UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 1997

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the transition period from _____________________ to ______________________

Commission File Number: 0-24804

                             Featherlite Mfg., Inc.
             (Exact name of registrant as specified in its charter)

        Minnesota                                          41-1621676
(State or other jurisdiction                            (I.R.S. Employer
of incorporation or organization)                       Identification No.)

                Highways 63 & 9, P.O. Box 320, Cresco, IA 52136
     (Address of principal executive offices)             (Zip Code)

                                  319/547-6000
              (Registrant's telephone number, including area code)


              (Former name, former address and former fiscal year,
                         if changed since last report)

     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.
 [ X ] Yes       [  ] No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.                                [  ] Yes       [  ] No

                     
                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

                    6,255,000 Shares as of November 11, 1997


<PAGE>


                             FEATHERLITE MFG., INC.

                                      INDEX



                                                                    Page No.

 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

  Part I.  Financial Information:

           Item 1.  Financial Statements (Unaudited)
             Balance sheets
             September 30, 1997 and December 31, 1996  . . . . . . . . . 3

             Statements of Income
             Three Months and Nine Months
             Ended September 30, 1997 and 1996   .  . . . . . . . . . .  4

             Condensed Statements of Cash Flows
             Nine months Ended September 30, 1997 and 1996 . . . . . . . 5

             Notes to Financial Statements . . . . . . . . . . . . . . . 6

           Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations. . . . 9

  Part II.   Other Information:

           Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . 13

  Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

  Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15




<PAGE>


                          Part I: FINANCIAL INFORMATION

Item 1:

              Featherlite Mfg., Inc.
              Condensed Balance Sheets
              (Unaudited)
              (In thousands)

<TABLE>
<CAPTION>

                                                                                          September 30,           December 31,
                               ASSETS                                                          1997                   1996
                                                                                          -------------           ------------

<S>                                                                                    <C>                     <C>    
Current Assets
    Cash                                                                                $         673          $         256
    Trade receivables                                                                           7,947                  6,783
    Inventories
      Raw Materials                                                                             9,667                  8,053
      Work in process                                                                           9,215                  8,410
      Finished trailers                                                                        11,780                  8,772
                                                                                             --------               --------
      Total inventories                                                                        30,662                 25,235
    Prepaid expenses                                                                              768                  1,094
    Deferred taxes                                                                                481                    481
                                                                                             --------               --------
    Total current assets                                                                       40,531                 33,849
                                                                                             --------               --------

Property and equipment                                                                         19,619                 17,687
    Less accumulated depreciation                                                              (5,936)                (4,914)
                                                                                            ---------             ----------
    Property and equipment, net                                                                13,683                 12,773
                                                                                            ---------             ----------

Goodwill and Other assets                                                                       6,943                  6,912
                                                                                             --------               --------
                                                                                         $     61,157          $      53,534
                                                                                             ========               ========

                     LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities
    Current maturities of long term debt                                                 $      1,073          $       1,146
    Other notes payable                                                                         3,960                  2,255
    Accounts payable                                                                           10,808                  9,776
    Accrued liabilities                                                                         4,704                  3,110
    Customer deposits                                                                           1,898                  2,157
    Accrued income taxes                                                                          410                    240
                                                                                             --------               --------

    Total current liabilities                                                                  22,853                 18,684
                                                                                             --------               --------

Long Term Debt, net of current maturities                                                      14,596                 13,346
Deferred grant income                                                                             255                    310
Deferred taxes                                                                                    599                    599
Commitments and contingencies (Note 4)
Shareholders' equity                                                                           22,854                 20,595
                                                                                             --------               --------
                                                                                        $      61,157          $      53,534
                                                                                             ========               ========

See Notes to financial statements

</TABLE>



<PAGE>

              Featherlite Mfg., Inc.
              Condensed Statements of Income
              (Unaudited)
     (In thousands, except for per share data)


<TABLE>
<CAPTION>


                                                                              Three months Ended            Nine Months Ended
                                                                                 September 30                 September 30
                                                                               1997        1996             1997         1996
                                                                               ----        ----             ----         ----
<S>                                                                         <C>           <C>              <C>            <C>    
Net Sales                                                                   $ 32,728       $ 28,384        $ 99,414       $ 69,528
Cost of Sales                                                                 26,926         24,446          83,315         59,869
                                                                            --------       --------        --------       --------
    Gross profit                                                               5,802          3,938          16,099          9,659
Selling and administrative expenses                                            4,215          3,248          11,632          8,582
                                                                            --------       --------        --------       --------
    Income from operations                                                     1,587            690           4,467          1,077
Other income (expense)
    Interest                                                                    (445)          (395)         (1,220)        (1,052)
    Gain on aircraft and property sales                                          275             -              269             -
    Grant and other income, net                                                   66             44             250            419
                                                                            --------       --------        --------       --------
    Total Other income, net                                                     (104)          (351)           (701)          (633)
                                                                            --------       --------        --------       --------
Income before taxes                                                            1,483            339           3,766            444
Provision for income taxes                                                       594            133           1,507            173
                                                                            --------       --------        --------       --------
    Net income                                                                   889            206           2,259            271
                                                                            ========       ========        ========       ========


Net income per share                                                        $   0.14       $   0.03        $   0.36       $   0.04
                                                                            --------       --------        --------       --------

Weighted average shares outstanding                                            6,305          6,255           6,309          6,055
                                                                            --------       --------        --------       --------






See Notes to financial statements


</TABLE>


<PAGE>

              Featherlite Mfg., Inc.
              Condensed Statements of Cash Flow
              (Unaudited)
              (In thousands)


<TABLE>
<CAPTION>
                                                                                   Nine months Ended
                                                                                     September 30
                                                                                   1997         1996
                                                                                   ----         ----            
<S>                                                                             <C>            <C>   
Cash provided (used) by operating activities
Net income                                                                      $  2,259       $    271
Non cash adjustments, net                                                            547            984
Decrease (increase) in working capital, net                                       (3,729)          (840)
                                                                                --------       --------
Net cash provided by (used for) operating activities                                (923)           415
                                                                                --------       --------

Cash provided by (used for) investing activities
Acquisition of business                                                                             317
Additions to property and equipment, net                                          (2,062)          (965)
Additions to aircraft for resale                                                  (2,650)            -
Proceeds from sale of aircraft                                                     3,169             -
                                                                                --------       --------
Net cash provided by (used for) investing activities                              (1,543)          (648)
                                                                                --------       --------

Cash provided (used for) Financing Activities
Change in short term debt                                                          1,711          (766)
Change in long term debt and grants                                                1,172            931
                                                                                 -------       --------
Net cash provided by (used for) financing activities                               2,883            165
                                                                                 -------       --------
Net cash increase (decrease)                                                         417            (68)
Cash, begin of period                                                                256            811
                                                                                 -------       --------
Cash, end of period                                                              $   673       $    743
                                                                                 =======       ========


Non-cash Investing and Financing Activities
Fair market value of assets acquired, excluding cash                                          $  (6,186)
Excess of purchase price over net assets acquired                                                (3,139)
Liabilities assumed                                                                               7,842
Issuance of common stock                                                                          1,800
                                                                                               --------
Cash acquired                                                                                 $     317
                                                                                              =========



See Notes to financial statements

</TABLE>


<PAGE>

                              FEATHERLITE MFG., INC
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Note 1:  Basis of Presentation

The  accompanying  condensed  financial  statements have been prepared,  without
audit,  in accordance  with the  instructions  of Form 10-Q and therefore do not
include all  information  and  footnotes  necessary for a fair  presentation  of
financial  position,  results of operations  and cash flows in  conformity  with
generally accepted accounting  principles.  Financial information as of December
31, 1996 has been derived from the audited financial  statements of the Company,
but does not include all disclosures  required by generally accepted  accounting
principles.

It  is  the  opinion  of  management  that  the  unaudited  condensed  financial
statements  include all adjustments,  consisting of normal  recurring  accruals,
necessary to fairly state the results of  operations  for the nine month periods
ended  September  30,  1997 and 1996.  The  results of interim  periods  are not
necessarily  indicative  of results to be  expected  for the year.  For  further
information refer to the financial  statements and notes to financial statements
included in the Company's  Form 10-K Annual  Report for the year ended  December
31, 1996.

Note 2:  Goodwill and other assets

         Goodwill and other assets  consists of the  following at September  30,
1997 and December 31, 1996 (in thousands)

                                             Sept. 30,       December 31,
                                                1997             1996
                                             ---------       -------------
         Goodwill, net                      $  3,510          $    3,536
         Aircraft held for resale              2,539               2,815
         Idle facilities                         522                 522
         Advertising and other                   372                  39
                                           ---------      --------------
         Total Other                        $  6,943          $    6,912
                                           =========      ==============

Note 3:  Financing Arrangements

         Other notes  payable  primarily  include  borrowings  under a wholesale
finance  agreement with a financial  services company for a $5.0 million line of
credit (was increased from $3.5 million during the quarter) to finance completed
new and used  motorcoaches.  At September  30,  1997,  $3.9 million was borrowed
against this line.

         Long-term  debt includes a credit  agreement  with  Firstar Bank Iowa,
N.A.,  that provides a working  capital line of credit.  The agreement  includes
covenants requiring  maintenance of defined levels of working capital,  tangible
net worth and cash flow and limits leverage and capital expenditures.  There was
$6.8 million  borrowed  against this line of credit as of September 30, 1997. In
November,  1997,  the credit  agreement  was extended  until July,  1999 and the
interest  rate on  borrowings  was  reduced  from prime to prime  less  one-half
percent.

         In June,  1997,  the Company  borrowed $5 million  dollars under a term
note agreement  with Firstar Bank,  N.A. This note bears interest at 8.25% fixed
and is payable in monthly installments based on a 12 year term and it has a five
year maturity.  The proceeds from this note were used to reduce the  outstanding
balance on the line of credit.

In September,  1997, the Company  entered into an operating lease agreement with
the Seminole Port  Authority  covering the existing and expanded  production and
office  facilities at its Vantare location in Florida.  This lease has a minimum
ten year term and requires varying payments  monthly,  which average $275,000 on
an  annual  basis  over the  life of the  lease.  Borrowings  from a bank by the
Company to provide interim  financing for the expansion project were repaid from
proceeds of the sale to the Port Authority.

<PAGE>

Note 4:  Commitments and Contingencies.

Pursuant to dealer inventory floor plan financing arrangements,  the Company may
be  required,  in the event of  default  by a  financed  dealer,  to  repurchase
products from financial institutions or to reimburse the institutions for unpaid
balances  including  finance  charges plus costs and  expenses.  The Company was
contingently  liable  under the  arrangement  for a maximum of $  13,028,000  at
September 30, 1997 and $6,059,000 at December 31, 1996.

Also,  the Company is  self-insured  for a portion of certain health benefit and
workers'  compensation  insurance  claims.  The Company's  maximum  annual claim
exposure under these programs is approximately $2.2 million,  including $938,000
accrued for  estimated  unpaid  claims at  September  30,  1997 and  $634,000 at
December 31, 1996.  The Company has obtained an  irrevocable  standby  letter of
credit in the amount of  $1,225,000 in favor of the workers  compensation  claim
administrator.

There is a risk to future operating results if the Company were to lose its sole
supplier of  motorcoach  conversion  shells,  Prevost Car Company,  although the
Company could purchase certain shells from other manufacturers. The Company does
have business interruption  insurance to cover all or a portion of the losses it
may  sustain  if  Prevost's   plant  is  destroyed  by  fire  or  certain  other
catastrophes.

The  Company  has made an offer to  purchase  land for future  expansion  at its
Vantare location in Florida.  A commitment  letter has been obtained from a bank
to fund a  substantial  portion of the  $900,000  purchase  price for this land,
which is expected to be completed in the fourth quarter of 1997.


Note 5:  Shareholders' Equity

Shareholders' equity is further detailed as follows: (Dollars in thousands)

                                             Sept.30,        Dec 31,
                                               1997           1996
                                            --------        --------
Common stock - without par value;
   authorized- 40,000,000 shares;
   issued-      6,255,000 shares            $ 14,220          $14,220
Additional paid-in capital                     4,061            4,061
Retained earnings                              4,573            2,314
                                            --------          -------
         Total Shareholders' equity         $ 22,854          $20,595
                                              ======           ======


<PAGE>


Note 6: Stock Option Plan

The Board of Directors  granted stock options to certain employees and directors
in the total amount of 305,710  shares and 249,380  shares at September 30, 1997
and  December  31,  1996,  respectively,  pursuant  to  the  stock  option  plan
established  by the Company in July,  1994.  These shares were granted at prices
ranging from $5.50 to $9.00 per share,  and are exercisable at varying dates not
to exceed 10 years  from the date of grant.  There is also an  outstanding  five
year warrant that was granted to the  Underwriter in connection with the initial
public offering of the Company's stock in September,  1994, to purchase  120,000
shares of the Company's  stock at 120% of the public offering price of $6.00 per
share.

Note 7: Earnings per Share

The FASB has issued Statement No. 128, Earnings per Share,  which supersedes APB
No. 15.  Statement  128 requires the  presentation  of earnings per share by all
entities  that have common stock or  potential  common  stock,  such as options,
warrants and convertible  securities  outstanding that trade in a public market.
Those entities that have only common stock  outstanding  are required to present
basic  earnings per share  amounts.  All other  entities are required to present
basic and  diluted  per share  amounts.  Diluted  per share  amounts  assume the
conversion,  exercise or  issuance of all  potential  common  stock  instruments
unless the effect is to reduce a loss or  increase  the income per common  share
from continuing  operations.  All entities required to present per share amounts
must  initially  apply  Statement  No. 128 for annual and interim  periods after
December 15, 1997. Earlier application is not permitted.

Because the Company has potential  common stock  outstanding  (stock options and
warrants as discussed in Note 6), the Company will be required to present  basic
and diluted  earnings per share. If the Company had applied  Statement No 128 in
the  accompanying  financial  statements,  the following per share amounts would
have been reported:
                                   Three months ended         Nine Months Ended
                                      September 30               September 30
                                  ---------------------     --------------------
                                  1997             1996     1997            1996
                                  ----            -----     -----           ----
Basic earnings per share           .14              .03      .36             .04
                                   ---             ----      ---             ---
Diluted earnings per share         .14              .03      .36             .04
                                   ---             ----      ---             ---


The weighted-average  number of shares of common stock used to compute the basic
earnings  per share was  increased by 50,247 and 54,246 for the three months and
nine months ended September 30, 1997, respectively,  for the assumed exercise of
the employee and director  stock  options and warrants in computing  the diluted
per share data.  There was no increase  for the same periods in 1996 because the
exercise  price of those options and warrants  exceeded the average market price
of the common stock during those periods.


Note 8:  Joint Venture Agreement

On October 1, the Company signed a joint venture agreement with GMR Marketing to
form the  Featherlite/GMR  Sports  Group,  LLC. The joint  venture will focus on
developing  promotional  events and  implementing  marketing  strategies  in the
rapidly growing motorsports  industry. It is not expected that this venture will
require significant capital to begin and maintain its operations.


<PAGE>


Item 2:

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

         The  following   discussion   pertains  to  the  Company's  results  of
operations and financial condition for the nine month period ended September 30,
1997 and 1996:

Results of Operations

         Three months ended September 30, 1997 and 1996

         Net sales of $32.7  million for the quarter  ended  September  30, 1997
increased by 15.3% over the same period in 1996,  including an increase of 17.5%
in sales of  Featherlite  aluminum  and steel brand  trailers and an increase of
1.4% in sales of luxury  motorcoaches.  On a product group basis,  horse trailer
sales increased by 8.2%, livestock trailers increased by 20.0%, car/race car and
specialty transporter sales were up 63.2%, utility trailer increased by 8.6% and
commercial  trailers sales were down by 8.6%.  These increases are reflective of
the strong order backlog ($32  million)  carried into the third quarter from the
second  quarter as well as continued  backlog  growth in certain  product  lines
during the  quarter.  Commercial sales were down in 1997  compared  to 1996 due
to lower levels of orders for drop frame specialty  trailers during the  current
quarter compared to 1996.

         Gross  margin  increased  to $5.8  million in 1997 from $3.9 million in
1996 as a result  of the  increased  levels  of  sales  and an  improved  margin
percentage.  As a percentage of sales, gross margin for the quarter increased to
17.7% compared to 13.9% in 1996 which was adversely  impacted by higher material
costs than in 1997. The 1997 gross margin  percentage  benefited from changes in
product mix,  reduced aluminum costs and improved labor  efficiencies  resulting
from a strong order backlog. These increases were partially offset by the effect
of the sale of certain slide-out model new coaches and used  motorcoaches  which
had a lower than normal gross  margin.  If motorcoach  sales are excluded, gross
margin would have increased to 20.0% in the third quarter.

         Selling and administrative  expenses increased in 1997 by $967,000 over
1996 and  increased as a percentage  of sales to 12.9% in 1997 from 11.4% in the
same period in 1996. This increase reflects the additional operating expenses at
Vantare.  Excluding Vantare's selling and administrative  expenses,  these costs
increased  by about 21.7% which is slightly  higher than the increase in trailer
sales during the quarter.

         Interest  expense was about $50,000 greater in 1997 than 1996 due to an
increased  level of  borrowings  for  working  capital in 1997 as well as higher
interest rates. Gains on aircraft and other property sales were $275,000 greater
in 1997 than 1996 which had no such sales during the quarter.  Other income was
$21,000 greater in 1997 than 1996.

         The provision for income taxes reflects an effective federal and state
income tax rate of 40% in 1997 and 39% in 1996.


         Nine months ended September 30, 1997 and 1996

         Net sales of $99.4 million for the nine months ended September 30, 1997
increased by 43.0% over the same period in 1996,  including an increase of 18.6%
in sales of  Featherlite  aluminum  and steel  brand  trailers.  Vantare  luxury
motorcoaches,  which was  acquired  in the 3rd  quarter of 1996,  added sales of
$25.8 million during this period. On a product group basis,  horse trailer sales
were  unchanged,  livestock  trailers  increased  by  26.7%,  car/race  car  and
specialty  transporter sales were up 69.7%,  utility trailers increased by 37.9%

<PAGE>

and commercial  trailers sales were down by 18.1%. These increases were a result
of the strong order backlog ($28 million) carried into 1997 from 1996 as well as
continued  strong backlog in all product lines during the period.  Horse trailer
sales have not shown an increase  in 1997 due to reduced  sales from dealer pool
inventory  which  is at a  lower  level  than  in 1996  and  adjustments  in the
production  schedule  due to  product  mix.  Commercial  sales  are down in 1997
compared to 1996 due to discontinuation  of semi-flatbed  models during 1996 and
lower  levels of orders for  dropframe  specialty  trailers  during the  current
period compared to 1996.  There was also a 2 percent  increase in trailer models
prices in the first  quarter of 1997,  which was  partially  effective  on sales
during this period.

         Gross  margin  increased  to $16.1  million in the first nine months of
1997 from $9.7 million in 1996 as a result of the increased  levels of sales and
a higher gross margin percentage. As a percentage of sales, gross margin for the
period  improved  to 16.2%  compared  to 13.9% in 1996.  The 1997  gross  margin
percentage  benefited from reduced aluminum costs,  which were  approximately 7%
lower than in 1996,  changes in product mix and improved labor efficiency.  This
increase was partially  offset by the effect of used and certain  slideout model
new motorcoach sales which had a lower than normal gross margin.  If motorcoach
sales are excluded,  gross margin would have increased to 19.2% in 1997 compared
to 14.5% in 1996.

         Selling and  administrative  expenses  increased in 1997 by  $3,049,000
over 1996 but  decreased as a percentage of sales to 11.7% in 1997 from 12.3% in
the same period in 1996. This decrease reflects the additional operating expense
leverage  obtained  through  the  acquisition  of  Vantare  in  1996.  Excluding
Vantare's selling and administrative  expenses,  these costs increased by 21.2%,
which is slightly higher than the rate of increase in trailer sales.

         Interest  expense  increased  by  $168,000  over 1997 due to  increased
borrowings  and higher  interest  rates and other income  decreased by $169,000,
primarily due to the non-recurrence of a $245,000  litigation  settlement during
1996.  Gains on aircraft and other property sales were $275,000  greater in 1997
than 1996 as there were no such sales in 1996.

         The provision for income taxes reflects an effective federal and state
income tax rate of 40% in 1997 and 39% in 1996.  The rate increase reflects 
anticipated higher state income tax accruals in 1997.

Looking Forward

         The statements made in this Form 10Q quarterly report which are forward
looking  in time  involve  risks  and  uncertainties  discussed  here and in the
Company's Form 10K and other filings with the SEC, including but not limited to:
product  demand and  acceptance of new products in each segment of the Company's
markets,  fluctuations  in  the  price  of  aluminum,  competition,   facilities
utilization and aircraft purchases and sales.

         Sales are  expected  to remain  strong  in most  product  lines for the
balance of 1997. The Company believes its close affiliation with the motorsports
industry  will  continue  to have a  positive  impact on its sales of  specialty
trailers,  transports  and  motorcoaches. With more than 75% of its revenues now
from end users in the motorsports,  leisure and entertainment categories,  which
also  includes  horse  trailers,  and with its strong  position in the livestock
trailer  market,  the Company  believes  it is  strategically  well-situated  to
benefit from the very strong growth in these markets.  The Company will continue
to put strong  emphasis on its horse and livestock  product  lines,  through the
introduction of new models and offering new features for existing trailers.  The
total  trailer and  motorcoach  backlog at  September  30, 1997 was $33 million
compared  with $28 million at December 31, 1996 and $32 million at September 30,
1996.  The sales  backlog at September 30, 1997 and December 31, 1996  included
luxury  motorcoach  order backlog of $16 million and $16 million,  respectively,
including  approximately $10 million ordered for 1998 delivery at September 30,
1997.

<PAGE>
         Gross  margins are  expected to  continue  to benefit  from  changes in
product mix as well as lower  average costs of aluminum.  The Company has
obtained  commitments from suppliers to provide,  at an agreed upon fixed price,
substantially  all of its aluminum  requirements for 1997 and 1998.  Development
costs related to the slide-out motorcoaches are not expected to adversely impact
margin  improvement  in the future.  Labor and  overhead  costs are  expected to
increase  but  remain  unchanged  or be  less,  as a  percentage  of  sales,  as
operational efficiencies improve and price increases become fully effective.

         Sales  and  administration  expenses  for the  remainder  of  1997  are
expected to increase but at about the same rate as sales.  Interest expense will
likely  remain  higher than 1996 as the average  level of debt is expected to be
greater due to working capital growth and capital addition projects.

         There is a risk to future  operating  results related to losing a major
supplier of aluminum.  This risk is  relatively  nominal as there are  alternate
sources  of  supply.  There is also a risk to future  operating  results  if the
Company  were to lose  its sole  supplier  of  motorcoach  shells,  Prevost  Car
Company,   although  the  Company  could  purchase  certain  shells  from  other
manufacturers.  The Company does have business  interruption  insurance to cover
all or a portion of the losses it may sustain if Prevost's plant is destroyed by
fire or certain other catastrophes.


Liquidity and Capital Resources

During the first half of 1997,  the  Company's  operations  provided net cash of
$417,000,  including  $1,085,000  used  for  operating  activities,   $2,883,000
provided by increased  debt, and $1,381,000  used for capital  expenditures  for
property, equipment and aircraft.

Operating  activities in the first nine months of 1997 used cash of  $1,085,000.
Net  income  from  operations  provided  cash of  $2,259,000.  This  amount  was
increased by adjustments  for  depreciation  and  amortization of $1,214,000 and
reduced by other non-cash items in an aggregate amount of $667,000. Increases in
receivables,   inventories   and  other  working  capital  items  used  cash  of
$3,729,000.  Inventory  and  receivable  increases  of  $6,590,000,  which  were
required to support  increased  sales in 1997,  were  partially  offset by a net
increase of  $2,861,000  in prepaid  expenses,  accounts  payable and  accruals.
Increased  expenditures  for  working  capital  items may be required to support
increased sales levels  throughout  1997. These increases will be funded by cash
generated from operations as well as the Company's available lines of credit.

Investing  activities for the first nine months of 1997 used cash of $1,381,000,
including  $2,062,000 used for plant and other capital improvements and $519,000
provided  by aircraft  transactions.  Plant  additions  include  $1,155,000  for
various machinery and equipment  additions and $907,000 for luxury  motorcoaches
leased to outsiders. The Vantare production facility expansion was completed and
sold to the Seminole Port  Authority at its cost of $975,000 and was then leased
back by the Company under the terms of a ten year operating  lease. The proceeds
from the sale  were  used to repay  interim  bank  borrowings  for the  project.
Aircraft  transactions of $519,000 include net proceeds of $3,700,000 from sale
of aircraft and the purchase of aircraft for $2,651,000. In October, the Company
purchased  aircraft  at a cost  of  $3,700,000  which  were  fully  financed  by
additional  borrowings.  The Company is in the process of adding  20,000  square
feet to its parts and rework facility at a cost of approximately  $450,000. This
project will be completed in the fourth  quarter and  substantially  funded with
available borrowing capacity.

Financing  activities  during the first nine months of 1997 provided net cash of
$2,883,000,  after  borrowings  of  $15,665,000  and  payments  of  $12,782,000.
Borrowings  included  $2,601,000 for the purchase of aircraft,  $12,419,000 from
term and line of  credit  notes  and  $645,000  for  plant  expansion  and other

<PAGE>

projects.  Repayments  included  $7,660,000  on the line of  credit  notes  and
$2,328,000  for the  reduction of other debt. In October,  the Company  borrowed
$3,700,000 to fund aircraft purchases.

The  Company  has a working  capital  line of credit  with its  primary  lender,
Firstar Bank Iowa,  N.A.  This line has a defined  borrowing  limit equal to the
lesser of $12.0  million or a defined  percentage  of eligible  receivables  and
inventory.  In November,  1997, the maturity date of borrowings  under this line
was extended to July 31, 1999, subject to renewal and extension and the interest
rate on borrowings  was reduced from prime rate to one-half  percent below prime
rate.  The  Company is  required  by the lender to  maintain  defined  levels of
working  capital,  tangible  net worth and cash flow and to limit  leverage  and
capital expenditures. Borrowings under the line are secured by substantially all
assets of the Company.  There was $6.8 million borrowed against this credit line
as of September 30, 1997.

The Company also has a wholesale floor plan agreement with  Deutsche  Financial
Services to borrow up to $5.0 million  (increased  from $3.5 million  during the
third quarter) for financing new and used motorcoaches  held in inventory,  with
interest at prime plus  one-quarter  percent on borrowed funds. At September 30,
1997 $3.9 million was borrowed against this line.

The Company  believes that its current cash  balances,  cash flow generated from
operations  and  available   borrowing  capacity  will  be  sufficient  to  fund
operations  and  capital  requirements  for the next  year  and the  foreseeable
future.

As  discussed  in Note 2 to financial  statements,  the Company is  contingently
liable under certain dealer floor  arrangements.  These  contingent  liabilities
total  approximately  $13 million at September 30, 1997.  Also,  the Company is
self-insured  for a portion of certain health benefit and workers'  compensation
insurance  claims.  At September 30, 1997,  the Company's  maximum  annual claim
exposure under these  programs is  approximately  $2.2 million.  The Company has
obtained an irrevocable  standby letter of credit in the amount of $1,225,000 in
favor of the workers compensation claim administrator.


The Company is the process of  purchasing  land near its  Sanford  facility  for
future expansion use at a cost of approximately  $900,000. This purchase will be
funded before the end of 1997 by additional borrowings from a Florida bank.

The  Company  has also made a  commitment  to the City of Cresco to  construct a
hangar facility at a cost of $300,000 as part of an airport expansion project in
1998.

In June,  the Company  signed a letter of intent to acquire  Camp &  Associates,
Inc. In July,  the Company  withdrew its offer as a result of its due  diligence
work and this acquisition was not completed.

In  October,  1997,  the  Company  signed  a joint  venture  agreement  with GMR
Marketing  to form  Featherlite/GMR  Sports  Marketing  Group,  LLC.  This joint
venture will focus on developing  promotional events and implementing  marketing
strategies in the rapidly growing motorsports  industry. It is not expected that
this  venture  will  require  significant  capital  to begin  and  maintain  its
operations.


<PAGE>


                  PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         (a)       Exhibits.  See Exhibit Index on page following signatures.

         (b)       Form 8-K. The Registrant did not file any reports on Form 8-K
                   during the three months ended September 30, 1997.





<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                        FEATHERLITE MFG., INC.
                                        (Registrant)



Date:  November 11, 1997                /S/ CONRAD D. CLEMENT
                                        ---------------------
                                        Conrad D. Clement
                                        President & CEO




Date:  November 11, 1997                /S/ JEFFERY A. MASON
                                        --------------------
                                        Jeffery A. Mason
                                        Chief Financial Officer


<PAGE>



                                  EXHIBIT INDEX
                                    Form 10Q
                        Quarter Ended September 30, 1997


Exhibit No.             Description

   10.1  Second  Amendment dated July 31, 1997, to Amended and Restated 
         Credit and Security Agreement
   10.2  Agreement dated October 16, 1997 with Tifton Aluminum Company, Inc. *
   10.3  Agreement dated October 15, 1997 with EASCO Aluminum, Dolton Works *
   10.4  Agreement dated October 22, 1997 with Alumax Transportation Products *

   27    Financial Data Schedule (filed in electronic format only)

* Portions of this document have been omitted pursuant to a request for
  confidential treatment.