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 June 30, 1998

                                       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, 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)

                             Featherlite Mfg., Inc.
        (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 CORPORATE ISSUERS:


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


                     6,528,351 Shares as of August 11, 1998


<PAGE>


                                FEATHERLITE, INC.

                                      INDEX



                                                                      Page No.

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

Part I. Financial Information:

   Item 1.  Financial Statements (Unaudited)

     Balance sheets
     June 30, 1998 and December 31, 1997  . . . . . . . . . . . . . . . . .  3

     Statements of Income
     Three Months and Six Months
     Ended June 30, 1998 and 1997  . . . . . . . . . . . . . . . . . . . .   4

     Condensed Statements of Cash Flows
     Six months Ended June 30, 1998 and 1997 .  . . . . . . . . . . . . . .  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 2. Changes in Securities and Use of Proceeds . . . . . . . . . . .  13

   Item 4. Submission of Matters to a Vote
           of Security Holders . . . . . . . . . . . . . . . . . . . . . .  13

   Item 6. Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . .  14

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

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




<PAGE>

                          Part I: FINANCIAL INFORMATION

Item 1:

              Featherlite, Inc.
              Condensed Balance Sheets
              (Unaudited)
              (In thousands)
<TABLE>
<CAPTION>
                                                                                      June 30,             December 31,
                                    ASSETS                                              1998                  1997
                                                                                        ----                  ----
<S>                                                                               <C>                   <C>    
Current Assets
    Cash                                                                          $       2,034          $       1,632
    Trade receivables                                                                     9,228                  7,050
    Inventories
      Raw Materials                                                                      11,282                 10,052
      Work in process                                                                    15,312                 11,815
      Finished trailers and motorcoaches                                                 22,458                 17,797
                                                                                  -------------          -------------
      Total inventories                                                                  49,052                 39,664
    Prepaid expenses                                                                      1,407                  1,110
    Deferred taxes                                                                          824                    824
                                                                                  -------------          -------------
    Total current assets                                                                 62,545                 50,280
                                                                                  -------------          -------------

Property and equipment                                                                   21,915                 20,460
    Less accumulated depreciation                                                        (7,022)                (6,280)
                                                                                  -------------          -------------
    Property and equipment, net                                                          14,893                 14,180
                                                                                  -------------          -------------
Goodwill and Other assets                                                                17,605                 11,048
                                                                                  -------------          -------------
                                                                                  $      95,043          $      75,508
                                                                                  =============          =============
                    LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
    Current maturities of long term debt                                          $       1,025          $       1,173
    Other notes payable                                                                  11,771                  6,515
    Accounts payable                                                                     18,640                 11,984
    Accrued liabilities                                                                   5,125                  5,380
    Customer deposits                                                                     3,055                  3,585
                                                                                  -------------          -------------
    Total current liabilities                                                            39,616                 28,637
                                                                                  -------------          -------------
Long Term Debt, net of current maturities                                                26,022                 22,075
Deferred Grant Income                                                                       200                    237
Deferred taxes                                                                              682                    682
Commitments and Contingencies (Note 5)
Shareholders' Equity                                                                     28,523                 23,877
                                                                                  -------------          -------------
                                                                                  $      95,043          $      75,508
                                                                                  =============          =============
See Notes to financial statements

</TABLE>

<PAGE>



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

<TABLE>
<CAPTION>

                                                                       Three months Ended            Six months Ended
                                                                             June 30                      June 30
                                                                       ------------------            ----------------
                                                                         1998       1997              1998       1997
                                                                         ----       ----              ----       ----
<S>                                                                  <C>        <C>               <C>        <C>    
Net Sales                                                            $ 49,294   $ 32,652          $ 91,036   $ 66,686
Cost of Sales                                                          41,905     27,451            76,730     56,390
                                                                     --------   --------          --------   --------
    Gross profit                                                        7,389      5,201            14,306     10,296
Selling and administrative expenses                                     5,276      3,817             9,937      7,416
                                                                     --------   --------          --------   --------
    Income from operations                                              2,113      1,384             4,369      2,880
Other income (expense)
    Interest                                                             (685)      (440)           (1,261)      (776)
    Other, net                                                            249         78               471        180
                                                                     --------   --------          --------   --------
    Total Other expense                                                  (436)      (362)             (790)      (596)
                                                                     --------   --------          --------   --------
Income before taxes                                                     1,677      1,022             3,579      2,284
Provision for income taxes                                                672        408             1,433        913
                                                                     --------   --------          --------   --------
    Net income                                                       $  1,005   $    614          $  2,146   $  1,371
                                                                     ========   ========          ========   ========

Net income per share - basic                                         $   0.16   $   0.10          $   0.34   $   0.22
                                                                     --------   --------          --------   --------
Net income per share - diluted                                       $   0.15   $   0.10          $   0.33   $   0.22
                                                                     --------   --------          --------   --------
Weighted average shares outstanding - basic                             6,414      6,255             6,335      6,255
                                                                     --------   --------          --------   --------
Weighted average shares outstanding - diluted                           6,571      6,326             6,456      6,311
                                                                     --------   --------          --------   --------

See Notes to financial statements

</TABLE>

<PAGE>




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

<TABLE>
<CAPTION>

                                                                                         Six months Ended
                                                                                             June 30
                                                                                         ----------------
                                                                                         1998        1997
                                                                                         ----        ----
<S>                                                                                 <C>         <C>    
Cash provided (used) by operating activities
  Net income                                                                        $   2,146   $   1,371
  Depreciation & amortization                                                             876         777
  Other non cash adjustments, net                                                        (278)       (317)
  Decrease (increase) in working capital, net                                          (3,107)     (2,025)
                                                                                    ---------   ---------
      Net cash (used for) operating activities                                           (363)       (194)
                                                                                    ---------   ---------
Cash provided by (used for) investing activities
  Acquisition of business                                                                (310)         -
  Additions to property and equipment, net                                               (863)     (2,142)
  Sale (purchase) of aircraft, net                                                        173      (2,531)
                                                                                    ---------   ---------
      Net cash (used for) investing activities                                         (1,000)     (4,673)
                                                                                    ---------   ---------
Cash provided by (used for) financing activities
  Change in short term debt                                                            (2,012)      1,085
  Change in long term debt and grants                                                   3,777       4,382
                                                                                    ---------   ---------
      Net cash provided by financing activities                                         1,765       5,467
                                                                                    ---------   ---------
Net cash increase                                                                         402         600
Cash, begin of period                                                                   1,632         256
                                                                                    ---------   ---------
Cash, end of period                                                                 $   2,034   $     856
                                                                                    =========   =========
Non-cash Investing and Financing Activities

  Fair market value of assets acquired                                              $  12,417
  Excess of purchase price over net assets acquired                                     6,640
  Liabilities assumed                                                                 (16,247)
  Issuance of common stock                                                             (2,500)
                                                                                    ---------
      Cash used for business acquisition                                            $    (310)
                                                                                    =========


See Notes to financial statements

</TABLE>



<PAGE>


                                FEATHERLITE, 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  to 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, 1997 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 three and six month
periods  ended June 30, 1998 and 1997.  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, 1997.

Note 2: Property and Equipment

     Property   and   equipment   consists   of  the   following   at  June  30,
1998(unaudited) and December 31, 1997 (in thousands):

                                           June 30,          December 31,
                                             1998               1997
                                             ----               ----

         Land and improvements            $ 2,268           $  2,098
         Building and improvements          8,311              7,954
         Machinery and equipment           11,336             10,408*
         Accumulated depreciation          (7,022)            (6,280)
                                          -------           --------
         Net Property and equipment       $14,893           $ 14,180
                                          =======           ========

* This  amount was  incorrectly  reported  as $10,280 in the  December  31, 1997
annual report.

Note 3:  Goodwill and Other Assets

     Goodwill  and other  assets  consists  of the  following  at June 30,  1998
(unaudited) and December 31, 1997 (in thousands):

                                           June 30,          December 31,
                                             1998               1997
                                             ----               ----     
         Goodwill, net                   $  9,967          $   3,461
         Aircraft held for resale           6,675              6,726
         Idle facilities                      522                522
         Advertising and other                426                328
         Investment in joint venture           15                 11
                                         --------          ---------
         Total                           $ 17,605          $  11,048
                                         ========          =========


     Goodwill  increased  during the  quarter by  $6,641,000  as a result of the
acquisition  of the assets of Mitchell  Motorcoach  Sales,  Inc. as discussed in
Note 9 to financial statements.


<PAGE>


Note 4:  Financing Arrangements

     Other notes payable primarily include  borrowings under a wholesale finance
agreement  with a financial  services  company for a $23 million  line of credit
(increased  from $11 million  during the quarter )to finance  completed  new and
used  motorcoaches.  At June 30, 1998,  $11.7 million was borrowed  against this
line.

     Long-term  debt  includes a credit  agreement  with a bank that  provides a
working capital line of credit of up to $17 million  (increased from $12 million
during the quarter).  The agreement includes covenants requiring  maintenance of
defined levels of working capital, tangible net worth and cash flow and limiting
leverage and capital expenditures.  The Company was in compliance with all these
covenants at June 30, 1998.  There was $14.3 million  borrowed against this line
of credit as of June 30, 1998.

Note 5:  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 $ $15.8 million at
June 30, 1998 and $14.8 million at December 31, 1997.

     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 $3.5 million,  including $907,000
accrued for  estimated  unpaid  claims at June 30, 1998 and $844,000 at December
31, 1997.  The Company has obtained an  irrevocable  standby letter of credit in
the  amount  of   $1,245,000  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,  in the course of its business,  has been named as a defendant
in various  legal  actions.  Most,  but not all,  of such  actions  are  product
liability  or  workers'  compensation  claims in which the Company is covered by
insurance  subject to applicable  deductibles.  Although the ultimate outcome of
such claims cannot be ascertained at this time, it is the opinion of management,
after consulting with counsel, that the resolution of such suits will not have a
material  adverse  effect on the financial  position of the Company,  but may be
material to the Company's operating results for any particular period.


<PAGE>


Note 6:  Shareholders' Equity

Shareholders' equity may be further detailed as follows (Dollars in thousands)

                                                         June 30,       Dec 31,
                                                           1998          1997
                                                           ----          ----
Common stock - without par value;
   authorized- 40,000,000 shares;
   issued-      6,527,851 shares at June 30, 1998*       $ 16,720       $14,220
                6,255,000 shares at Dec. 31, 1997
Additional paid-in capital                                  4,062         4,062
Retained earnings                                           7,741         5,595
                                                         --------       -------
         Total Shareholders' equity                      $ 28,523      $ 23,877
                                                         ========       =======

 * As discussed in Note 9 to financial  statements,  the Company  issued 272,851
shares of common stock on May 7, 1998 with an aggregate  value of  $2,500,000 in
exchange for the assets of Mitchell  Motorcoach  Sales,  Inc. This is subject to
adjustment  based on the  outcome  of an audit of the  closing  balances  of the
assets and  liabilities  acquired.  Up to an  additional  381,992  shares may be
issued in the future if certain levels of defined  earnings are achieved  during
an earnout period ending December 31, 2001.

     In 1994,  the Company  completed  an initial  public  offering of 1,955,000
shares of Company common stock and granted an option to the  Underwriter  for an
additional  120,000  shares  at a price of 120  percent  of the  initial  public
offering  price of $6.00 per share.  This option,  which  expires in  September,
1999, has not yet been exercised.

Note 7: Stock Option Plan

     The Board of Directors has granted  stock options to certain  employees and
directors in the total amount of 323,380  shares and 311,380  shares at June 30,
1998 and  December  31,  1997,  respectively,  pursuant to the stock option plan
established  by the Company in July 1994.  These shares were granted at a prices
ranging from $5.50-$10.00 per share, and are exercisable at varying dates not to
exceed 10 years from the date of grant.  Options  totaling  12,000  shares  were
granted to directors upon their election to a one-year term in May, 1998. On May
6, 1998, the shareholders  approved an amendment to the stock option plan, which
increased  the  shares  reserved  for the  stock  option  plan from  550,000  to
1,100,000.

Note 8:  Earnings per Share

     Effective  December 31, 1997,  the Company  adopted FASB  Statement No 128,
Earnings per Share.  The  statement  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.

The weighted-average  number of shares of common stock used to compute the basic
earnings  per share was  increased  by 156,534 and  121,815 at June  30,1998 and
71,302  and 56,270 at June  30,1997  for the  assumed  exercise  of options  and
warrants in computing the quarterly and year to date diluted  earnings per share
data,  respectively.  Basic and diluted  earnings per share, as calculated under
FAS  statement  No. 128, are not  different  than the primary and fully  diluted
earnings per share as previously reported in prior periods.


<PAGE>


Note 9:  Acquisition of business

     In May 1998, the Company acquired  substantially all the assets of Mitchell
Motorcoach  Sales,  Inc. in exchange for Company  common stock with an aggregate
value of $2.5 million and the assumption of certain  Mitchell  Motorcoach  Sales
liabilities.  Additional  Company  common stock with an aggregate  value of $3.5
million  may be issued if this newly  formed  Featherlite-Vogue  division of the
Company achieves certain defined earnings levels through December 31, 2001. This
acquisition  was  accounted  for  as a  purchase  and  accordingly,  results  of
operations  of the  newly  formed  division,  which are not  significant  to the
Company's  operations,  have been included in the Company's operating statements
since the acquisition date. The purchase price was allocated on the basis of the
estimated  fair  value of  assets  acquired  and  liabilities  assumed  with the
remaining excess purchase price of $6,641,000 to be amortized over 30 years.

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 three-month  period and six-month  period ended
June 30, 1998 and 1997.

Results of Operations

     Three months ended June 30, 1998 and 1997

     On an overall basis,  the company's net income for the second quarter ended
June 30, 1998 was $1,005,000 or 15 cents per diluted share, up 63.7 percent from
net income of $614,000,  or 10 cents per diluted share, in the second quarter of
1997.  This increase was the result of  significantly  increased  sales combined
with a slightly improved operating margin percent for the quarter.

     Net sales of $49.3 million for the quarter ended June 30, 1998 increased by
51.0% over the same period in 1997.  The sales growth was led by a 136% increase
in  sales  of  Vantare  luxury  motorcoaches  over  1997  and  the  addition  of
Featherlite  Vogue luxury  motorcoach sales of $4.5 million.  The Vogue Division
was created when  Featherlite  acquired the assets of Mitchell  Motorcoach Sales
during the  quarter.  Sales of  Featherlite  aluminum  and steel brand  trailers
increased  by 12.3%.  On a  trailer  product  group  basis,  combined  horse and
livestock trailer sales increased by 22%. Car/racecar and specialty  transporter
sales were up about 10%. Both utility trailers and commercial trailer sales were
down by 25% and 2%,  respectively.  Utility trailers decreased  primarily due to
reduced levels of personal watercraft trailers sales in 1998. Commercial trailer
sales, a category which the Company previously  announced as being de-emphasized
declined from last year's level.  There was also a 2 percent increase in trailer
models prices late in 1997, which was fully effective on current quarter sales.

     Gross margin  increased to $7.4 million in the second  quarter of 1998 from
$5.2  million  in 1997 as a  result  of the  increased  levels  of  sales.  As a
percentage of sales, gross margin for the quarter was 15.0% compared to 15.9% in
1997. The gross profit margin percentage  decrease primarily reflects the effect
of the Mitchell Motorcoach Sales asset acquisition during the quarter. Excluding

<PAGE>

these sales,  the gross margin  percentage would have remained the same as 1997.
On a segment basis,  trailer margins were slightly lower during the quarter than
in 1997 due to  increased  labor and  overhead  costs not fully  offset by price
increases.  Luxury motorcoach margins related to Vantare improved  significantly
over 1997 due to the  non-recurrence  of development  costs related to slide-out
models.  Margins on Featherlite Vogue motorcoaches were lower than normal due to
the  sale  of new  units  at  prices  established  before  the  acquisition  was
completed.

     Selling and administrative  expenses increased in 1998 by $1.4 million over
1997,  including  $313,000  related to the Vogue  Division,  which was  acquired
during  1998.  This  increase,   excluding  Vogue,  primarily  reflects  greater
personnel and advertising costs primarily at the Vantare Division in response to
further  growth.  As a percentage of sales,  these  expenses  decreased to 10.7%
(11.1% excluding Vogue) from 11.7% in 1997.

     Interest  expense  increased  by $245,000  in 1998  compared to 1997 due to
higher levels of debt in 1998. Other income increased by $171,000,  primarily as
the result of a $130,000 gain on the sale of aircraft.

     The  provision  for income taxes  reflects an  effective  federal and state
income tax rate of 40% in 1998 and 1997.

Six months ended June 30, 1998 and 1997

     On an overall basis,  net income for the six months ended June 30, 1998 was
$2.1 million,  or 33 cents per diluted  share,  up 56.5% from net income of $1.4
million, or 22 cents per diluted share.

     Net sales of $91.0  million  for the six months  ended June 30, 1998 are up
36.5% over 1997, including an increase of 17.5% in sales of Featherlite aluminum
and steel brand trailers.  Vantare luxury motorcoach sales were up 61.4% and the
Featherlite Vogue  motorcoaches,  which was added in May 1998 as a result of the
Company's  acquisition  of the assets of Mitchell  Motorcoach  sales,  generated
sales of $4.5  million  during this  period.  On a product  group  basis,  horse
trailer sales increased by 28%, livestock trailers increased by 10%, car/racecar
and specialty  transporter sales were up by 18%, utility trailer sales increased
by 3%, commercial trailer sales were up 2% and motorcoach sales were up 61%.

     Gross  margin  increased  to $14.3  million in the first six months of 1998
from $10.3 million in 1997 as a result of increased levels of sales and a higher
margin  percentage.  As a  percentage  of sales,  gross  margin  for the  period
improved to 15.7%  compared to 15.4% in 1997.  The 1998 gross margin  percentage
benefited  from  improvements  in margin  percentages  realized  in the  Vantare
Division in 1998 compared to 1997 when significant  amounts of development costs
related to slide-out motorcoaches were incurred.  These improvements were offset
in part,  by  moderately  lower gross margin in  Featherlite's  trailer  product
categories due to increased  labor and overhead costs not fully covered by price
increases  in 1998  and by  lower  than  normal  margins  on  Featherlite  Vogue
motorcoaches which were sold at prices established before the acquisition.

     Selling and administration  expenses increased in 1998 by $2.5 million over
1997 but  decreased  as a percentage  of sales to 10.9% from 11.1% in 1997.  The
increase in overall spending reflects additional advertising and personnel costs
related to the  overall  growth of the  Company as well as the  addition  of the

<PAGE>

Vogue   Division  in  the  second  quarter  of  1998  which  added  selling  and
administrative   costs  of   $314,000.   On  an  overall   basis,   selling  and
administrative  costs have  increased  by 34%,  which is slightly  less than the
overall sales growth rate.

     Interest expense for 1998 is $484,000 greater than in 1997 due to increased
borrowings  on the  revolving  lines of credit for  working  capital and capital
expenditures. Increased levels of borrowing on the wholesale line of credit used
to finance new and used  motorcoach  inventory as a result of the acquisition of
the assets of Mitchell Motorcoach Sales also increased interest expense.

     Other  income  is up by  $290,000  over 1997 due  primarily  to the sale of
aircraft, which realized gains of about $145,000.

     The  provision  for income taxes  reflects an  effective  federal and state
income tax rate of 40% in 1998 and 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 all product lines for the balance of
1998 except for commercial trailers, which are being de-emphasized to focus more
on trailers used for leisure and entertainment purposes. The total sales backlog
for 1998  delivery  was $32 million at June 30, 1998  compared  with $27 million
June 30, 1997 and $28 million at December 31, 1997.

     Overall gross margin levels should remain at substantially  the same levels
for the remainder of 1998. The Company has obtained  commitments  from suppliers
to provide, at an agreed upon fixed price, all of its aluminum  requirements for
1998  and  substantially  all of 1999 at  fixed  prices  approximately  5% below
current levels.  The labor cost increases  related to wage increases in the last
quarter of 1997 are  expected  to be  substantially  recovered  in 1998  through
reduced  workforce  turnover  and  training  costs and through  price  increases
effective in 1998.  Margin  improvements  experienced in the first six months of
1998 at the  motorcoach  divisions are expected to continue as the operations of
the Vogue Division are fully integrated into the Company.

     Sales and administration  expenses for 1998 are expected to increase but at
a lower rate than sales growth. Interest expense will remain higher than 1997 as
the  average  level of debt is  expected  to be greater  due to working  capital
growth.

     There is a risk to future  operating  results if the Company were to lose 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.

<PAGE>

     The  Company  has made  greater  use of  leverage  and  incurred  increased
interest and related expenses in the past several years to finance  acquisitions
and working capital growth.  Increased debt has been incurred in connection with
the  acquisition of the assets of Mitchell  Motorcoach  Sales,  in financing the
operations  of the Vogue  and  Vantare  Divisions  and in  providing  additional
working capital for growth of the trailer  operations.  At various times in 1996
and 1997,  the Company  has been  temporarily  out of  compliance  with  certain
covenants of its loan agreements but received waivers from the lenders for there
variances.  It is in compliance with all covenants in 1998.  Increased  leverage
and related expenses create a risk to future operating results.

Liquidity and Capital Resources

     During the first six months of 1998, the Company's  operations provided net
cash  of  $402,000,   including  a  net  of  $1,765,000  provided  by  financing
activities,  a net  of  $363,000  used  for  operating  activities  and a net of
$1,000,000 used for capital  expenditures for equipment and expenses incurred in
the acquisition of the assets of Mitchell Motorcoach Sales.

     Operating activities in the first six months of 1998 used cash of $363,000.
Net  income  from  operations  provided  cash of  $2,146,000.  This  amount  was
increased by  adjustments  for  depreciation  and  amortization  of $876,000 and
decreased other non-cash items in an aggregate  amount of $278,000.  Net changes
in  receivables,  inventories  and  other  working  capital  items  used cash of
$3,107,000,  excluding  the  effect of the Vogue  acquisition,  which  increased
receivables, inventory and prepaid expenses by $11,842,000 and increased current
liabilities by $8,957,000.  Increased expenditures for working capital items may
be required to support  increased sales levels  throughout  1998. Cash generated
from  operations  as well as the Company's  available  lines of credit will fund
these increases.

     Investing  activities  for the six months  ended June 30, 1998 used cash of
$1,000,000, including $863,000 for equipment and other capital expenditures. The
Company also used cash of $310,000 for expenses  related to the  acquisition  of
the  assets of  Mitchell  Motorcoach  Sales in May,  1998,  which is more  fully
described in Note 9 to financial  statements,  including  property and equipment
valued at $575,000.  The facility  used by Mitchell is leased under the terms of
an operating lease.  Also during the quarter,  net cash of $173,000 was provided
from the purchase and resale of aircraft.

     Financing  activities  provided  net  cash  of  $1,765,000,  including  net
borrowings of  $4,555,000 on the bank line of credit and repaying  $2,012,000 on
the wholesale  financing  line of credit and other short term notes and $778,000
for the reduction of other long term debt.  In  connection  with the purchase of
assets of Mitchell  Motorcoach  Sales as  discussed  in Note 9 to the  financial
statements,  the Company issued 272,851 shares of common stock with an aggregate
value of  $2,500,000  and assumed notes payable of  $7,290,000.  These  acquired
notes  payable  were then  refinanced  with  borrowings  of $4.8  million of the
Company's wholesale line of credit and $2.5 million on the bank line of credit.

     The Company has a working  capital line of credit with its primary  lender,
Firstar Bank, N.A. This line has a borrowing  limit of $17.0 million  (increased
from $12 million  during the  quarter)  and an  interest  rate of prime less .5%
(8.00% at June 30, 1998).  The maturity  date of  borrowings  under this line is
September  30,1999.  The Company  currently  is in  discussion  with its primary
lender to increase and  restructure  the current credit line and to provide term
borrowings  for an  extended  period of time.  The amount of the  future  credit
facility and other details  related to these changes have not been  finalized at

<PAGE>

this time.  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.  The Company was in compliance with these requirements at
June 30, 1998. Borrowings under the line are secured by substantially all assets
of the Company.  There was $14.3 million  borrowed  against this line as of June
30, 1998.

     The  Company  also has a  wholesale  floor  plan  agreement  with  Deutsche
Financial  Services  to borrow up to $23  million  (increased  from $11  million
during the quarter) for financing new and used motorcoaches held in inventory by
the Vantare and Vogue  Divisions  with interest at prime (8.5% at June 30, 1998)
on borrowed funds.  The Company was in compliance with all the covenants of this
Agreement  at June  30,1998,  and at June  30,1998  $11.6  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 5 to financial statements, the Company is contingently
liable under certain dealer floor plan and retail financing arrangements.  These
contingent liabilities total approximately $15.8 million at June 30, 1998. Also,
the Company is self-insured for a portion of certain health benefit and workers'
compensation  insurance  claims.  At June 30, 1998, the Company's maximum annual
claim exposure under these programs is approximately  $3.5 million.  The Company
has obtained an irrevocable standby letter of credit in the amount of $1,245,000
in favor of the workers compensation claim administrator.

     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,
which  may begin in late  1998 or 1999.  In late  1998,  the  Company  may begin
construction  of a warehouse  facility  for raw  material  storage at its Cresco
location at an approximate  total  completed  cost of $2.0 million.  It may also
begin some phases of an expansion at its Vantare facilities. These programs will
be financed with new borrowings from banks or other financial institutions.

     In October  1997,  the Company  signed a joint venture  agreement  with GMR
Marketing to form  Featherlite/GMR  Sports  Group,  LLC. The joint  venture will
focus on developing  promotional events and implementing marketing strategies in
the rapidly  growing  motorsports  industry.  Since  inception,  the Company has
invested  $20,000  in  this  venture  and it is not  expected  that  significant
additional amounts of capital will be required to maintain this operation.

     The Company leases certain office and production  facilities  under various
leases that expire at varying  dates  through  fiscal year 2007.  Minimum  lease
payments for 1998 are expected to total $693,000,  including $193,000 related to
an operating  lease assumed in connection  with the Mitchell  Motorcoach  Sales,
Inc. acquisition.


                           PART II. OTHER INFORMATION


Item 2.  Changes in Securities and Use of Proceeds

Effective May 8, 1998, the Company  issued to Mitchell  Motorcoach  Sales,  Inc.
("Mitchell")  272,851 shares of Common Stock in connection  with the acquisition

<PAGE>

of substantially all of the assets of Mitchell.  The number of shares issued was
based on $9.1625 per share,  being the  average  market  value of the  Company's
Common Stock during the 20 trading days preceding the acquisition. Up to 381,992
additional  shares may be issued to Mitchell  subject to an  earn-out  and other
adjustments.  The sale of such stock was deemed to be exempt  from  registration
under the  Securities  Act of 1933 by virtue of Section 4(2)  thereof.  Mitchell
represented its intention to acquire the stock for investment  purposes only and
not  with a  view  to the  distribution  thereof;  in  addition,  a  restrictive
securities  legend  has  been  placed  on  the  certificates   representing  the
securities.


Item 4.  Submission of Matters to a Vote of Security-Holders.

     (a)  The  Annual  Meeting  of the  Registrant's  shareholders  was  held on
Wednesday, May 6, 1998.

     (b) At the Annual  Meeting a proposal  to set the  number of  directors  at
seven was  adopted by a vote of  5,994,923  shares in favor,  with 9,851  shares
against, 5,545 shares abstaining and -0- shares represented by broker non votes.

     (c) Proxies for the Annual  Meeting were  solicited  pursuant to Regulation
14A under the  Securities  Exchange  Act of 1934.  The  following  persons  were
elected  directors of the  Registrant to serve until the next annual  meeting of
shareholders  and until  their  successors  shall  have been  duly  elected  and
qualified:

     NOMINEE               NUMBER OF VOTES FOR         NUMBER OF VOTES WITHHELD
Conrad D. Clement                5,857,918                        152,401
Jeffery A. Mason                 5,858,418                        151,901
Tracy J. Clement                 5,857,918                        152,401
Donald R. Brattain               5,858,418                        151,901
Thomas J. Winkel                 5,858,418                        151,901
Kenneth D. Larson                5,858,418                        151,901
John H. Thomson                  5,860,318                        150,001

     (d) The holders of 5,992,469 shares voted for the amendment to the Articles
of  Incorporation  to change the name of the Company to  Featherlite,  Inc.; the
holders of 10,800  shares  voted  against  the  amendment,  the holders of 7,050
shares abstained and the broker non vote is 0.

     (e) The holders of  4,959,607  shares  voted for the  amendment to the 1994
Stock Option Plan to increase the number of shares of Common Stock  reserved for
issuance as options from  550,000  shares to  1,100,000  shares;  the holders of
205,049  shares  voted  against  the  amendment;  the  holders of 12,601  shares
abstained and the broker non vote is 833,062.


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

         (a)   Exhibits.  See Exhibit Index on Page 18 following signatures.

         (b) Form  8-K.  The  Registrant  did not file any  reports  on Form 8-K
during the three months ended June 30, 1998.


<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:  August 11, 1998                  /S/ CONRAD D. CLEMENT
                                            Conrad D. Clement
                                            President & CEO



Date:  August 11, 1998                  /S/ JEFFERY A. MASON
                                            Jeffery A. Mason
                                            Chief Financial Officer



<PAGE>


                                  EXHIBIT INDEX
                                    Form 10Q
                           Quarter Ended June 30, 1998


Exhibit No.      Description

 2.1     Agreement and Plan  of  Reorganization  dated May 8, 1998 with Mitchell
         Motorcoach Sales, Inc.  Pursuant  to Item  601(b)(2) of Regulation S-K,
         and subject to claims of  confidentiality  pursuant to Rule 24b-2 under
         the Securities Exchange Act of 1934, upon the request of the Commission
         the Registrant undertakes to furnish supplementally to the Commission a
         copy  of  any  schedule  or  exhibit  to  the  Agreement  and  Plan  of
         Reorganization described as follows:

                                 Schedules
         
         1.33           Permitted Liens
         2.2.3          Executed Contracts (Not Assigned or Assumed)
         2.3            Excluded Assets
         2.5.2(i)       Obligations to Institutional and Other Lenders
         2.5.2(ii)      Finance and Capital Lease Obligations
         2.5.2(iii)     Accrued Benefit Obligations
         2.5.2(iv)      Other Permitted Liabilities
         3.1            Foreign Qualifications
         3.4            Corporate Authority Matters
         3.7            Liabilities
         3.8            Changes and Events
         3.9(i),(ii)
          and (iii)     Assets and Liens
         3.10           Intellectual Property
         3.11           Licenses, Permits, Etc.
         3.12           Litigation
         3.14           Contracts
         3.15           Insurance
         3.16           Accounts Receivable
         3.17           Scheduled Plans (ERISA and non-ERISA)
         3.18           Employees
         3.19           Bank Accounts
         5.8            Form of Employment Agreement
         5.9            Employment Matters
         7.2.1          Required Approvals
         7.3.5          Form of Opinion of Mitchell Motorcoach's Counsel
         7.4.4          Form of Opinion of Featherlite's Counsel

                                 Appendices

                      A.   Litigation Pledge Agreement
         
<PAGE>

10.1     Third  Amendment  dated  January 1, 1998 to Amended and Restated Credit
         and Security Agreement with Firstar Bank Iowa, N.A.

10.2     Fourth  Amendment dated June 8, 1998 to Amended and Restated Credit and
         Security Agreement with Firstar Bank Iowa, N.A.

10.3     Fifth  Amendment dated June 30, 1998 to Amended and Restated Credit and
         Security Agreement with Firstar Bank Iowa, N.A.

10.4*    Agreements  with  Samuel-Whittar,  Inc. dated February 3, 1998, May 13,
         1998, June 29, 1998 and June 30, 1998

10.5*    Agreement with Easco Aluminum dated May 1, 1998

10.6*    Agreement with Aluminum Shapes dated May 1, 1998

10.7*    Agreement with Alumax Transportation Products dated May 14, 1998

10.8*    Agreements with Aluminum Line Products Company  dated June 10, 1998 and
         June 30, 1998

10.9*    Letter to Tifton Aluminum dated May 1, 1998

27       Financial Data Schedule (filed in electronic format only)


-----------------------------
* Portions of these documents have been omitted pursuant to a request for
  confidential treatment.