------------ |  | --------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                         |  | At December 31,
|                         |  |                
|                         |  | 2001            |        | 2000 |  | 1999 |        | 1998 |  | 1997
|                         |  |                 |        |      |  |      |        |      |  |     
|                         |  | (In thousands) 
|Balance Sheet Data:      |  |                 |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Working capital          |  | $               | 35,227 |      |  | $    | 40,643 |      |  | $    | 45,653 |  |  | $ | 42,937 |  |  | $ | 48,999 | 
|Total assets             |  |                 | 60,236 |      |  |      | 63,890 |      |  |      | 69,687 |  |  |   | 66,813 |  |  |   | 72,663 | 
|Long-term obligations(2) |  |                 | 21,785 |      |  |      | 25,140 |      |  |      | 28,105 |  |  |   | 23,175 |  |  |   | 29,726 | 
|Shareholders equity     |  |                 | 25,375 |      |  |      | 28,165 |      |  |      | 31,243 |  |  |   | 33,831 |  |  |   | 33,996 | 



---

|(1) |  | See Note I to the Companys Consolidated Financial Statements.                                                                                          
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Exclusive of current portion. For additional information regarding
long-term obligations, see Note C to the Companys Consolidated Financial
Statements.

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

ACCOUNTING POLICIES AND ESTIMATES

General

In accordance with generally accepted accounting principles, as applied in
the United States (GAAP), we record most of our assets at the lower of cost
or fair value. In determining the fair value of some of our assets,
principally accounts receivable, inventories, deferred income taxes and costs
in excess of net assets of acquired businesses (commonly known as goodwill),
we must make judgments, estimates and assumptions regarding future events and
circumstances that could affect the value of those assets, such as future economic conditions that will affect our ability
to collect our accounts receivable or sell our inventories in future
periods. Those judgments, estimates and assumptions are based on current information
available to us at the time they are made. Many of those events and
circumstances, however, are outside of our control and if changes in those
events or circumstances occur thereafter, GAAP will require us to adjust the
earlier estimates that are affected by those changes. Any downward adjustments
are commonly referred to as write-downs of assets involved.

It is our practice to establish reserves or allowances against which we
are able to charge any such downward adjustments or write-downs in the fair
value of any of our assets. Examples include reserves or allowances
established for uncollectible accounts receivable (sometimes referred to as
bad debt reserves) and reserves for inventory obsolescence. With respect to
other assets, such as goodwill, we write down their fair value directly upon
determining that, due to changes in events or circumstances, the amounts at
which they are carried on our books exceed their current fair value. Such
reserves or allowances are established, and such write-downs are effectuated,
by charges to income or increases in expense in our statement of operations in
the periods when those reserves or allowances are established or those
write-downs recorded. As a result, our judgments, estimates and assumptions
about future events can and will affect not only the amounts at which we record
these assets on our balance sheet, but also our results of operations.

Under GAAP, most businesses also must make estimates or judgments
regarding the periods during which sales are recorded and also the
amounts at which they are recorded. Those estimates and judgments will depend
on such factors as the steps or actions that a business must take to complete a
sale of products to or the provision of services for a customer and the
circumstances under which a customer would be entitled to return the products
or reject or adjust the payment for the services. Additionally, in the case of
a company that grants its customers contractual rights to return products sold
to them, GAAP requires that the company establish a reserve or allowance for
product returns by means of a reduction in the amount at which its sales are
recorded primarily based on the nature, extensiveness and duration of those
rights and its historical return experience.

In making our estimates and assumptions we follow GAAP and accounting
practices applicable to our business that we believe, after consultation with
our independent public accountants, will enable us to make fair and consistent
estimates of the fair value of those assets and establish adequate reserves or
allowances. Additionally, as part of the audit of our annual financial
statements, our independent public accountants examine, on a test basis, the
evidence on which we rely, and assess the accounting principles that we use and
the significant estimates that we make, in determining the amounts at which we
propose to record our assets and establish our reserves in our financial
statements. See Consolidated Financial Statements Report of Independent
Certified Public Accountants in Item 8 of this Report.

Set forth below is a summary of the accounting policies that we believe
are material to an understanding of our financial condition and results of
operations that are discussed below.

Revenue Recognition and the Allowance for Product Returns. We recognize
revenue from the sale of a product upon its shipment to the customer. We
provide our customers with a limited right of return. We establish an
allowance for potential returns which reduce the amounts of our reported sales.
We estimate the allowance based on historical experience with returns of like
products and current economic data, which can affect the level at which
customers submit product returns.

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Accounts
Receivable and the Allowance for Doubtful Accounts. In the normal
course of business we extend 30 day payment terms to our customers and, due to
the seasonality of our business, during late fall and winter we grant extended
payment terms to those of our customers that have good credit records. We
regularly review our customers accounts and estimate the amount of and
establish an allowance for uncollectible amounts or receivables in each
reporting period. The amount of the allowance is based on several factors,
including the age of unpaid amounts, a review of significant past due accounts,
and current economic trends, which affects the ability of customers to keep
their accounts current. Estimates of uncollectible amounts are revised each
period, and changes are recorded in the period they become known. For example,
if the financial condition of the Companys customers or economic conditions
were to deteriorate, adversely affecting their ability to make payments,
increases in the allowance may be required. Since the allowance is created by
recording a charge against income, an increase in the allowance will cause a
decline in our operating results in the period when the increase is recorded.

Reserve for Excess and Obsolete Inventory. Inventories are valued at the
lower of cost (first-in, first-out) or market and are reduced by an
allowance for excess and slowing moving or obsolete inventories. The amount of
the allowance is determined on the basis of historical experience with
different product lines, estimates concerning future economic conditions and
estimates of future sales. If there is an economic downturn or a decline in
sales, causing inventories of some product lines to accumulate, it may become
necessary to increase the allowance. Other factors that can require increases
in the allowance or inventory write downs are reductions in pricing or
introduction of new or competitive products by manufacturers; however, due to
the relative maturity of the markets in which the Company operates, usually
these are not significant factors. Increases in this allowance also will cause
a decline in operating results as such increases are effectuated by charges
against income.

Allowance for Deferred Income Taxes. We record as a deferred tax asset
on our balance sheet tax loss and tax credit carryforwards, to the extent they are
available to offset or reduce our future income tax liability. At December 31,
2001 the amount of that asset totaled approximately $3.6 million, net of a
valuation allowance of $120,000. Under applicable federal and state income tax
laws and regulations, deferred tax assets relating to tax loss and
tax credit
carryforwards will expire if not used within specified time periods.
Accordingly, the ability to use such assets depends on generating taxable
income during those time periods. As a result, we establish a valuation
allowance, which is applied as a reduction of the gross amount of that deferred
tax asset, to take account of the possibility that we will not generate
sufficient taxable income in the future to fully utilize this asset. In
determining the amount of that allowance, we considered the taxable losses
incurred in 2000 and 2001 and also current operating and economic trends as
they may affect the amounts and timing of future taxable income that we
currently believe we can generate. Currently available evidence leads us to
believe that it is more likely than not that we will be able to utilize the
deferred tax asset that is recorded in our financial statements. However, if
due to future events or circumstances, such as an economic downturn that would
adversely affect our operating results, we subsequently come to a different
conclusion regarding our future taxable income and, hence, our ability to fully
utilize this asset, we would increase the allowance and thereby reduce the
amount at which we record the deferred tax asset. That reduction would be
effectuated by an increase in the provision (or a reduction in the credit) for
income taxes in our statement of operations, which would have the effect of
causing a decline in our operating results.

Long-Lived Assets. Long-lived assets such as goodwill and intangible
assets are reviewed for impairment when events or circumstances indicate that
the carrying value may be not be recoverable. Estimated undiscounted expected
future cash flows are used to determine if an asset is impaired, in which case
the carrying value of the asset would be reduced to fair value. Any resulting
impairment would be recorded as a charge against income in the period in
which the impairment was recorded. Beginning with our fiscal year ending
December 31, 2002, however, we will be required to assess our goodwill for
impairment based on the new standards established by SFAS No. 142. We will not
be able to determine the full effect of these new standards on our financial
position or our results of operations until we are able to complete our
impairment analysis using the new standards. Under existing accounting
standards, our assessment of goodwill indicated that no impairment existed as
of December 31, 2001. In the event our analysis under the new standards
indicates this goodwill is impaired, we will be required to record a charge to
our earnings in fiscal 2002, the amount of which is not presently
determinable. See Paragraph 6 of Note A to our Consolidated
Financial Statements for additional information regarding SFAS No. 142.

Foreign Currency Translation. The financial position and results of
operations of our foreign subsidiaries are measured using local currency as the
functional currency. Assets and liabilities of each foreign subsidiary are
translated into U.S. dollars at the rate of exchange in effect at the end of
each reporting period. Revenues and expenses are translated into U.S. dollars
at the average exchange rate for the reporting period. Foreign currency

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translation gains and losses not impacting cash flows are credited to or
charged against other comprehensive income (loss). Foreign currency
translation gains and losses arising from cash transactions are credited to or
charged against current earnings.

RESULTS OF OPERATIONS

Factors Generally Affecting Sales of RV and Boating Products

We believe that the Company is one the largest wholesale distributors of
replacement parts, accessories and supplies for recreational vehicles (RVs),
and boats in North America. Our sales are made to retail parts and supplies
stores, service and repair establishments and new and used RV and boat dealers
(After-Market Customers). Our sales are affected primarily by (i) usage of
RVs and boats which affects the consumers needs for and purchases of
replacement parts, repair services and supplies, and (ii) sales of new RVs and
boats, because consumers often accessorize their RVs and boats at the time of
purchase.

The usage and the purchase, by consumers, of RVs and boats depend, in
large measure, upon the extent of discretionary income available to consumers
and their confidence about economic conditions. Weather conditions also affect
the usage of RVs and boats. Additionally, shortages in the supply and
increases in the prices of gasoline also can lead to declines in the usage and
purchases of RVs and boats. As a result, our sales and operating results can
be, and in the past have been, adversely affected by recessionary economic
conditions, increases in interest rates, increases in the prices of gasoline,
and unusually adverse weather conditions. We believe that increases in
gasoline prices, which occurred early in 2001, and growing uncertainties among
consumers about economic conditions contributed to our poor financial
performance in 2001.

Net Sales. Net sales in 2001 declined by $12,533,000 or 8.5% as compared
to 2000. We believe that this decline was attributable to a number of factors,
including rising gasoline prices in the first part of the year and
uncertainties among consumers about the economy, which resulted in decreases in
both the usage and purchases of recreational vehicles and boats, and the
Companys implementation of its new inventory management and deployment program
which led to temporary disruptions in service levels to our customers.
However, most of the sales decline occurred in the first half of the year. In
the third quarter of 2001 sales declined 3.2%, as compared to the corresponding
quarter of 2000 and sales increased 6.8% in the fourth quarter of 2001 as
compared to the fourth quarter of 2000. We believe that this reversal of our
sales decline reflects an improvement in consumer confidence about the economy
coupled with security concerns about foreign travel and travel by air which is
causing an increase in domestic travel and, we believe, in the use of RVs;
declines in interest rates and gasoline prices; and our progress in
implementing our inventory management and deployment program, which has enabled
us to improve our service levels to our customers. We anticipate continued
improvement in economic conditions and in the service levels we provide to our
customers and, as a result, we currently expect to see further improvements,
year over year, in sales in 2002.

Net sales in 2000 declined by approximately $7,309,000 or 4.7% as compared
to 1999. We believe that this decline, which began late in the second quarter
of 2000, was primarily attributable to increases in gasoline prices and
interest rates which, coupled with growing uncertainties among consumers about
the economy during the latter part of that year, resulted in a decrease in both
the usage and purchase of recreational vehicles and boats and, in turn, led to
a decline in purchases of our products by our customers in response to these
conditions.

Gross Margin. Our gross margin declined to 14.2% of net sales in 2001
from 15.0% in 2000. This decrease was attributable to increased labor costs at
our distribution facilities caused by the implementation of our new inventory
management and deployment system and the relation of that increase to the
decline in our sales in 2001. That decrease more than offset an overall
reduction in the prices that we paid for the purchase of products from our
suppliers and increases in the prices we were able to charge for selected
products. The price concessions from our suppliers were the result of costs
savings we have been able to pass on to them that are attributable to our new
inventory management and deployment system which has enabled us to reduce the
frequency and increase the size of product shipments from them. We believe
that in 2002 we will receive continued price concessions from our suppliers
and, now that the implementation of our inventory management and deployment
system is substantially completed, that we will be able to reduce our labor
costs at our distribution facilities, and, thereby, achieve an improvement in
our gross margins from 2001.

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Our gross margin declined to 15.0% of net sales in 2000 from 16.8% in
1999. This decline was due primarily to increased price competition in the
second half of that year in response to slowing sales in our markets, the
adverse effect of lower sales volume on fixed costs and a change in the mix of
our sales to a higher proportion of higher priced, but lower margin
accessories.

Selling, General and Administrative Expenses. In 2001, selling, general
and administrative (SG&A) expenses declined, in absolute dollars, by 9% or
$2,258,0000, as compared to 2000 and, despite the decline in sales in 2001 also
declined as a percentage of net sales to 16.3% from 16.5% in 2000. These
declines were due primarily to our continuing cost containment efforts,
including reductions in labor costs that resulted from reductions in the number
of our employees and in salaries during 2001. Also contributing to the
reduction in SG&A expenses in 2001 was a reduction in marketing costs. We
continue to look for opportunities to streamline our organization, and
anticipate that SG&A expenses will again decline in 2002, both in absolute
dollars and as a percentage of net sales.

In 2000, SG&A increased in absolute dollars by approximately $1.2 million
and as a percentage of net sales to 16.5% from 15.0% in 1999. These increases
were primarily attributable to higher selling and marketing costs, as we
expanded our marine products marketing and sales efforts during 2000, and due
to expenses that we incurred in 2000 in connection the integration into our
operations, and the improvements made in the functionality, of a new computer
system that was installed in 1999.

Nearly all of our corporate overhead costs are incurred in the United
States. A portion of those costs are allocated to our foreign operations to
the extent that they directly benefit from the expenses incurred.

Operating Income. The decline in operating income in 2001 was due
primarily to the combined effects of the decreases in sales and gross margin,
which more than offset the reduction in SG&A expenses. The decline in
operating income in 2000 was due primarily to the combined effects of the
decreases in sales and gross margin and the increase in SG&A expenses.

Interest Expense. Interest expense in 2001 decreased by $713,000 or 24%
as compared to 2000. This decrease was the result of reductions in interest
rates during 2001, and reductions in average long-term borrowings outstanding
during the year that were made possible, in part, by inventory reductions that
we were able to implement as a result of our new inventory management and
deployment system.

During 2000, interest expense increased by $635,000 or 27%, as compared to
1999. This increase was primarily the result of increases in average long-term
borrowings outstanding during the first nine months of 2000, which were used to
fund operations and to fund repurchases of shares of our common stock in the
latter half of 1999 and, to a lesser extent, due to increases in interest rates
during 2000.

Other Income. Other income in 2001 was primarily attributable to the sale
of the real property where our distribution center in Portland, Oregon was
located. That distribution center was relocated, following that sale, to a
leased facility in the Portland area. Other income in 2000 was the result of a
one-time sale of one of our proprietary product lines to a recreational vehicle
supplies manufacturer, which has agreed to supply that product, along with
products from its other product lines, to us in future periods.

Income Taxes. Our effective income tax rate is affected by the amount of
our expenses that are not deductible for income tax purposes and by varying tax
rates on income generated by our foreign subsidiaries.

LIQUIDITY AND CAPITAL RESOURCES

We finance our working capital requirements for our operations primarily
with borrowings under a long-term revolving credit facility from a bank and
internally generated funds. Under the terms of the revolving credit facility,
which expires in May 2003, we may borrow up to the lesser of (i) $40,000,000
with seasonal reductions ranging from $30,000,000 to $35,000,000 between August
1 and February 28 of each year, or (ii) an amount equal to 80% of eligible
accounts receivable and between 50% to 60% of eligible inventory. Interest on
the revolving credit facility is payable at the banks prime rate plus 1.25%
or, at the Companys option but subject to certain limitations, at the banks LIBOR rate, plus 3.0 percent.

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At March 15, 2002, outstanding borrowings under the revolving credit
facility totaled $31,100,000. Our bank borrowings are secured by substantially
all of the Companys assets and rank senior in priority to other indebtedness
of the Company. Our revolving credit facility expires on May 31, 2003. As a
result, commencing in the second quarter of 2002, our bank borrowings, which
are currently classified as a long term liability, will have to be reclassified
as a short term liability until such time as we are able to obtain a new long
term credit facility.

We currently believe that we have good relations with our bank lender and,
if our operating results in 2002 improve, as we currently expect they will, we
believe we will be able to obtain a renewal or extension of our existing credit
agreement with our current lender or obtain a new credit facility with a new
lender. If, however, our operating results should deteriorate, or economic
conditions or conditions in the credit markets were to worsen, our costs of
borrowing could increase in 2003, or we could experience difficulties renewing
our existing or obtaining a new credit facility.

Due to the nature of our business, our primary need for working capital is
to finance our accounts receivable and our purchases of inventory. Typically
we bill our customers on an open account basis with 2% 10 day, net 30-day
terms. During late fall and winter, however, certain of our customers receive
extended payment terms. We were largely successful in late 2001 in securing
similar extended payment terms from some of our suppliers, which reduced the
amounts we had to borrow under our credit facility to make inventory purchases.
There is no assurance that we will be able to obtain extended payment terms
from our suppliers in the future. If we are unable to do so, it would require us to incur additional
borrowings under our credit facility or could adversely affect our ability to
timely pay our creditors and to purchase inventory. Also, in the event our
customers delay their payments to us, our payments to our creditors could also
be delayed.

We generally use cash for, rather than generate cash from, operations in
the first half of the year, because we build inventories, and accounts
receivables increase, as our customers begin increasing their product purchases
for the spring and summer selling seasons. See Seasonality and Inflation
below.

Net cash provided by operating activities was $3,303,000 in 2001, as
compared to $1,426,000 in 2000 and $777,000 in 1999. The increase in cash
provided by operations in 2001 was primarily attributable to an increase of
$4,465,000 in our accounts payable as a result of obtaining extended payment
terms from our suppliers.

During 2001, we received $2,669,000 from the sale of our Portland, Oregon
distribution facility. We have leased a smaller facility in nearby
Wilsonville, Oregon.

Capital expenditures were $324,000 in 2001 as compared to $1,265,000 in
2000 and $1,465,000 in 1999. Capital expenditures in 2000 and 1999 were
primarily related to the acquisition and installation of the Companys new
computer system in 1999 and improvements made in its functionality during 2000.

Borrowings under our credit facility decreased by $3,809,000 in 2001 and
by $781,000 in 2000, and increased $5,095,000 in 1999. We also repaid
$1,333,000 in other long-term debt in 2001, the majority of which was owed on
the mortgage for our Portland, Oregon distribution facility. In June 1999, we
made the final payment, in the amount of $2,333,000, on our outstanding senior
subordinated notes with borrowings under our credit facility. In early 1999,
we began an open market and private stock repurchase program and, during 1999,
we purchased 1,102,304 of shares of our common stock, also using borrowings
under our credit facility. We do not currently expect to make any purchases of
shares during 2002.

We lease our facilities and certain of our equipment under non-cancelable
operating leases. In 2001, rent expense under all operating leases totaled
approximately $3,449,000. Our future lease commitments are described in Note D
of Notes to the Companys Consolidated Financial Statements included elsewhere
in this Report.

SEASONALITY AND INFLATION

Seasonality. Sales of recreational vehicle and boating parts, supplies
and accessories are seasonal. We have significantly higher sales during the
six-month period from April through September than we do during the remainder
of the year. Because a substantial portion of the Companys expenses are
fixed, operating income declines and the Company sometimes incurs losses and
must rely more heavily on borrowings to fund operating requirements in months
when sales are lower.

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The following table presents unaudited quarterly financial information for
each of the fiscal years ended December 31, 2001 and 2000. This information
has been prepared by us on a basis consistent with our audited financial
statements included elsewhere in this Report. The information includes all
necessary adjustments, consisting only of normal recurring adjustments, that
management considers necessary for a fair presentation of the unaudited
quarterly operating results when read in conjunction with the consolidated
financial statements and notes thereto included elsewhere in this Report.
These quarterly operating results are not necessarily indicative of results
that may be expected in future periods.

|                                        |  |                |        |               |  |                    |        |                   |  |   |        |   |  |   |        |  
|--------------------------------------- |  | -------------- | ------ | ------------- |  | ------------------ | ------ | ----------------- |  | - | ------ | - |  | - | ------ | -
|                                        |  | Quarter Ended 
|                                        |  |               
|                                        |  | March 31, 2001 |        | June 30, 2001 |  | September 30, 2001 |        | December 31, 2001
|                                        |  |                |        |               |  |                    |        |                  
|                                        |  | (Unaudited)   
|Revenues                                |  | $              | 37,855 |               |  | $                  | 40,273 |                   |  | $ | 35,886 |   |  | $ | 20,944 |  
|Gross profit                            |  |                | 6,353  |               |  |                    | 5,810  |                   |  |   | 4,402  |   |  |   | 2,653  |  
|Net earnings (loss)                     |  |                | (48    | )             |  |                    | (734   | )                 |  |   | (455   | ) |  |   | (1,258 | )
|Net earnings (loss) per share  diluted |  | $              | (0.01  | )             |  | $                  | (0.17  | )                 |  | $ | (0.10  | ) |  | $ | (0.29  | )

|                                        |  |                |        |               |  |                    |        |                   |  |   |        |   |  |   |        |  
|--------------------------------------- |  | -------------- | ------ | ------------- |  | ------------------ | ------ | ----------------- |  | - | ------ | - |  | - | ------ | -
|                                        |  | Quarter Ended 
|                                        |  |               
|                                        |  | March 31, 2001 |        | June 30, 2001 |  | September 30, 2001 |        | December 31, 2001
|                                        |  |                |        |               |  |                    |        |                  
|                                        |  | (Unaudited)   
|Revenues                                |  | $              | 43,872 |               |  | $                  | 46,940 |                   |  | $ | 37,076 |   |  | $ | 19,603 |  
|Gross Profit                            |  |                | 8,114  |               |  |                    | 7,220  |                   |  |   | 5,180  |   |  |   | 1,551  |  
|Net earnings (loss)                     |  |                | 413    |               |  |                    | 311    |                   |  |   | (957   | ) |  |   | (2,610 | )
|Net earnings (loss) per share  diluted |  | $              | 0.10   |               |  | $                  | 0.07   |                   |  | $ | (0.22  | ) |  | $ | (0.60  | )

Inflation. Generally, we have been able to pass inflationary price
increases on to our customers. However, inflation also may cause or may be
accompanied by increases in gasoline prices and interest rates. Such
increases, or even the prospect of increases in the price or shortages in the
supply of gasoline, can adversely affect the purchase and usage of RVs and
boats, which can result in a decline in the demand for our Companys products.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk with respect to financial instruments is
primarily related to changes in interest rates with respect to borrowing
activities, which may adversely affect our financial position, results of
operations and cash flows. To a lesser degree, we are exposed to market risk
from foreign currency fluctuations associated with the our Canadian operations
and our Canadian currency denominated debt. We do not use financial
instruments for trading or other speculative purposes and are not party to any
derivative financial instruments.

In seeking to minimize the risks from interest rate fluctuations, we
manage exposures through our regular operating and financing activities. The
fair value of borrowings under our revolving credit facility approximate the
carrying value of such obligations. As of December 31, 2001, we had
outstanding $21.8 million under our revolving credit facility.

We sometimes enter into forward exchange agreements to reduce the effect
of foreign currency fluctuations on a portion of our inventory purchases in
Canada for our Canadian operations. The gains and losses on these contracts
are reflected in earnings in the period during which the transactions being
hedged are recognized. We believe that these agreements do not subject us to
significant market risk from exchange rate movements because the agreements
offset gains and losses on the balances and transactions being hedged. As of
December 31, 2001, there were no such agreements outstanding.

Approximately 15% of our debt is denominated in Canadian currency, which
also exposes us to market risk associated with exchange rate movements.
Historically, we have not used derivative financial instruments to manage our
exposure to foreign currency rate fluctuations since the market risk associated
with our foreign currency denominated debt has not been considered significant.

14



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CERTAIN FACTORS THAT COULD AFFECT FUTURE PERFORMANCE

Statements contained in this Annual Report that are not historical facts
or that discuss our expectations regarding our future operations or future
financial performance or trends in our business constitute forward-looking
statements. Forward-looking statements are estimates of future performance
or our future financial condition that are based upon current information and
that are subject to a number of risks and uncertainties that could cause our
actual operating results or our financial performance or condition in future
periods to differ significantly from those expected at the current time.
Those risks and uncertainties include, although they are not limited to, the
following:

Our Business is Seasonal and is Subject to Various Economic and Climatic
Influences. Our sales are affected directly by the purchase and usage levels
of RVs and boats. The purchase and, in particular, the usage of RVs and boats,
are affected by weather conditions. As a result, our sales and operating
results ordinarily decline in the winter months and we sometimes incur losses
in these periods of the year. Additionally, unusual weather conditions in a
particular season, such as unusually cold weather in the spring or summer
months, can cause period to period fluctuations in our sales and financial
performance. Purchases and usage of RVs and boats also are affected by
consumers level of discretionary income and their confidence about economic
conditions and changes in interest rates and in the availability and cost of
gasoline. As a result, our sales and operating results can be, and in the past
have been, adversely affected by the following:



| |  |  | Loss of confidence among consumers regarding economic
conditions and the onset of economic recessions, which affect the
willingness of consumers to purchase and use their RVs and boats;                                           
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Increases in interest rates which affect the availability and
affordability of financing for RVs and boats;                                                                                                                         
|
| |  |  | Increases in the costs and supply shortages of gasoline which
affect the costs of using and the ability to use RVs and boats; and                                                                                                   
|
| |  |  | Unusually severe or extended winter weather conditions, which
can reduce the usage of RV and boats for periods extending beyond
the ordinary winter months or to regions that ordinarily encounter
milder winter weather conditions.

These conditions also often lead to increased price competition in our markets
which could force us to reduce our prices, thereby reducing sales revenue and
our margins. These conditions contributed to the decline in our sales and the
losses we incurred in the years ended December 31, 2001 and 2000 and could
impact our operating results in the future.

We have financed our growth primarily with and rely heavily on bank
borrowings.We rely heavily on bank borrowings to fund our working capital
requirements and capital expenditures. Our outstanding borrowings could harm
us in the future. We may find it more difficult to obtain additional financing
to fund expansion or take advantage of other business opportunities, and we use
a substantial portion of our cash flow from operations to pay the principal and
interest on our debt. Therefore, our existing debt makes us more vulnerable to
general economic downturns and competitive pressures and, as discussed in the
Section of this Report entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations, the interest we have to pay on
such debt impacts our operating results.

Our Credit Facility Expires on May 31, 2003.Our credit facility, which
is our principal source of borrowings to fund working capital requirements and
capital expenditures will expire in approximately 14 months, on May 31, 2003.
We may encounter difficulties obtaining a renewal or extension of our existing
credit facility from our existing lender or a new credit facility from a new
lender to replace the existing credit facility and, even if we are able to do
so, our costs of borrowing may increase.

The Effects of Possible Changes in Supply Relationships in Our Markets.
As is the customary practice in our markets, in most instances we do not have
long term supply contracts with our product suppliers. As a result, product
suppliers are free to change the terms on which they will sell us products or
to discontinue supplying us with products altogether, because they may choose
to distribute their products directly to after-market dealers or because they
might choose to establish exclusive supply relationships with other
distributors. Additionally, manufacturers of new RVs and boats may choose to
incorporate optional equipment on their RVs and boats at the time of
manufacture that, historically were provided to their dealers by distributors
such as the Company. Any of these occurrences

15



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##### Table of Contents



could result in increased competition in our markets or reduce the number
of products we are able to offer our customers, which could cause our sales to
decline and could result in lower margins.

Additional uncertainties are discussed in the Section of this Report
entitled Managements Discussion and Analysis of Financial Condition and
Results of Operations, including, in particular, in the introductory portion
thereof that discusses our accounting policies and estimates and the
effects those policies and estimates can have on our future financial
position and operating results.

Due to these and other possible uncertainties and risks, readers are
cautioned not to place undue reliance on forward-looking statements contained
in this Report, which speak only as of the date of this Annual Report. We
also disclaim any obligation to update forward-looking information contained
in this Report, whether as a result of new information, future events or
otherwise.




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 2001

|                                   |                                                                                                      |  |      |    | 
|---------------------------------- | ---------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                   |                                                                                                      |  | PAGE
|                                   |                                                                                                      |  |     
|Consolidated Financial Statements: |                                                                                                      |  |      |   
|                                  
|                                   | Report of Independent Certified Public Accountants                                                   |  |      | 17 | 
|                                  
|                                   | Consolidated Balance Sheets, December 31, 2001 and 2000                                              |  |      | 18 | 
|                                  
|                                   | Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000 and 1999           |  |      | 19 | 
|                                  
|                                   | Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999           |  |      | 20 | 
|                                  
|                                   | Consolidated Statement of Shareholders Equity for the Years Ended December 31, 2001, 2000 and 1999  |  |      | 21 | 
|                                  
|                                   | Notes to Consolidated Financial Statements                                                           |  |      | 22 | 
|                                  
|Financial Statement Schedules:     |                                                                                                      |  |      |   
|                                  
|                                   | Schedule II  Valuation and Qualifying Accounts for the Years Ended December 31, 2001, 2000 and 1999 |  |      | 30 | 

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | (Other Financial Statement Schedules are omitted as the information is not
required, is not material or is otherwise furnished.)

16



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REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Shareholders The Coast Distribution System, Inc.

We have audited the accompanying consolidated balance sheets of The Coast
Distribution System, Inc. and Subsidiaries as of December 31, 2001 and 2000,
and the related consolidated statements of operations, shareholders equity,
and cash flows for each of the three years in the period ended December 31,
2001. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Coast
Distribution System, Inc. and Subsidiaries as of December 31, 2001 and 2000,
and the consolidated results of their operations and their consolidated cash
flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States
of America.

We have also audited Schedule II of The Coast Distribution System, Inc. and
Subsidiaries for each of the three years in the period ended December 31, 2001.
In our opinion, this schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly, in all material respects, the
information therein.

/s/ Grant Thornton LLP

San Jose, California
March 8, 2002

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THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands Except Per Share Amounts)

|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |        |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------- | ------ | ------------ | ------ | ---- | ------ | ------ | ------ | 
|                                                                                                                                                  |                                                                                                 |                           |        | As of       
|                                                                                                                                                  |                                                                                                 |                           |        | December 31,
|                                                                                                                                                  |                                                                                                 |                           |        |             
|                                                                                                                                                  |                                                                                                 |                           |        | 2001         |        | 2000
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |     
|ASSETS                                                                                                                                            |                                                                                                 |                           |        |              |        |      |        |       
|Current Assets                                                                                                                                    |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  | Cash                                                                                            |                           | $      | 1,001        |        |      | $      | 539    |       
|                                                                                                                                                  | Accounts receivable (less allowance for doubtful accounts of $1,082
in 2001 and $1,040 in 2000) |                           |        | 12,760       |        |      |        | 12,996 |       
|                                                                                                                                                  | Inventories                                                                                     |                           |        | 32,356       |        |      |        | 33,343 |       
|                                                                                                                                                  | Prepaid expenses                                                                                |                           |        | 198          |        |      |        | 799    |       
|                                                                                                                                                  | Deferred income taxes                                                                           |                           |        | 1,772        |        |      |        | 1,702  |       
|                                                                                                                                                  | Income tax refunds receivable                                                                   |                           |        | 10           |        |      |        | 893    |       
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  |                                                                                                 | Total current assets      |        |              | 48,097 |      |        |        | 50,272 | 
|Property, Plant and Equipment                                                                                                                     |                                                                                                 |                           | 2,137  |              |        |      | 4,139  |       
|Other Assets                                                                                                                                      |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  | Costs in excess of net assets of acquired businesses                                            |                           |        | 6,426        |        |      |        | 7,061  |       
|                                                                                                                                                  | Deferred income taxes                                                                           |                           |        | 2,030        |        |      |        | 788    |       
|                                                                                                                                                  | Other                                                                                           |                           |        | 1,546        |        |      |        | 1,630  |       
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  |                                                                                                 | Total other assets        |        |              | 10,002 |      |        |        | 9,479  | 
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  |                                                                                                 | $                         | 60,236 |              |        | $    | 63,890 |       
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|LIABILITIES                                                                                                                                       |                                                                                                 |                           |        |              |        |      |        |       
|Current Liabilities                                                                                                                               |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  | Accounts payable                                                                                |                           | $      | 10,603       |        |      | $      | 6,138  |       
|                                                                                                                                                  | Accrued liabilities                                                                             |                           |        | 2,241        |        |      |        | 2,423  |       
|                                                                                                                                                  | Current maturities of long-term obligations                                                     |                           |        | 26           |        |      |        | 1,763  |       
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  |                                                                                                 | Total current liabilities |        |              | 12,870 |      |        |        | 10,324 | 
|Long-Term Obligations                                                                                                                             |                                                                                                 |                           | 21,785 |              |        |      | 25,140 |       
|Deferred Income Taxes                                                                                                                             |                                                                                                 |                           | 206    |              |        |      | 213    |       
|Commitments                                                                                                                                       |                                                                                                 |                           |       |              |        |      |       |       
|Redeemable Preferred Stock of Subsidiary                                                                                                          |                                                                                                 |                           |       |              |        |      | 48     |       
|STOCKHOLDERS EQUITY                                                                                                                              |                                                                                                 |                           |        |              |        |      |        |       
|Preferred stock, $.001 par value; authorized: 5,000,000 shares; none issued
or outstanding:                                                       |                                                                                                 |                           |       |              |        |      |       |       
|Common stock, $.001 par value; authorized: 20,000,0000 shares; 4,366,880
and 4,330,654 issued as of
     December 31, 2001 and 2000, respectively |                                                                                                 |                           | 16,823 |              |        |      | 16,800 |       
|Accumulated other comprehensive income (loss)                                                                                                     |                                                                                                 |                           | (968   | )            |        |      | (650   | )     
|Retained earnings                                                                                                                                 |                                                                                                 |                           | 9,520  |              |        |      | 12,015 |       
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  |                                                                                                 | Total Stockholders Equity |        |              | 25,375 |      |        |        | 28,165 | 
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       
|                                                                                                                                                  |                                                                                                 | $                         | 60,236 |              |        | $    | 63,890 |       
|                                                                                                                                                  |                                                                                                 |                           |        |              |        |      |        |       

The accompanying notes are an integral part of these financial statements

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THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |        |        |    | 
|---------------------------------------------------- | ---------------- | ------------------------------ | ------------------- | ------ | ------------------------------------------------ | ------ | ------- | ------ | ------ | ------ | ------- | ------ | ------ | -- | 
|                                                     |                  |                                |                     |        | Year Ended December 31,                         
|                                                     |                  |                                |                     |        |                                                 
|                                                     |                  |                                |                     |        | 2001                                             |        | 2000    |        | 1999  
|                                                     |                  |                                |                     |        |                                                  |        |         |        |       
|                                                     |                  |                                |                     |        | (Dollars in thousands, except per share amounts)
|Net sales                                            |                  | $                              | 134,958             |        |                                                  | $      | 147,491 |        |        | $      | 154,800 |       
|Cost of products sold (including distribution costs) |                  |                                | 115,740             |        |                                                  |        | 125,426 |        |        |        | 128,804 |       
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|                                                     |                  | Gross margin                   |                     |        | 19,218                                           |        |         |        | 22,065 |        |         |        | 25,996 |   
|Selling, general and administrative expenses         |                  |                                | 22,044              |        |                                                  |        | 24,302  |        |        |        | 23,140  |       
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|                                                     |                  | Operating margin               |                     |        | (2,826                                           | )      |         |        | (2,237 | )      |         |        | 2,856  |   
|Equity in net earnings of affiliated companies       |                  |                                | 107                 |        |                                                  |        | 50      |        |        |        | 76      |       
|Other Income (expense)                               |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|                                                     | Interest expense |                                |                     | (2,293 | )                                                |        |         | (3,006 | )      |        |         | (2,371 | )     
|                                                     | Other            |                                |                     | 1,319  |                                                  |        |         | 1,202  |        |        |         | (15    | )     
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|Earnings (loss) before income taxes                  |                  |                                | (3,693              | )      |                                                  |        | (3,991  | )      |        |        | 546     |       
|                                                     |                  | Income tax provision (benefit) |                     |        | (1,198                                           | )      |         |        | (1,150 | )      |         |        | 536    |   
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|                                                     |                  |                                | Net earnings (loss) |        | $                                                | (2,495 | )       |        | $      | (2,841 | )       |        | $      | 10 | 
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|Earnings (loss) per share:                           |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|                                                     |                  | Basic                          |                     | $      | (.57                                             | )      |         | $      | (.66   | )      |         | $      | .00    |   
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       
|                                                     |                  | Diluted                        |                     | $      | (.57                                             | )      |         | $      | (.66   | )      |         | $      | .00    |   
|                                                     |                  |                                |                     |        |                                                  |        |         |        |        |        |         |       

The accompanying notes are an integral part of these financial statements

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THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |        |        |      |  
|----------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------ | --------------------------------------------------- | ------ | ----------------------- | ------ | ------ | ------ | ------ | ------ | ---- | ------ | ------ | ---- | -
|                                                                                          |                                                                               |                                            |                                                     |        | Year Ended December 31,
|                                                                                          |                                                                               |                                            |                                                     |        |                        
|                                                                                          |                                                                               |                                            |                                                     |        | 2001                    |        | 2000   |        | 1999  
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |       
|Cash flows from operating activities:                                                     |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|Net earnings (loss)                                                                       |                                                                               | $                                          | (2,495                                              | )      |                         | $      | (2,841 | )      |        | $      | 10   |       
|Adjustments to reconcile net earnings (loss) to net cash provided by operating
activities |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          | Depreciation                                                                  |                                            |                                                     | 781    |                         |        |        | 881    |        |        |      | 928    |       
|                                                                                          | Amortization                                                                  |                                            |                                                     | 589    |                         |        |        | 646    |        |        |      | 634    |       
|                                                                                          | (Gain) Loss from sale of property and equipment                               |                                            |                                                     | (1,141 | )                       |        |        | 24     |        |        |      | 5      |       
|                                                                                          | Equity in net earnings of affiliated companies, net of distributions          |                                            |                                                     | (66    | )                       |        |        | (35    | )      |        |      | (76    | )     
|                                                                                          | Gain from sale of product line                                                |                                            |                                                     |       |                         |        |        | (1,078 | )      |        |      |       |       
|                                                                                          | Deferred income taxes                                                         |                                            |                                                     | (1,319 | )                       |        |        | (572   | )      |        |      | (37    | )     
|                                                                                          | Change in assets and liabilities:                                             |                                            |                                                     |        |                         |        |        |        |        |        |      |        |       
|                                                                                          |                                                                               | Accounts receivable                        |                                                     |        | 200                     |        |        |        | 299    |        |      |        | (569   | )   
|                                                                                          |                                                                               | Inventory                                  |                                                     |        | 987                     |        |        |        | 5,312  |        |      |        | (2,124 | )   
|                                                                                          |                                                                               | Prepaids and income tax refunds receivable |                                                     |        | 1,484                   |        |        |        | 27     |        |      |        | (1,245 | )   
|                                                                                          |                                                                               | Accounts payable                           |                                                     |        | 4,465                   |        |        |        | (1,610 | )      |      |        | 3,281  |     
|                                                                                          |                                                                               | Accrued liabilities                        |                                                     |        | (182                    | )      |        |        | 373    |        |      |        | (30    | )   
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          |                                                                               |                                            | 6,954                                               |        |                         |        | 4,401  |        |        |        | (687 | )     
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          |                                                                               |                                            | Net cash provided by operating activities           |        |                         | 3,303  |        |        |        | 1,426  |      |        |        | 777  |  
|Cash flows from investing activities:                                                     |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          | Proceeds from sale of property and equipment                                  |                                            |                                                     | 2,669  |                         |        |        | 622    |        |        |      | 174    |       
|                                                                                          | Proceeds from sale of product line                                            |                                            |                                                     | 400    |                         |        |        | 400    |        |        |      |       |       
|                                                                                          | Increase (decrease) in other assets                                           |                                            |                                                     | (226   | )                       |        |        | 485    |        |        |      | 1,019  |       
|                                                                                          | Capital expenditures                                                          |                                            |                                                     | (324   | )                       |        |        | (1,265 | )      |        |      | (1,465 | )     
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          |                                                                               |                                            | Net cash provided by (used in) investing activities |        |                         | 2,519  |        |        |        | 242    |      |        |        | (272 | )
|Cash flows from financing activities:                                                     |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          | Net borrowings (repayments) under notes payable and line-of credit agreements |                                            |                                                     | (3,809 | )                       |        |        | (781   | )      |        |      | 5,095  |       
|                                                                                          | Proceeds from issuance of long-term debt                                      |                                            |                                                     | 53     |                         |        |        |       |        |        |      | 136    |       
|                                                                                          | Repayments of long-term debt                                                  |                                            |                                                     | (1,333 | )                       |        |        | (707   | )      |        |      | (2,715 | )     
|                                                                                          | Issuance of common stock under employee stock purchase and stock option plans |                                            |                                                     | 23     |                         |        |        | 49     |        |        |      | 86     |       
|                                                                                          | Redemption of redeemable preferred stock of subsidiary                        |                                            |                                                     | (45    | )                       |        |        | (97    | )      |        |      | (96    | )     
|                                                                                          | Dividends on preferred stock of subsidiary                                    |                                            |                                                     |       |                         |        |        | (3     | )      |        |      | (7     | )     
|                                                                                          | Retirement of common stock                                                    |                                            |                                                     |       |                         |        |        |       |        |        |      | (2,975 | )     
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          |                                                                               |                                            | Net cash used in financing activities               |        |                         | (5,111 | )      |        |        | (1,539 | )    |        |        | (476 | )
|Effect of exchange rate changes on cash                                                   |                                                                               |                                            | (249                                                | )      |                         |        | (231   | )      |        |        | 177  |       
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          |                                                                               |                                            | Net Increase (Decrease) in Cash                     |        |                         | 462    |        |        |        | (102   | )    |        |        | 206  |  
|Cash beginning of year                                                                    |                                                                               |                                            | 539                                                 |        |                         |        | 641    |        |        |        | 435  |       
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|Cash end of year                                                                          |                                                                               | $                                          | 1,001                                               |        |                         | $      | 539    |        |        | $      | 641  |       
|                                                                                          |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|Supplemental disclosures of cash flow information:                                        |                                                                               |                                            |                                                     |        |                         |        |        |        |        |        |      |       
|                                                                                          | Cash paid during the year for:                                                |                                            |                                                     |        |                         |        |        |        |        |        |      |        |       
|                                                                                          |                                                                               | Interest                                   |                                                     | $      | 2,188                   |        |        | $      | 3,043  |        |      | $      | 2,341  |     
|                                                                                          |                                                                               | Income taxes                               |                                                     |        | (568                    | )      |        |        | (112   | )      |      |        | 1,313  |     

The accompanying notes are an integral part of these financial statements

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THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(DOLLARS IN THOUSANDS)

|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|----------------------------------------------------------- |  | ------------ | ---------- | -------- |  | ------------- | ------ | ----- |  | -------- | ------ | ------------- |  | ----------- | ---- | - |  | - | ------ | -
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  | Accumulated |      |   |  |  
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  | Other       |      |   |  |  
|                                                            |  |              |            |          |  |               |        |       |  | Retained |        | Comprehensive |  |             |      |  
|Three Years Ended December 31, 2001                         |  | Common Stock |            | Earnings |  | Income (Loss) |        | Total
|                                                            |  |              |            |          |  |               |        |      
|Balance at January 1, 1999                                  |  |              | 5,279,854  |          |  | $             | 19,640 |       |  | $        | 14,856 |               |  | $           | (665 | ) |  | $ | 33,831 |  
|Net earnings for the year                                   |  |              |           |          |  |               |       |       |  |          | 10     |               |  |             |     |   |  |   | 10     |  
|Foreign currency translation adjustments                    |  |              |           |          |  |               |       |       |  |          |       |               |  |             | 298  |   |  |   | 298    |  
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Comprehensive earnings for the year                         |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   | 308    |  
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Issuance of common stock under employee stock purchase plan |  |              | 35,296     |          |  |               | 86     |       |  |          |       |               |  |             |     |   |  |   | 86     |  
|Retirement of common stock                                  |  |              | (1,012,304 | )        |  |               | (2,975 | )     |  |          |       |               |  |             |     |   |  |   | (2,975 | )
|Dividends on preferred stock of subsidiary                  |  |              |           |          |  |               |       |       |  |          | (7     | )             |  |             |     |   |  |   | (7     | )
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Balance at December 31, 1999                                |  |              | 4,302,846  |          |  |               | 16,751 |       |  |          | 14,859 |               |  |             | (367 | ) |  |   | 31,243 |  
|Net loss for the year                                       |  |              |           |          |  |               |       |       |  |          | (2,841 | )             |  |             |     |   |  |   | (2,841 | )
|Foreign currency translation adjustments                    |  |              |           |          |  |               |       |       |  |          |       |               |  |             | (283 | ) |  |   | (283   | )
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Comprehensive loss for the year                             |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   | (3,124 | )
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Issuance of common stock under employee stock purchase plan |  |              | 27,808     |          |  |               | 49     |       |  |          |       |               |  |             |     |   |  |   | 49     |  
|Dividends on preferred stock of subsidiary                  |  |              |           |          |  |               |       |       |  |          | (3     | )             |  |             |     |   |  |   | (3     | )
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Balance at December 31, 2000                                |  |              | 4,330,654  |          |  |               | 16,800 |       |  |          | 12,015 |               |  |             | (650 | ) |  |   | 28,165 |  
|Net loss for the year                                       |  |              |           |          |  |               |       |       |  |          | (2,495 | )             |  |             |     |   |  |   | (2,495 | )
|Foreign currency translation adjustments                    |  |              |           |          |  |               |       |       |  |          |       |               |  |             | (318 | ) |  |   | (318   | )
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Comprehensive loss for the year                             |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   | (2,813 | )
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Issuance of common stock under employee stock purchase plan |  |              | 36,226     |          |  |               | 23     |       |  |          |       |               |  |             |     |   |  |   | 23     |  
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  
|Balance at December 31, 2001                                |  |              | 4,366,880  |          |  | $             | 16,823 |       |  | $        | 9,520  |               |  | $           | (968 | ) |  | $ | 25,375 |  
|                                                            |  |              |            |          |  |               |        |       |  |          |        |               |  |             |      |   |  |   |        |  

The accompanying notes are an integral part of these financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the
preparation of the accompanying consolidated financial statements follows:



| | 1. |  | Principles of Consolidation. The Company consolidates the
accounts of its wholly-owned subsidiaries, The Coast Distribution
System (Canada) Inc. (Coast Canada) and Eura-Asia Recreational
Vehicle Accessories Taiwan Company. Investments in unconsolidated
affiliates are accounted for by the equity method. All material
intercompany transactions have been eliminated.                                  
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Inventories. Inventories are stated at the lower of cost
(determined on a first-in, first-out basis) or net realizable value.
The Company regularly assesses the appropriateness of the inventory
valuations with particular attention to obsolete, slow-moving and
non-saleable inventory. Inventories consist primarily of
recreational replacement parts, supplies and accessories held for
resale.          
|
| | 3. |  | Property, Plant and Equipment. Property, plant and equipment
are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are provided for in amounts sufficient
to relate the cost of depreciable assets to operations over their
estimated service lives, principally on a straight-line basis. The
estimated lives used in determining depreciation and amortization
are:

|                               |  |             |  | 
|------------------------------ |  | ----------- |  | 
|Buildings and improvements     |  | 12-40 years
|Warehouse and office equipment |  | 5-7 years  
|Automobiles                    |  | 3-5 years  



| |    |  | Leasehold improvements are amortized over the lives of the respective
leases or the service lives of the improvements, whichever is shorter.
Currently the amortization periods range from 5 to 15 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 4. |  | Revenue Recognition. Revenue from sales of products is
recognized upon shipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | 5. |  | Segment Reporting. The Company has one operating segment
which is the distribution of recreational replacement parts,
supplies and accessories. The Company distributes its products from
17 distribution centers located throughout the United States and
Canada. No single customer accounted for 10% or more of the
Companys revenues in 2001, 2000 or 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | 6. |  | Intangible Assets. The costs in excess of net assets of
acquired businesses are being amortized on a straight-line basis
using periods ranging from four to thirty years. At December 31,
2001 and 2000, the accumulated amortization applicable to intangible
assets was approximately $7,124,000 and $7,009,000, respectively.
In June 2001, the Financial Accounting Standards Board (the FASB)
adopted SFAS No. 141 Business Combinations and SFAS No. 142 Goodwill
and Intangible Assets. SFAS No. 141 addresses the methods used to
account for business combinations and requires the use of the
purchase method of accounting for all combinations after June 30,
2001. SFAS No. 142 addresses the methods used to amortize
intangible assets and to assess impairment of those assets,
including goodwill resulting from business combinations accounted
for under the purchase method. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001 and the Company is required
to adopt SFAS No. 142 effective January 1, 2002. Included in our
assets at December 31, 2001 is goodwill with a net carrying value of
$5,721,000. Beginning with our fiscal year ending December 31,
2002, we will no longer amortize this goodwill, decreasing our
amortization expense by approximately $385,000 per year, and we will
be required to assess our goodwill for impairment based on the new
standards established by SFAS No. 142. We will not be able to
determine the full effect of these new standards on our financial
position or our results of operations until we are able to complete
our impairment analysis using the new standards. Under existing
accounting standards, our assessment of goodwill indicated that no
impairment existed as of December 31, 2001. In the event our
analysis under the new standards indicates this goodwill is
impaired, we will be required to record a charge to our earnings in
fiscal 2002.

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| | 7.  |  | Foreign Currency Translation. Exchange adjustments resulting
from foreign currency transactions are generally recognized in net
earnings, whereas adjustments resulting from the translation of
financial statements are reflected as a separate component of
stockholders equity. Net foreign currency transaction gains or
losses are not material in any of the years presented. The
functional currency of the Companys Canadian subsidiary is the
Canadian dollar, its local currency.                                                                                                                                                                                                                                                                                                                                              
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 8.  |  | Forward Exchange Contracts. On a selective basis, the
Company enters into forward exchange contracts to reduce the effect
of foreign currency fluctuations on a portion of the inventory
purchases of Coast Canada. The gains or losses on these contracts
are included in earnings in the period when the related transactions
being hedged are recognized. The contracts do not subject the
Company to significant market risk from exchange rate movements
because the contracts offset gains and losses on the balances and
transactions being hedged. At December 31, 2001, there were no
forward exchange contracts outstanding.                                                                                                                                                                                                     
|
| | 9.  |  | Income Taxes. The Company provides a deferred tax expense or
benefit equal to the net change in the deferred tax liability or
asset during the year. Deferred income taxes represent tax loss and
credit carryforwards and future net tax effects resulting from
temporary differences between the financial statement and tax basis
of assets and liabilities, using enacted tax rates. A valuation
allowance is provided against deferred tax assets when realization
of the asset is not expected to occur.                                                                                                                                                                                                                                                                                                                             
|
| | 10. |  | Use of Estimates. In preparing financial statements in
conformity with accounting principles generally accepted in the
United States of America, management is required to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, as well as revenues and
expenses during the reporting period. Actual results could differ
from those estimates.                                                                                                                                                                                                                                                                                                                                                      
|
| | 11. |  | Earnings per Share. Basic earnings per share are computed
using the weighted average number of common shares outstanding
during the period. Diluted earnings per share are computed using
the weighted average number of common and potentially dilutive
securities outstanding during the period. Potentially dilutive
securities consist of the incremental common shares issuable upon on
exercise of stock options (using the treasury stock method).
Potentially dilutive securities are excluded from the computation if
their effect is anti-dilutive.                                                                                                                                                                                                                                                                              
|
| | 12. |  | Reclassifications. Certain reclassifications have been made
to prior year amounts to conform with the current year
presentations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | 13. |  | New Accounting Standard. In October 2001, the FASB issued
SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 addresses significant issues
relating to the implementation of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets to be Disposed of, and develops a
single accounting model, based on the framework established in SFAS
No. 121 for long-lived assets held or to be disposed of by sale,
whether such assets are or are not deemed to be a business. SFAS
No. 144 also modifies the accounting and disclosure rules for
discontinued operations. We are required to adopt the standard on
January 1, 2002; however, we have not determined the effect that the
adoption of SFAS No. 144 will have on the financial position or
results of operations of the Company.

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NOTE B: PROPERTY, PLANT AND EQUIPMENT

Property and equipment consist of the following at December 31:

|                                               |                        |   |                |       |      |   |        |       | 
|---------------------------------------------- | ---------------------- | - | -------------- | ----- | ---- | - | ------ | ----- | 
|                                               |                        |   | 2001           |       | 2000
|                                               |                        |   |                |       |     
|                                               |                        |   | (In thousands)
|                                               | Buildings              |   | $              |      |      |   | $      | 1,425 | 
|                                               | Warehouse equipment    |   |                | 3,460 |      |   |        | 3,572 | 
|                                               | Office equipment       |   |                | 5,328 |      |   |        | 5,131 | 
|                                               | Leasehold improvements |   |                | 731   |      |   |        | 906   | 
|                                               | Automobiles            |   |                | 96    |      |   |        | 99    | 
|                                               |                        |   |                |       |      |   |        |      
|                                               |                        |   | 9,615          |       |      |   | 11,133 |      
|Less accumulated depreciation and amortization |                        |   | 7,478          |       |      |   | 7,479  |      
|                                               |                        |   |                |       |      |   |        |      
|                                               |                        |   | 2,137          |       |      |   | 3,654  |      
|                                               | Land                   |   |                |      |      |   |        | 485   | 
|                                               |                        |   |                |       |      |   |        |      
|                                               |                        | $ | 2,137          |       |      | $ | 4,139  |      
|                                               |                        |   |                |       |      |   |        |      

NOTE C: LONG-TERM OBLIGATIONS

Long-term obligations consist of the following at December 31:

|                                                                                                                                            |  |                |        |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ | ---- |  | - | ------ | 
|                                                                                                                                            |  | 2001           |        | 2000
|                                                                                                                                            |  |                |        |     
|                                                                                                                                            |  | (In thousands)
|Secured notes payable to bank due May 31, 2003                                                                                              |  | $              | 21,750 |      |  | $ | 25,559 | 
|8.75% note collateralized by a deed of trust on land and
building, due in monthly installments of $14, final payment
made in September 2001 |  |                |       |      |  |   | 1,241  | 
|Other                                                                                                                                       |  |                | 61     |      |  |   | 103    | 
|                                                                                                                                            |  |                |        |      |  |   |        | 
|                                                                                                                                            |  |                | 21,811 |      |  |   | 26,903 | 
|Current portion                                                                                                                             |  |                | 26     |      |  |   | 1,763  | 
|                                                                                                                                            |  |                |        |      |  |   |        | 
|                                                                                                                                            |  | $              | 21,785 |      |  | $ | 25,140 | 
|                                                                                                                                            |  |                |        |      |  |   |        | 

Subsequent to 2002 annual maturities of long-term obligations (in
thousands) are $21,780 in 2003 and $5 in 2004.

Secured Notes Payable to Bank

The secured notes payable to bank evidence borrowings under a revolving
credit facility and term borrowings, which are collateralized by substantially
all of the Companys assets. Under the revolving credit line, the Company may
borrow up to the lesser of (i) $40,000,000 with seasonal reductions ranging
from $30,000,000 to $35,000,000 each year, or (ii) an amount equal to 80% of
the value of its eligible accounts receivable and between 50% and 60% of the
value of its eligible inventory. Interest is payable at the banks prime rate
plus 1.25% or, at the Companys option but subject to certain limitations,
borrowings will bear interest at the banks LIBOR rate plus 3%.

The note agreements contain certain restrictive covenants. Included are
covenants regarding profitability, minimum liquidity ratios, restrictions on
investments, and limitations on indebtedness, on payment of dividends, and on
mergers and consolidations. The Company is in compliance with all the
covenants.

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##### Table of Contents



NOTE D: COMMITMENTS

Operating Leases

The Company leases its corporate offices, certain warehouse facilities,
and data processing equipment. These leases are classified as operating leases
as they do not meet the capitalization criteria of Statement of Financial
Accounting Standards No. 13, Accounting for Leases. The office and warehouse
leases expire over the next ten years and the equipment leases expire over the
next two years.

Minimum future rental commitments under non-cancelable operating leases as
of December 31, 2001 are as follows:

|                         |  |                |     |            |  |       |        |  |  |   |        | 
|------------------------ |  | -------------- | --- | ---------- |  | ----- | ------ |  |  | - | ------ | 
|Year Ending December 31, |  | Equipment      |     | Facilities |  | Total
|                         |  |                |     |            |  |      
|                         |  | (In thousands)
|2002                     |  | $              | 319 |            |  | $     | 2,989  |  |  | $ | 3,308  | 
|2003                     |  |                | 200 |            |  |       | 2,908  |  |  |   | 3,108  | 
|2004                     |  |                |    |            |  |       | 2,077  |  |  |   | 2,077  | 
|2005                     |  |                |    |            |  |       | 1,173  |  |  |   | 1,173  | 
|2006                     |  |                |    |            |  |       | 1,141  |  |  |   | 1,141  | 
|Thereafter               |  |                |    |            |  |       | 2,638  |  |  |   | 2,638  | 
|                         |  |                |     |            |  |       |        |  |  |   |        | 
|                         |  | $              | 519 |            |  | $     | 12,926 |  |  | $ | 13,445 | 
|                         |  |                |     |            |  |       |        |  |  |   |        | 

Rent expense charged to operations amounted to (in thousands) $3,449 in
2001, $3,308 in 2000 and
$3,380 in 1999.

NOTE E: STOCK OPTIONS AND STOCK PURCHASE PLANS

Stock Option
Plans

The Company has in effect a 1993
Stock Option and Incentive Plan and a 1999 Stock Incentive Plan (the plans),
which authorize the issuance of options to purchase, 1,000,000 shares of the
Companys common stock to key management employees of the Company and members
of the Companys Board of Directors. The plans are accounted for under the
provisions of APB No. 25 and generally provide that option prices will not be
less than fair market value per share on the date the option is granted, or
110% of fair market value in the case of an option granted to any employee who,
at the time of the grant, owns or is deemed to own more than 10% of the total
combined voting power of all classes of stock of the Company. Accordingly, no
compensation cost has been recognized for the plans. Had compensation cost for
the plans been determined based on fair value at the grant dates, consistent
with the method prescribed in Statement of SFAS No. 123, Accounting for
Stock-Based Compensation, the Companys net earnings (loss) and earnings (loss)
per share would have been reduced to the pro forma amounts indicated below.

|                                                        |             |  |                           |        |      |  |      |        |   |  |   |      |  
|------------------------------------------------------- | ----------- |  | ------------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ---- | -
|                                                        |             |  | 2001                      |        | 2000 |  | 1999
|                                                        |             |  |                           |        |      |  |     
|                                                        |             |  | (dollars in thousands    
|                                                        |             |  | except per share amounts)
|Net earnings (loss) attributable to common
shareholders |             |  |                           |        |      |  |      |        |   |  |   |     
|                                                        | As reported |  | $                         | (2,495 | )    |  | $    | (2,844 | ) |  | $ | 3    |  
|                                                        | Pro forma   |  |                           | (2,594 | )    |  |      | (2,926 | ) |  |   | (73  | )
|Per share  Basic                                       |             |  |                           |        |      |  |      |        |   |  |   |     
|                                                        | As reported |  | $                         | (.57   | )    |  | $    | (.66   | ) |  | $ | .00  |  
|                                                        | Pro forma   |  |                           | (.59   | )    |  |      | (.68   | ) |  |   | (.02 | )
|Per share  Diluted                                     |             |  |                           |        |      |  |      |        |   |  |   |     
|                                                        | As reported |  | $                         | (.57   | )    |  | $    | (.66   | ) |  | $ | .00  |  
|                                                        | Pro forma   |  |                           | (.59   | )    |  |      | (.68   | ) |  |   | (.02 | )

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The fair value of each option grant is estimated on the date of grant
using the Black-Scholes options-pricing model with the following weighted
average assumptions used: no expected dividends; expected volatility of 111%
for 2001, 147% for 2000 and 71% for 1999; risk -free interest rates of 4.8%,
6.6% and 5.2%; an expected forfeiture rate of 33% for 2001 and 2000 and 37% for
1999; and expected lives of 5 years in 2001 and 2000 and 4 years in 1999. A
summary of the status of the Companys stock option plans is presented below:

|                                               |           |   |         |          |       |   |          |      |  |  |        |  |       |   |         |         |          |   |      |      |  |   |          |         |   |   |      |      | 
|---------------------------------------------- | --------- | - | ------- | -------- | ----- | - | -------- | ---- |  |  | ------ |  | ----- | - | ------- | ------- | -------- | - | ---- | ---- |  | - | -------- | ------- | - | - | ---- | ---- | 
|                                               |           |   | 2001    |          | 2000  |   | 1999    
|                                               |           |   |         |          |       |   |         
|                                               |           |   |         |          |       |   | Weighted |      |  |  |        |  |       |   |         |         | Weighted |   |      |      |  |   | Weighted
|                                               |           |   |         |          |       |   | Average  |      |  |  |        |  |       |   |         |         | Average  |   |      |      |  |   | Average 
|                                               |           |   |         |          |       |   | Exercise |      |  |  |        |  |       |   |         |         | Exercise |   |      |      |  |   | Exercise
|                                               |           |   | Shares  |          | Price |   |          |      |  |  | Shares |  | Price |   | Shares  |         | Price   
|                                               |           |   |         |          |       |   |          |      |  |  |        |  |       |   |         |         |         
|Outstanding at beginning of year               |           |   | 699,500 |          |       | $ | 3.73     |      |  |  |        |  |       |   | 548,500 |         |          | $ | 4.23 |      |  |   | 479,500  |         |   | $ | 4.69 |     
|                                               | Granted   |   |         | 195,000  |       |   |          | 0.75 |  |  |        |  |       |   |         | 156,000 |          |   |      | 2.01 |  |   |          | 97,000  |   |   |      | 2.26 | 
|                                               | Exercised |   |         |         |       |   |          |     |  |  |        |  |       |   |         |        |          |   |      |     |  |   |          |        |   |   |      |     | 
|                                               | Forfeited |   |         | (235,500 | )     |   |          | 2.99 |  |  |        |  |       |   |         | (5,000  | )        |   |      | 4.77 |  |   |          | (28,000 | ) |   |      | 5.33 | 
|                                               |           |   |         |          |       |   |          |      |  |  |        |  |       |   |         |         |          |   |      |      |  |   |          |         |   |   |      |     
|Outstanding at end of year                     |           |   | 659,000 |          |       | $ | 3.11     |      |  |  |        |  |       |   | 699,500 |         |          | $ | 3.73 |      |  |   | 548,500  |         |   | $ | 4.23 |     
|Exercisable at end of year                     |           |   | 506,645 |          |       | $ | 3.66     |      |  |  |        |  |       |   | 473,900 |         |          | $ | 4.22 |      |  |   | 305,000  |         |   | $ | 4.97 |     
|                                               |           |   |         |          |       |   |          |      |  |  |        |  |       |   |         |         |          |   |      |      |  |   |          |         |   |   |      |     
|Weighted average fair
value per option granted |           | $ | .62     |          |       |   |          |      |  |  |        |  |       | $ | 1.84    |         |          |   |      |      |  | $ | 1.29     |         |   |   |      |     
|                                               |           |   |         |          |       |   |          |      |  |  |        |  |       |   |         |         |          |   |      |      |  |   |          |         |   |   |      |     

The following information applies to options outstanding at December 31,
2001:

|            |  |             |         |                  |  |              |       |              |  |                  |   |  |  |  |         |  |  |   |       | 
|----------- |  | ----------- | ------- | ---------------- |  | ------------ | ----- | ------------ |  | ---------------- | - |  |  |  | ------- |  |  | - | ----- | 
|            |  |             |         |                  |  |              |       |              |  | Weighted Average |   |  |  |  |         |  |  |  
|            |  |             |         |                  |  |              |       |              |  | Remaining        |   |  |  |  |         |  |  |  
|            |  | Options     |         | Weighted Average |  | Contractual  |       | Options      |  | Weighted Average
|Range       |  | Outstanding |         | Exercise Price   |  | Life (Years) |       | Exerciseable |  | Exercise Price  
|            |  |             |         |                  |  |              |       |              |  |                 
|$0.63-$3.50 |  |             | 439,500 |                  |  | $            | 1.91  |              |  |                  | 8 |  |  |  | 287,145 |  |  | $ | 2.24  | 
|$4.13-$7.88 |  |             | 219,500 |                  |  |              | $5.52 |              |  |                  | 4 |  |  |  | 219,500 |  |  |   | $5.52 | 
|            |  |             |         |                  |  |              |       |              |  |                  |   |  |  |  |         |  |  |   |       | 
|$0.63-$7.88 |  |             | 659,000 |                  |  | $            | 3.11  |              |  |                  | 6 |  |  |  | 506,645 |  |  | $ | 3.66  | 

Employee Stock Purchase Plans

The Company has in effect a 1997 Employee Stock Purchase Plan under which
400,000 shares of the Companys common stock have been reserved for issuance to
all permanent employees who have met minimum employment criteria. Employees
who do not own 5% or more of the outstanding shares are eligible to participate
through payroll deductions. At the end of each offering period, shares are
purchased by the participants at 85% of the lower of the fair market value at
the beginning or the end of the offering period. The weighted average per
share fair values of the awards were $0.51, $0.30, and $0.58 for the years
ended December 31, 2001, 2000, and 1999. At December 31, 2001, 266,752 shares
under this plan remain available for issuance in future offering periods.

NOTE F: EMPLOYEE BENEFIT PLAN

The Company has a 401(k) profit sharing plan in which all full-time
employees are eligible to participate beginning the first quarter following the
completion of six months of employment. The plan allows participants to make
pretax contributions and apply for and secure loans from their account. The
plan provides for the Company to make discretionary contributions to be
determined annually. The Company contributed $0 in 2001, $102,236 in 2000 and
$86,441 in 1999 to this plan.

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NOTE G: FOREIGN OPERATIONS

A summary of the Companys operations by geographic area is presented
below:

|                            |               |  |                |         |      |  |   |         |  
|--------------------------- | ------------- |  | -------------- | ------- | ---- |  | - | ------- | -
|                            |               |  | 2001           |         | 2000
|                            |               |  |                |         |     
|                            |               |  | (In thousands)
|Sales to external customers |               |  |                |         |      |  |   |        
|                            | United States |  | $              | 112,377 |      |  | $ | 123,845 |  
|                            | Canada        |  |                | 22,548  |      |  |   | 23,646  |  
|                            | Other         |  |                | 33      |      |  |   |        |  
|Operating margin            |               |  |                |         |      |  |   |        
|                            | United States |  | $              | (3,336  | )    |  | $ | (2,960  | )
|                            | Canada        |  |                | 197     |      |  |   | 736     |  
|                            | Other         |  |                | 313     |      |  |   | (13     | )
|Identifiable assets         |               |  |                |         |      |  |   |        
|                            | United States |  | $              | 51,284  |      |  | $ | 55,359  |  
|                            | Canada        |  |                | 8,199   |      |  |   | 7,882   |  
|                            | Other         |  |                | 753     |      |  |   | 649     |  

NOTE H: INCOME TAXES

Pretax income (loss) for the years ending December 31 was taxed under the
following jurisdictions:

|         |  |                |        |      |  |      |        |   |  |   |      |  
|-------- |  | -------------- | ------ | ---- |  | ---- | ------ | - |  | - | ---- | -
|         |  | 2001           |        | 2000 |  | 1999
|         |  |                |        |      |  |     
|         |  | (In thousands)
|Domestic |  | $              | (3,884 | )    |  | $    | (4,330 | ) |  | $ | (308 | )
|Foreign  |  |                | 191    |      |  |      | 339    |   |  |   | 854  |  
|         |  |                |        |      |  |      |        |   |  |   |      |  
|         |  | $              | (3,693 | )    |  | $    | (3,991 | ) |  | $ | 546  |  
|         |  |                |        |      |  |      |        |   |  |   |      |  

The provisions (benefit) for income taxes is summarized as follows for the
year ended December 31:

|                               |         |   |                |        |      |   |        |      |   |   |     |     |  
|------------------------------ | ------- | - | -------------- | ------ | ---- | - | ------ | ---- | - | - | --- | --- | -
|                               |         |   | 2001           |        | 2000 |   | 1999  
|                               |         |   |                |        |      |   |       
|                               |         |   | (In thousands)
|Current:                       |         |   |                |        |      |   |        |      |   |   |     |    
|                               | Federal |   | $              | 32     |      |   | $      | (771 | ) |   | $   | 77  |  
|                               | State   |   |                | 82     |      |   |        | 16   |   |   |     | 78  |  
|                               | Foreign |   |                | 7      |      |   |        | 177  |   |   |     | 418 |  
|                               |         |   |                |        |      |   |        |      |   |   |     |    
|                               |         | $ | 121            |        |      | $ | (578   | )    |   | $ | 573 |    
|                               |         |   |                |        |      |   |        |      |   |   |     |    
|Deferred:                      |         |   |                |        |      |   |        |      |   |   |     |    
|                               | Federal |   | $              | (1,169 | )    |   | $      | (427 | ) |   | $   | (10 | )
|                               | State   |   |                | (148   | )    |   |        | (145 | ) |   |     | (1  | )
|                               | Foreign |   |                | (2     | )    |   |        |     |   |   |     | (26 | )
|                               |         |   |                |        |      |   |        |      |   |   |     |    
|                               |         | $ | (1,319         | )      |      | $ | (572   | )    |   | $ | (37 | )  
|                               |         |   |                |        |      |   |        |      |   |   |     |    
|Income tax provision (benefit) |         | $ | (1,198         | )      |      | $ | (1,150 | )    |   | $ | 536 |    
|                               |         |   |                |        |      |   |        |      |   |   |     |    

The total operating loss carryforwards available for federal and state
income tax purposes at December 31, 2001 were $4,476,000 and
$7,200,000, respectively. The earliest
carryforwards begin to expire in 2002.

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Deferred tax assets (liabilities) are comprised of the following at
December 31:

|                         |                                |   |                |       |      |   |       |       |   |   |       |       |  
|------------------------ | ------------------------------ | - | -------------- | ----- | ---- | - | ----- | ----- | - | - | ----- | ----- | -
|                         |                                |   | 2001           |       | 2000 |   | 1999 
|                         |                                |   |                |       |      |   |      
|                         |                                |   | (In thousands)
|Deferred tax assets      |                                |   |                |       |      |   |       |       |   |   |       |      
|                         | Inventory capitalization       |   | $              | 792   |      |   | $     | 810   |   |   | $     | 786   |  
|                         | Bad debt provision             |   |                | 381   |      |   |       | 344   |   |   |       | 306   |  
|                         | Inventory reserve              |   |                | 477   |      |   |       | 510   |   |   |       | 502   |  
|                         | Property, plant and equipment  |   |                | 78    |      |   |       | 72    |   |   |       | 54    |  
|                         | Loss carryforwards             |   |                | 2,014 |      |   |       | 770   |   |   |       | 176   |  
|                         | Other                          |   |                | 180   |      |   |       | 59    |   |   |       | 71    |  
|                         |                                |   |                |       |      |   |       |       |   |   |       |      
|                         | Gross deferred tax assets      |   |                | 3,922 |      |   |       | 2,565 |   |   |       | 1,895 |  
|                         | Less valuation allowance       |   |                | (120  | )    |   |       | (75   | ) |   |       | (88   | )
|                         |                                |   |                |       |      |   |       |       |   |   |       |      
|                         |                                | $ | 3,802          |       |      | $ | 2,490 |       |   | $ | 1,807 |      
|                         |                                |   |                |       |      |   |       |       |   |   |       |      
|Deferred tax liabilities |                                |   |                |       |      |   |       |       |   |   |       |      
|                         | Investment in affiliates       |   | $              | (18   | )    |   | $     | (2    | ) |   | $     |      |  
|                         | Property, plant and equipment  |   |                | (188  | )    |   |       | (211  | ) |   |       | (102  | )
|                         |                                |   |                |       |      |   |       |       |   |   |       |      
|                         | Gross deferred tax liabilities |   |                | (206  | )    |   |       | (213  | ) |   |       | (102  | )
|                         |                                |   |                |       |      |   |       |       |   |   |       |      
|                         | Net deferred tax assets        |   | $              | 3,596 |      |   | $     | 2,277 |   |   | $     | 1,705 |  
|                         |                                |   |                |       |      |   |       |       |   |   |       |      

A reconciliation between actual tax expense (benefit) for the year and
expected tax expense (benefit) is as follows:

|                                                      |  |                |        |      |  |      |        |   |  |   |     |  
|----------------------------------------------------- |  | -------------- | ------ | ---- |  | ---- | ------ | - |  | - | --- | -
|                                                      |  | 2001           |        | 2000 |  | 1999
|                                                      |  |                |        |      |  |     
|                                                      |  | (In thousands)
|Earnings (loss) before income taxes                   |  | $              | (3,693 | )    |  | $    | (3.991 | ) |  | $ | 546 |  
|                                                      |  |                |        |      |  |      |        |   |  |   |     |  
|Expected income tax expense (benefit) at 34%          |  |                | (1,256 | )    |  |      | (1,357 | ) |  |   | 186 |  
|Higher rates on earnings (loss) of foreign
operations |  |                | (15    | )    |  |      | 45     |   |  |   | 84  |  
|Goodwill amortization                                 |  |                | 187    |      |  |      | 281    |   |  |   | 242 |  
|State taxes (net of federal benefit)                  |  |                | (111   | )    |  |      | (104   | ) |  |   | 38  |  
|Change in valuation allowance                         |  |                | 45     |      |  |      | (13    | ) |  |   | (12 | )
|Exclusion of earnings of foreign affiliates           |  |                | (18    | )    |  |      | (22    | ) |  |   | (16 | )
|Other                                                 |  |                | (30    | )    |  |      | 20     |   |  |   | 14  |  
|                                                      |  |                |        |      |  |      |        |   |  |   |     |  
|Income tax provision (benefit)                        |  | $              | (1,198 | )    |  | $    | (1,150 | ) |  | $ | 536 |  
|                                                      |  |                |        |      |  |      |        |   |  |   |     |  

Deferred income taxes have not been provided on the undistributed earnings
of foreign subsidiaries or foreign joint ventures as they have been and will
continue to be reinvested. Where it is contemplated that earnings will not be
reinvested, the Company believes U.S. foreign tax credits would largely
eliminate any U.S. tax.

NOTE I: EARNINGS PER SHARE

|                                                  |                                             |   |                                 |        |      |   |        |        |   |   |       |    |  
|------------------------------------------------- | ------------------------------------------- | - | ------------------------------- | ------ | ---- | - | ------ | ------ | - | - | ----- | -- | -
|                                                  |                                             |   | For the Year Ended December 31,
|                                                  |                                             |   |                                
|                                                  |                                             |   | 2001                            |        | 2000 |   | 1999  
|                                                  |                                             |   |                                 |        |      |   |       
|                                                  |                                             |   | (in thousands)                 
|Numerator:                                        |                                             |   |                                 |        |      |   |        |        |   |   |       |   
|                                                  | Net earnings (loss)                         |   | $                               | (2,495 | )    |   | $      | (2,841 | ) |   | $     | 10 |  
|                                                  | Dividends on preferred shares of subsidiary |   |                                 |       |      |   |        | (3     | ) |   |       | (7 | )
|                                                  |                                             |   |                                 |        |      |   |        |        |   |   |       |   
|Numerator for basic earnings (loss) per share     |                                             | $ | (2,495                          | )      |      | $ | (2,844 | )      |   | $ | 3     |   
|                                                  |                                             |   |                                 |        |      |   |        |        |   |   |       |   
|Numerator for diluted earnings (loss) per share   |                                             | $ | (2,495                          | )      |      | $ | (2,844 | )      |   | $ | 3     |   
|                                                  |                                             |   |                                 |        |      |   |        |        |   |   |       |   
|Denominator:                                      |                                             |   |                                 |        |      |   |        |        |   |   |       |   
|Weighted average shares outstanding               |                                             |   | 4,360                           |        |      |   | 4,324  |        |   |   | 4,633 |   
|Dilutive effect of stock options                  |                                             |   |                                |        |      |   |       |        |   |   | 8     |   
|                                                  |                                             |   |                                 |        |      |   |        |        |   |   |       |   
|Denominator for diluted earnings (loss) per share |                                             |   | 4,360                           |        |      |   | 4,324  |        |   |   | 4,641 |   
|                                                  |                                             |   |                                 |        |      |   |        |        |   |   |       |   

A total of 659,000 options in 2001, 699,500 options in 2000, and 452,500
options in 1999 were excluded

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from the computation of diluted earnings per share because either (1) the
options exercise price was greater than the average market price of the common
shares, or (2) the inclusion of the options in 2001 and 2000 would have been
antidilutive because the Company experienced a net loss for the year.

NOTE J: ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31:

|                             |  |                |       |      |  |   |       | 
|---------------------------- |  | -------------- | ----- | ---- |  | - | ----- | 
|                             |  | 2001           |       | 2000
|                             |  |                |       |     
|                             |  | (In thousands)
|Payroll and related benefits |  | $              | 413   |      |  | $ | 597   | 
|Rent                         |  |                | 317   |      |  |   | 263   | 
|Income and other taxes       |  |                | 348   |      |  |   | 450   | 
|Other                        |  |                | 1,163 |      |  |   | 1,113 | 
|                             |  |                |       |      |  |   |       | 
|                             |  | $              | 2,241 |      |  | $ | 2,423 | 
|                             |  |                |       |      |  |   |       | 

NOTE K: FINANCIAL INSTRUMENTS

Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of trade receivables. The
amounts reported for cash, accounts receivable, short-term borrowings, accounts
payable and accrued liabilities approximate the fair value due to the their
short maturities. As of December 31, 2001 the carrying value of long-term
debt approximates the estimated fair value of long-term debt, based on the
current rates offered to the Company for debt of the same remaining maturities.

NOTE L: SIGNIFICANT CONCENTRATIONS

The Companys ability to satisfy demand for its products may be limited by
the availability of those products from the Companys suppliers. In 1995 the
Company entered into a multi-year supply agreement with Airxcel, Inc. (formerly
Recreational Vehicle Products, Inc.), which manufactures air conditioners under
the Coleman® brand name. Airxcel is the Companys principal supplier of these
products, the sales of which accounted for approximately 12% of the Companys
net sales in 2001 and 2000, and 13% of the Companys net sales in 1999.

NOTE M: OTHER INCOME

Other income in 2001 was primarily attributable to the sale of the real
property where our distribution center in Portland, Oregon was located. The
sales price of this property, net of selling expenses, was $2,667,000. Other
income in 2000 consists primarily of the sale of one of our proprietary product
lines to a supplier who has agreed to supply that product line along with
products from its other products lines to us in future periods. The sales
price for the product line was $1,078,000 of which $400,000 was received in
2000, $400,000 was received in 2001 and the remainder is due in 2002.

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SCHEDULE II

THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
December 31, 1999, 2000 and 2001

|                                 |  |              |           |           |  |               |         |        |  |   |         |            |  |   |           | 
|-------------------------------- |  | ------------ | --------- | --------- |  | ------------- | ------- | ------ |  | - | ------- | ---------- |  | - | --------- | 
|                                 |  | Balance at   |           |           |  |               |         |        |  |   |         | Balance at
|                                 |  | Beginning of |           |           |  |               |         |        |  |   |         | End of    
|Description                      |  | Period       |           | Additions |  | Deductions(1) |         | Period
|                                 |  |              |           |           |  |               |         |       
|Allowance for doubtful accounts: |  |              |           |           |  |               |         |        |  |   |         |            |  |   |           | 
|Year Ended December 31, 1999     |  | $            | 890,000   |           |  | $             | 259,000 |        |  | $ | 259,000 |            |  | $ | 890,000   | 
|Year Ended December 31, 2000     |  | $            | 890,000   |           |  | $             | 830,000 |        |  | $ | 680,000 |            |  | $ | 1,040,000 | 
|Year Ended December 31, 2001     |  | $            | 1,040,000 |           |  | $             | 832,000 |        |  | $ | 790,000 |            |  | $ | 1,082,000 | 



---

|(1) |  | Write-off of doubtful accounts against the allowance and recoveries.
|--- |  | --------------------------------------------------------------------

|                                                 |  |              |           |           |  |               |         |        |  |   |         |            |  |   |           | 
|------------------------------------------------ |  | ------------ | --------- | --------- |  | ------------- | ------- | ------ |  | - | ------- | ---------- |  | - | --------- | 
|                                                 |  | Balance at   |           |           |  |               |         |        |  |   |         | Balance at
|                                                 |  | Beginning of |           |           |  |               |         |        |  |   |         | End of    
|Description                                      |  | Period       |           | Additions |  | Deductions(1) |         | Period
|                                                 |  |              |           |           |  |               |         |       
|Allowance for obsolete or
slow-moving inventory: |  |              |           |           |  |               |         |        |  |   |         |            |  |   |           | 
|Year Ended December 31, 1999                     |  | $            | 1,564,000 |           |  | $             | 508,000 |        |  | $ | 423,000 |            |  | $ | 1,649,000 | 
|Year Ended December 31, 2000                     |  | $            | 1,649,000 |           |  | $             | 582,000 |        |  | $ | 501,000 |            |  | $ | 1,730,000 | 
|Year Ended December 31, 2001                     |  | $            | 1,730,000 |           |  | $             | 736,000 |        |  | $ | 699,000 |            |  | $ | 1,767,000 | 



---

|(1) |  | Write-off of slow-moving or obsolete inventory or sale of inventory at
reduced margin.
|--- |  | --------------------------------------------------------------------------------------

|                                             |  |              |         |           |  |               |        |        |  |   |        |            |  |   |         | 
|-------------------------------------------- |  | ------------ | ------- | --------- |  | ------------- | ------ | ------ |  | - | ------ | ---------- |  | - | ------- | 
|                                             |  | Balance at   |         |           |  |               |        |        |  |   |        | Balance at
|                                             |  | Beginning of |         |           |  |               |        |        |  |   |        | End of    
|Description                                  |  | Period       |         | Additions |  | Deductions(1) |        | Period
|                                             |  |              |         |           |  |               |        |       
|Valuation allowance for
deferred tax assets: |  |              |         |           |  |               |        |        |  |   |        |            |  |   |         | 
|Year Ended December 31, 1999                 |  | $            | 100,000 |           |  | $             | 12,000 |        |  | $ | 24,000 |            |  | $ | 88,000  | 
|Year Ended December 31, 2000                 |  | $            | 88,000  |           |  | $             |       |        |  | $ | 13,000 |            |  | $ | 75,000  | 
|Year Ended December 31, 2001                 |  | $            | 75,000  |           |  | $             | 45,000 |        |  | $ |       |            |  | $ | 120,000 | 



---

|(1) |  | Net operating loss carryforwards used or expired.
|--- |  | -------------------------------------------------

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##### Table of Contents






ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.




PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Except for information concerning the Companys executive officers which
is included in Part I of this Report, the information required by Item 10 is
incorporated by reference from the Companys definitive proxy statement
expected to be filed with the Commission on or before April 30, 2002 for the
Companys annual shareholders meeting.




ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference
from the Companys definitive proxy statement expected to be filed with the
Commission on or before on or before April 30, 2002 for the Companys annual
shareholders meeting.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated herein by reference
from the Companys definitive proxy statement expected to be filed with the
Commission on or before on or before April 30, 2002 for the Companys annual
shareholders meeting.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated herein by reference
from the Companys definitive proxy statement expected to be filed with the
Commission on or before on or before April 30, 2002 for the Companys annual
shareholders meeting.

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##### Table of Contents






PART IV




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

| |     |                                                          
| | --- | ---------------------------------------------------------
| | (a) | The following documents are filed as part of this Report:

| |     |                                                                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Financial Statements. The Consolidated Financial
Statements of The Coast Distribution System, Inc. and Financial
Statement Schedules: See Index to Financial Statements on Page
17 of this Report.               
|
| | (2) | Exhibits. See Index to Exhibits, elsewhere in this
Report, for a list and description of (i) exhibits previously
filed by the Company with the Commission and (ii) the exhibits
being filed with this Report.    
|
| |     | Compensation Plans and Arrangements. Set forth below is a list
of Compensation Plans and Arrangements that have been filed as
exhibits with the Commission, together with the respective
exhibit numbers thereof:



| | 1993 Stock Option and Incentive Plan, as amended  See Exhibit 10.31
 
        1997 Employee Stock Purchase Plan  See Exhibit 10. 35
 
        1999 Employee Stock Option Plan  See Exhibit 10.36
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |     |                             
| | --- | ----------------------------
| | (b) | Current Reports on Form 8-K.

| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | The Company did not file any reports on Form 8-K during the
quarter ended December 31, 2001.

32



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##### Table of Contents






SIGNATURES

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

Dated: March 29, 2002



| | THE COAST DISTRIBUTION SYSTEM, INC.
| | -----------------------------------



| | By: /s/ THOMAS R. MCGUIRE
Thomas R. McGuire, Chairman and Chief
Executive Officer
| | ---------------------------------------------------------------------------------

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

Each person whose signature to this Report appears below hereby appoints
Thomas R. McGuire and Sandra A. Knell, and either of them, individually, to act
severally as attorneys-in-fact and agents, with power of substitution and
resubstitution, for each of them, to sign on his behalf, individually and in
the capacities stated below, and to file any and all amendments to this Annual
Report, which amendment or amendments may make changes and additions as such
attorneys-in-fact may deem necessary or appropriate.

|          |  |       |  |     
|--------- |  | ----- |  | ----
|SIGNATURE |  | TITLE |  | DATE
|          |  |       |  |     

|                                       |  |                                                                                                              |  |               
|-------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------------
|/s/ THOMAS R. MCGUIREThomas R. McGuire |  | Chairman of the Board of Directors,
Chief Executive Officer and Director
Executive Vice President (Principal |  | March 29, 2002
|                                      
|/s/ SANDRA A. KNELLSandra A. Knell     |  | Financial and Principal Accounting
Officer)                                                                  |  | March 29, 2002
|                                      
|/s/ ROBERT S. THROOPRobert S. Throop   |  | Director                                                                                                     |  | March 29, 2002
|                                      
|/s/ JOHN W. CASEYJohn W. Casey         |  | Director                                                                                                     |  | March 29, 2002
|                                      
|/s/ BEN A. FRYDMANBen A. Frydman       |  | Director                                                                                                     |  | March 29, 2002

S-1



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##### Table of Contents






INDEX TO EXHIBITS

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|Number  |  | Description of Exhibits                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|3.1A    |  | Certificate of Incorporation of the Company as filed with the Delaware
Secretary of State on July 1, 1997 and as in effect since that date
(incorporated by reference to Exhibit B to the Companys Definitive Proxy
Statement dated and filed with the SEC on July 3, 1997).                                                                                                                    
|3.2     |  | Bylaws of the Company as adopted on July 1, 1997 and as in effect since
that date (incorporated by reference to Exhibit C to the Companys
Definitive Proxy Statement dated and filed with the SEC on
July 3, 1997).                                                                                                                                                                             
|10.17*  |  | Amended and Restated 1983 Employee Stock Option Plan.                                                                                                                                                                                                                                                                                                                                            
|10.18   |  | Agreement of Purchase and Sale dated June 25, 1985, between Coast R.V.,
Inc. and Coachmen Industries, Inc. (Incorporated by reference to the same
numbered exhibit in the Companys Current Report on Form 8-K dated June
28, 1985).                                                                                                                                                             
|10.22   |  | Nonqualified Stock Option Plan  1987. (Incorporated by reference to
Exhibit 4.1 in the Companys Registration Statement on Form S-8 (File No.
33-15322) filed with the SEC on June 25, 1987).                                                                                                                                                                                                   
|10.23   |  | 1987 Employee Stock Purchase Plan. (Incorporated by reference to Exhibit
4.1 in the Companys Registration Statement on Form S-8 (File No.
33-18696) filed with the SEC on December 1, 1987).                                                                                                                                                                                                    
|10.31   |  | 1993 Stock Option and Incentive Plan. (Incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form S-8 (File No.
33-64582) filed with the SEC on June 17, 1993).                                                                                                                                                                                                    
|10.33   |  | Second Amended and Restated Loan Agreement between the Company and Mellon
Bank, together with First Amendment thereto (Incorporated by reference to
Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the
Quarter ended June 30, 1995).                                                                                                                                            
|10.34   |  | Distribution Agreement dated October 11, 1995 between the Company and
Recreation Vehicle Products, Inc. (Incorporated by reference to Exhibit
10.1 to the Companys Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1995).                                                                                                                                                     
|10.35   |  | 1997 Employee Stock Purchase Plan (incorporated by reference to Exhibit
4.1 to the Companys Registration Statement on Form S-8
(No. 333-55933)
filed with the Commission on June 3, 1998.                                                                                                                                                                                                       
|10.36   |  | 1999 Stock Incentive Plan (Incorporated by reference to Exhibit 10.36 to
the Companys Annual Report on Form 10K for the year ended December 31,
2000).                                                                                                                                                                                                                                          
|10.37   |  | Agreement and Plan of Merger dated as of April 29, 1998, between the
Company and The Coast Distribution System, a California corporation and
the Companys predecessor (Coast California) pursuant to which its
reincorporation in Delaware was accomplished (incorporated by reference to
Exhibit A to the Companys Definitive Proxy Statement dated and filed with
the SEC on July 3, 1997).
|21      |  | Subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                    
|23.1    |  | Consent of Grant Thornton LLP, Independent Certified Public Accountants,
re Consolidated Financial Statements of The Coast Distribution System,
Inc.                                                                                                                                                                                                                                             
|24      |  | Power of Attorney  Included on Signature Page.                                                                                                                                                                                                                                                                                                                                                  



---

|* |  | Incorporated by reference to the same numbered exhibit in the Companys
Registration Statement on Form S-1 (File No. 33-4393) filed with the
Commission on March 28, 1986.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

E-1