<PAGE>

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                          SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C. 20549


                                      FORM 10-Q

[ X ]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934

For the period ended:  October 3, 1998
                      -----------------
                                          or

[   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934

For the period from              to             
                   --------------   -------------

Commission File Number:  0-22256
                       ----------


                               MONACO COACH CORPORATION

                                                               35-1880244
          Delaware                                          (I.R.S. Employer
     (State of Incorporation)                               Identification No.)

                                 91320 Industrial Way 
                                 Coburg, Oregon 97408
                       (Address of principal executive offices)

       Registrant's telephone number, including area code (541) 686-8011 

       Indicate by check mark whether the registrant  (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and  (2) has 
been subject to such filing requirements for the past 90 days.

YES     X              NO       
    ---------             --------

       The number of shares outstanding of common stock, $.01 par value, as 
of October 3, 1998:  8,312,764

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

<PAGE>


                               MONACO COACH CORPORATION

                                      FORM 10-Q

                                   OCTOBER 3, 1998

                                        INDEX

<TABLE>
<CAPTION>

                                                                        Page
PART I - FINANCIAL INFORMATION                                        Reference
<S>                                                                  <C>
   ITEM 1.  FINANCIAL STATEMENTS.

       Condensed Consolidated Balance Sheets as of                        4
        January 3, 1998 and  October 3, 1998.

       Condensed Consolidated Statements of Income                        5
        for the quarters and nine month periods ended
         September 27, 1997 and October 3, 1998.

       Condensed Consolidated Statements of Cash                          6
        Flows for the nine month periods ended
         September 27, 1997 and October 3, 1998.

       Notes to Condensed Consolidated Financial Statements.            7 - 9

   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS.                     10 - 16


PART II - OTHER INFORMATION

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.                          17

     SIGNATURES                                                          18


</TABLE>

                                                                             2

<PAGE>

                            PART I - FINANCIAL INFORMATION

                            ITEM 1.  FINANCIAL STATEMENTS











                                                                            3

<PAGE>

                               MONACO COACH CORPORATION
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                          (UNAUDITED: DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                        JANUARY 3,        OCTOBER 3,
                                                                           1998              1998
                                                                      ----------------  ---------------
<S>                                                                  <C>                <C>
ASSETS
Current assets:
   Trade receivables                                                    $   25,309        $   35,521
   Inventories                                                              45,421            67,635
   Prepaid expenses                                                            928                 0
   Deferred tax assets                                                       8,222            11,045
   Notes receivable                                                          1,552               115
                                                                        ----------        ----------
            Total current assets                                            81,432           114,316

Notes receivable                                                             1,125               788
Property, plant and equipment, net                                          55,399            58,640
Debt issuance costs, net of accumulated amortization
     of $755 and $1,076, respectively                                        1,358             1,037
Goodwill, net of accumulated amortization of $2,739
     and $3,223, respectively                                               20,518            20,034
                                                                        ----------        ----------
            Total assets                                                $  159,832        $  194,815
                                                                        ----------        ----------
                                                                        ----------        ----------
LIABILITIES
Current liabilities:
   Book overdraft                                                       $    6,762        $   10,536
   Short-term borrowings                                                     9,353             6,399
   Current portion of long-term note payable                                 4,375             5,000
   Accounts payable                                                         23,498            36,454
   Income taxes payable                                                      1,005             4,329
   Accrued expenses and other liabilities                                   26,027            32,366
                                                                        ----------        ----------
            Total current liabilities                                       71,020            95,084


Note payable, less current portion                                          11,500             6,650
Deferred tax liability                                                       2,564             2,825
                                                                        ----------        ----------
                                                                            85,084           104,559
                                                                        ----------        ----------
Commitments and contingencies (Note 8)

STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 20,000,000 shares
     authorized, 8,244,703 and 8,312,764 issued
     and outstanding respectively                                               55                83
Additional paid-in capital                                                  44,241            44,721
Retained earnings                                                           30,452            45,452
                                                                        ----------        ----------
            Total stockholders' equity                                      74,748            90,256
                                                                        ----------        ----------
            Total liabilities and stockholders' equity                  $  159,832        $  194,815
                                                                        ----------        ----------
                                                                        ----------        ----------

</TABLE>

See accompanying notes.


                                                                            4
<PAGE>

                             MONACO COACH CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
         (UNAUDITED: DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                            QUARTER ENDED                   NINE MONTHS ENDED
                                                   --------------------------------   ------------------------------
                                                      SEP 27,           OCT 3,          SEP 27,          OCT 3,
                                                        1997             1998             1997            1998
                                                   ---------------  ---------------   -------------  ---------------
<S>                                               <C>              <C>               <C>            <C>
Net sales                                           $   105,796      $   153,220       $   320,801      $   425,060
Cost of sales                                            91,712          131,891           277,354          367,255
                                                    -----------      -----------       -----------      -----------
            Gross profit                                 14,084           21,329            43,447           57,805

Selling, general and administrative expenses              8,564           10,402            26,877           30,804
Amortization of goodwill                                    159              165               477              484
                                                    -----------      -----------       -----------      -----------
            Operating income                              5,361           10,762            16,093           26,517

Other expense (income), net                                (579)            (549)             (676)            (680)
Interest expense                                            537              518             1,943            1,545
                                                    -----------      -----------       -----------      -----------
            Income before income taxes                    5,403           10,793            14,826           25,652

Provision for income taxes                                2,244            4,480             6,154           10,652
                                                    -----------      -----------       -----------      -----------
            Net income                                    3,159            6,313             8,672           15,000

Accretion of redeemable preferred stock                                                       (317)
                                                    -----------      -----------       -----------      -----------
            Net income attributable to
                 common stock                       $     3,159      $     6,313       $     8,355      $    15,000
                                                    -----------      -----------       -----------      -----------
                                                    -----------      -----------       -----------      -----------
Earnings per common share:
            Basic                                      $ .38            $ .76              $ 1.15          $ 1.81
            Diluted                                    $ .38            $ .74              $ 1.14          $ 1.77

Weighted average common shares outstanding:
            Basic                                   8,234,134         8,310,380          7,246,632        8,284,693
            Diluted                                 8,391,709         8,478,931          7,603,234        8,471,585

</TABLE>

See accompanying notes.

                                                                            5

<PAGE>

                            MONACO COACH CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (UNAUDITED: DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                            NINE MONTHS ENDED
                                                                     --------------------------------
                                                                         SEP 27,           OCT 3,
                                                                          1997             1998
                                                                    ---------------   --------------
<S>                                                                <C>               <C>
INCREASE (DECREASE) IN CASH:

Cash flows from operating activities:                           
   Net income                                                          $   8,672        $  15,000
   Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
      Gain on sale of retail stores                                         (539)
      Depreciation and amortization                                        2,556            3,591
      Deferred income taxes                                                  (15)          (2,562)
      Changes in working capital accounts:
         Trade receivables                                               (14,962)         (10,212)
         Inventories                                                       1,934          (22,214)
         Prepaid expenses                                                  1,129              928
         Accounts payable                                                  5,803           12,956
         Accrued expenses and other current liabilities                    2,986            6,339
         Income taxes payable                                             (6,626)           3,324
                                                                      ----------        ---------
            Net cash provided by operating activities                        938            7,150
                                                                      ----------        ---------
Cash flows from investing activities:
   Additions to property, plant and equipment                            (14,312)          (6,027)
   Proceeds from sale of retail stores, collections on notes
      receivable, net of closing costs                                       288            1,774
                                                                      ----------        ---------
            Net cash used in investing activities                        (14,024)          (4,253)
                                                                      ----------        ---------
Cash flows from financing activities:

   Book overdraft                                                          3,681            3,774
   Borrowings (payments) on lines of credit, net                            (241)          (2,954)
   Borrowings (payments) on floor financing, net                          (4,650)
   Payments on long-term notes payable                                    (1,375)          (4,225)
   Issuance of common stock                                               16,326              508
   Cost to issue shares of common stock                                     (645)
   Other                                                                     (10)
                                                                      ----------        ---------
            Net cash provided by (used in) financing activities           13,086           (2,897)
                                                                      ----------        ---------
Net change in cash                                                             0                0
Cash at beginning of period                                                    0                0
                                                                      ----------        ---------
Cash at end of period                                                  $       0        $       0
                                                                      ----------        ---------
                                                                      ----------        ---------
SUPPLEMENTAL DISCLOSURE

    Amount of capitalized interest                                     $     554        $      44
    Conversion of preferred stock to common stock                          3,000

</TABLE>

See accompanying notes.

                                                                            6
<PAGE>

                            MONACO COACH CORPORATION
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The interim condensed consolidated financial statements have been prepared
     by Monaco Coach Corporation (the "Company") without audit. In the opinion
     of management, the accompanying unaudited financial statements contain all
     adjustments necessary, consisting only of normal recurring adjustments, to
     present fairly the financial position of the Company as of January 3, 1998
     and October 3, 1998, and the results of operations for the quarters and
     nine-month periods ended September 27, 1997 and October 3, 1998, and cash
     flows of the Company for the nine-month periods ended September 27, 1997
     and October 3, 1998. The condensed consolidated financial statements
     include the accounts of the Company and its wholly-owned subsidiaries, and
     all significant intercompany accounts and transactions have been eliminated
     in consolidation. The balance sheet data as of January 3, 1998 was derived
     from audited financial statements, but does not include all disclosures
     contained in the Company's Annual Report to Stockholders. These interim
     condensed consolidated financial statements should be read in conjunction
     with the audited consolidated financial statements and notes thereto
     appearing in the Company's Annual Report to Stockholders for the year ended
     January 3, 1998.

     On November 2, 1998 the Board of Directors declared a 3-for-2 stock split
     in the form of a 50% stock dividend on the Company's common stock, payable
     November 30, 1998 to stockholders of record November 16, 1998. Share and
     per share data have not been restated for the stock split. If per share
     amounts had been restated, diluted earnings per share would have been $0.25
     and $0.76 for the quarter and nine-month period ended September 27, 1997,
     respectively; and $0.50 and $1.18 for the quarter and nine-month period
     ended October 3, 1998, respectively.

2.   INVENTORIES

     Inventories are stated at lower of cost (first-in, first-out) or market.
     The composition of inventory is as follows:

<TABLE>
<CAPTION>

                                                               (IN THOUSANDS)
                                                          JANUARY 3,      OCTOBER 3,
                                                             1998            1998
        <S>                                              <C>            <C>
         Raw materials                                    $   20,826     $   35,581
         Work-in-process                                      20,212         21,386
         Finished units                                        4,383         10,668
                                                          ----------     ----------
                                                          $   45,421     $   67,635
                                                          ----------     ----------
                                                          ----------     ----------
</TABLE>

3.   GOODWILL

     Goodwill, which represents the excess of the cost of acquisition over the
     fair value of net assets acquired, is being amortized on a straight-line
     basis over 20 and 40 years. Management assesses whether there has been
     permanent impairment in the value of goodwill and the amount of such
     impairment by comparing anticipated undiscounted future cash flows from
     operating activities with the carrying value of the goodwill. The factors
     considered by management in performing this assessment include current
     operating results, trends and prospects, as well as the effects of
     obsolescence, demand, competition and other economic factors.

4.   SHORT-TERM BORROWINGS

     The Company has a bank line of credit consisting, in part, of a revolving
     line of credit of up to $45.0 million, with interest payable monthly at
     varying rates based on the Company's interest coverage ratio and interest
     payable monthly on the unused available portion of the line at 0.375%.
     Outstanding borrowings under the line of credit were $6.4 million at
     October 3, 1998. The revolving line of credit expires March 1, 2001 and is
     collateralized by all the assets of the Company.

                                                                            7
<PAGE>

5.   LONG-TERM BORROWINGS

     The Company has a term loan of $11.7 million outstanding as of October 3,
     1998. The term loan bears interest at various rates based on the Company's
     interest coverage ratio, and expires on March 1, 2001. The term loan
     requires monthly interest payments, quarterly principal payments and
     certain mandatory prepayments, and is collateralized by all the assets of
     the Company.

6.   EARNINGS PER COMMON SHARE

     The Company has adopted Statement of Financial Accounting Standard (SFAS)
     No. 128, "Earnings Per Share", and has disclosed per share information in
     accordance with those standards. Basic and Diluted earnings per common
     share and the corresponding weighted average number of common shares used
     in the computation of earnings per common share are as follows:

<TABLE>
<CAPTION>

                                                    (in thousands, except share and per share data)
                                               FOR THE QUARTER ENDED             FOR THE QUARTER ENDED
                                                 SEPTEMBER 27, 1997                 OCTOBER 3, 1998
                                        ----------------------------------  ---------------------------------
                                            Net                    Per          Net                    Per
                                          Income      Shares       Share      Income       Shares     Share
                                        ----------   --------     --------   ---------     --------   -------
         <S>                           <C>          <C>           <C>        <C>         <C>         <C>
          BASIC
          Attributable to common stock    $3,159     8,234,134      $0.38      $6,313     8,310,380    $0.76

          EFFECT OF DILUTIVE SECURITIES
          Stock options                                157,575                              168,551
                                          ------     ---------                 ------     ---------    
          DILUTED                         $3,159     8,391,709      $0.38      $6,313     8,478,931    $0.74
                                          ------     ---------                 ------     ---------
                                          ------     ---------                 ------     ---------

</TABLE>

<TABLE>
<CAPTION>

                                            FOR THE NINE MONTHS ENDED          FOR THE NINE MONTHS ENDED
                                                 SEPTEMBER 27, 1997                 OCTOBER 3, 1998
                                        ----------------------------------  ---------------------------------
                                            Net                    Per          Net                   Per
                                          Income      Shares       Share      Income       Shares     Share
                                        ----------   --------     --------   ---------     --------   -------
         <S>                           <C>          <C>           <C>        <C>         <C>         <C>
          BASIC
          Attributable to common stock     $8,355   7,246,632      $1.15      $15,000     8,284,693    $1.81

          EFFECT OF DILUTIVE SECURITIES
          Stock options                               139,681                               186,892
          Convertible preferred stock         317     216,921
                                           ------   ---------                 -------     ---------
          DILUTED                          $8,672   7,603,234      $1.14      $15,000     8,471,585    $1.77
                                           ------   ---------                 -------     ---------
                                           ------   ---------                 -------     ---------

</TABLE>


7.   NEW ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board (FASB) has issued Statement of
     Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
     Income", which establishes standards for reporting and display of
     comprehensive income and its components of revenues, expenses, gains, and
     losses; SFAS No. 131, "Disclosures about Segments of an Enterprise and
     Related Information", which establishes standards for reporting information
     about operating segments; SFAS No. 132 "Employers' Disclosures about
     Pensions and Other Postretirement Benefits," which establishes reporting of
     pensions and other post-retirement benefits; and SFAS No. 133, "Accounting
     for Derivative Instruments and Hedging Activities," which establishes
     accounting for derivative instruments and hedging activities. The impact of
     adopting these standards will have little or no effect on the Company's
     accounting or reporting disclosures.

                                                                            8

<PAGE>

8.   COMMITMENTS AND CONTINGENCIES

     REPURCHASE AGREEMENTS

     Substantially all of the Company's sales to independent dealers are made on
     terms requiring cash on delivery. The Company does not finance dealer
     purchases. However, most dealers are financed on a "floor plan" basis by a
     bank or finance company which lends the dealer all or substantially all of
     the wholesale purchase price and retains a security interest in the
     vehicles. Upon request of a lending institution financing a dealer's
     purchases of the Company's product, the Company will execute a repurchase
     agreement. These agreements provide that, for up to 18 months after a unit
     is shipped, the Company will repurchase a dealer's inventory in the event
     of default by a dealer to its lender.

     The Company's liability under repurchase agreements is limited to the
     unpaid balance owed to the lending institution by reason of its extending
     credit to the dealer to purchase its vehicles. The Company does not
     anticipate any significant losses will be incurred under these agreements
     in the foreseeable future.

     LITIGATION

     The Company is involved in legal proceedings arising in the ordinary course
     of its business, including a variety of product liability and warranty
     claims typical in the recreational vehicle industry. The Company does not
     believe that the outcome of its pending legal proceedings will have a
     material adverse effect on the business, financial condition, or results of
     operations of the Company.



                                                                             9

<PAGE>

       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements within 
the meaning of Section 21E of the Securities Exchange Act of 1934, as 
amended, including statements that include the words "believes", "expects", 
"anticipates" or similar expressions. Such forward-looking statements involve 
known and unknown risks, uncertainties and other factors that may cause 
actual results, performance or achievements of the Company to differ 
materially from those expressed or implied by such forward-looking 
statements. Such factors include, among others, the factors discussed below 
under the caption "Factors That May Affect Future Operating Results" and 
elsewhere in this Quarterly Report on Form 10-Q. Forward looking statements 
include, but are not limited to, those items identified with a footnote (1) 
symbol. The reader should carefully consider, together with the other matters 
referred to herein, the factors set forth under the caption "Factors That May 
Affect Future Operating Results:. The Company cautions the reader, however, 
that these factors may not be exhaustive.

GENERAL

Monaco Coach Corporation is a leading manufacturer of premium Class A motor
coaches and towable recreational vehicles ("towables"). The Company's product
line currently consists of a broad line of motor coaches, fifth wheel trailers
and travel trailers under the "Monaco", "Holiday Rambler", and "McKenzie
Towables" brand names. The Company's products, which are typically priced at the
high end of their respective product categories, range in suggested retail price
from $60,000 to $900,000 for motor coaches and from $15,000 to $70,000 for
towables.

RESULTS OF OPERATIONS

QUARTER ENDED  OCTOBER 3, 1998 COMPARED TO QUARTER ENDED SEPTEMBER 27, 1997

Third quarter net sales increased 44.8% to $153.2 million compared to $105.8 
million for the same period last year. Gross sales dollars on motorized 
products were up 60.6%, reflecting strong demand for both the Company's new 
and established motorized products combined with higher production rates in 
both the Coburg, Oregon and Wakarusa, Indiana motorized plants. The Company's 
gross towable sales were off 18.5% as production of towable units declined 
from the prior year's third quarter due to the consolidation of the Company's 
two towable lines into one line in Elkhart, Indiana. The year-to-year 
comparison of third quarter net sales was positively affected by 13 weeks of 
production in the third quarter of 1998 versus 12 weeks in the third quarter 
of 1997. The Company's overall unit sales were up 29.7% in the third quarter 
of 1998 (excluding 38 units in 1997 that were sold by the Company's Holiday 
World retail dealerships that were either previously owned or not Holiday 
Rambler units). Reflecting the stronger performance on the motorized side of 
the Company's product offering, the Company's average unit selling price 
increased in the third quarter of 1998 to $88,000 from $78,000 in the 
comparable 1997 quarter. The Company's recent introduction of two less 
expensive gasoline motor coach models is likely to keep the overall average 
selling price below $100,000(1).

Gross profit for the third quarter of 1998 increased to $21.3 million, up $7.2
million, from $14.1 million in the third quarter of 1997, and gross margin
increased to 13.9% from 13.3% in the third quarter of 1997. The improvement in
gross margin in the third quarter of 1998 reflects a strong mix of motorized
products as well as manufacturing efficiencies from the increase in production
in both motorized plants. Gross margin in the third quarter of 1997 was
adversely affected by discounting and write-downs of inventory prior to, and at
the sale of, the two remaining Holiday World retail dealerships. Absent such
factors, gross margin would have been 13.7% in the third quarter of 1997.

Selling, general, and administrative expenses increased by $1.8 million to 
$10.4 million in the third quarter of 1998 but decreased as a percentage of 
sales from 8.1% in 1997 to 6.8% in 1998. The decrease in selling, general, 
and administrative expenses as a percentage of sales reflected efficiencies 
arising from the Company's increased sales level as well as savings derived 
from consolidation of Indiana-based office staff into office space built in 
conjunction with the expansion of production facilities in Wakarusa, Indiana.

Amortization of goodwill was $165,000 in the third quarter of 1998 compared to
$159,000 in the same period of 1997. At October 3, 1998, goodwill, net of
accumulated amortization, was $20.0 million.

--------------------------
(1)  Forward looking statement.

                                                                            10
<PAGE>

Operating income was $10.8 million in the third quarter of 1998, a $5.4 
million, or 100.7% increase over the $5.4 million in the similar 1997 period. 
The Company's reduction in selling, general, and administrative expense as a 
percentage of sales combined with the increase in the Company's gross margin 
resulted in an improvement in operating margin to 7.0% in the third quarter 
of 1998 compared to 5.1% in the third quarter of 1997.

Net interest expense was $518,000 in the third quarter of 1998 compared to
$537,000 in the same 1997 period. The Company capitalized $167,000 of interest
expense in 1997 relating to the construction in progress at the now completed
manufacturing facility in Wakarusa, Indiana. The Company's interest expense
included $32,000 in the third quarter of 1997 related to floor plan financing at
the retail stores. Additionally, third quarter interest expense in both years
included $103,000 related to the amortization of $2.1 million in debt issuance
costs recorded in conjunction with the Holiday Acquisition. These costs are
being written off over a five-year period.

The Company had other income of $523,000 in the third quarter of 1998 related to
insurance reimbursement of income loss from the fire at our Coburg manufacturing
plant in July of 1997. The impact was $306,000, net of tax, or 3.6 cents per
share. In the third quarter of 1997, the Company had other income from the sale
of its two remaining Holiday World retail dealerships which resulted in a pretax
gain on the sale of the buildings and fixed assets from the stores of $539,000.
The impact was $315,000, net of tax, or 3.8 cents per share.

The Company reported a provision for income taxes of $4.5 million, or an
effective tax rate of 41.5% in the third quarter of 1998, compared to $2.2
million, also an effective tax rate of 41.5% for the comparable 1997 period.

Net income increased by $3.1 million, or 99.8%, from $3.2 million in the third
quarter of 1997 to $6.3 million in 1998 due to the increase in net sales
combined with an increase in operating margin.

NINE MONTHS ENDED OCTOBER 3, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 27, 
1997.

Net sales increased $104.3 million, or 32.5%, to $425.1 million, for the first
nine months of 1998, compared to the similar year earlier period. Gross sales
dollars on motorized products were up 44.1% for the first nine months of 1998,
while gross towable sales dollars were off 12.1% for the same period. Overall
unit sales for the Company were up 16.3% in the first nine months of 1998
compared to the similar period in 1997 (excluding 211 units in 1997 that were
sold by the Holiday World retail dealerships that were either previously owned
or not Holiday Rambler units). The Company's average unit selling price
increased in the first nine months of 1998 to $86,000 compared to $74,000 in the
first nine months of 1997, reflecting the strong showing of the Company's
motorized products.

Gross profit for the nine-month period ended October 3, 1998 was up $14.4
million to $57.8 million and gross margin increased slightly to 13.6% in 1998
from 13.5% in the same period in 1997. Gross margin for the first nine months of
1998 was aided by manufacturing efficiencies resulting from higher volume in
both motorized production facilities. This improvement was dampened by lower
gross margins in the three towable plants in the first half of 1998 due to
reduced production volumes in those plants and by costs incurred in the second
quarter of 1998 related to consolidation of the two Indiana-based towable plants
into one Company-owned facility in Elkhart, Indiana.

Selling, general, and administrative expenses increased by $3.9 million to $30.8
million in the first nine months of 1998 but decreased as a percentage of sales
from 8.4% in the first nine months of 1997 to 7.2% in the same period in 1998.
The decrease in selling, general, and administrative expenses as a percentage of
sales reflected efficiencies arising from the Company's increased sales level as
well as savings derived from consolidation of Indiana based office staff into
office space built in conjunction with the expansion of production facilities in
Wakarusa, Indiana.

Amortization of goodwill was $484,000 in the first nine months of 1998 compared
to $478,000 in the same period of 1997.

Operating income was $26.5 million in the first nine months of 1998, a $10.4
million increase over the comparable period a year earlier. The Company's
improvement in selling, general, and administrative expense as a percentage of
sales combined with the slight increase in the Company's gross margin resulted
in an improvement in operating margin to 6.2% in the first nine months of 1998
compared to 5.0% in the similar 1997 period.

Net interest expense declined in the first nine months of 1998 to $1.5 million
from $1.9 million in the comparable 1997 period. The Company capitalized $44,000
of interest expense in 1998 relating to the construction in progress in Indiana
for the now completed paint facility and capitalized $554,000 of interest
expense in the first nine months of 1997 as a result of the construction in
progress for the now completed Wakarusa, Indiana manufacturing facility. 

                                                                            11
<PAGE>

The Company's interest expense included $281,000 in 1997 related to floor 
plan financing at the retail stores. Additionally, second quarter interest 
expense in both years included $321,000 related to the amortization of $2.1 
million in debt issuance costs recorded in conjunction with the Holiday 
Acquisition. These costs are being written off over a five-year period.

The Company reported a provision for income taxes of $10.7 million, or an
effective tax rate of 41.5% for the first nine months of 1998, compared to $6.2
million, or an effective tax rate of 41.5% for the comparable 1997 period.

Net income increased to $15.0 million in the first nine months of 1998 from $8.7
million in the first nine months of 1997, primarily due to the increase in net
sales combined with an improvement in operating margin and a decrease in
interest expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity are internally generated cash from
operations and available borrowings under its credit facilities. During the
first nine months of 1998, the Company had cash flows of $7.2 million from
operating activities. Net income and non-cash expenses, such as depreciation and
amortization, generated $18.6 million. Additionally, increases in accounts
payable and accrued expenses generated another $19.3 million. However, the
combination was partially offset by increases in accounts receivable and
inventories resulting from the Company's increased production and sales levels.

The Company has credit facilities consisting of a term loan of $20.0 million
(the "Term Loan") and a revolving line of credit of up to $45.0 million ( the
"Revolving Loans"). The Term Loan bears interest at various rates based upon the
prime lending rate announced from time to time by Banker's Trust Company (the
"Prime Rate") or LIBOR and is due and payable in full on March 1, 2001. The Term
Loan requires monthly interest payments, quarterly principal payments and
certain mandatory prepayments. The mandatory prepayments consist of: (i) an
annual payment on April 30, of each year, beginning April 30, 1997 of
seventy-five percent (75%) of the Company's defined excess cash flow for the
then most recently ended fiscal year (no defined excess cash flow existed for
the year ended January 3, 1998); and (ii) a payment within two days of the sale
of any Holiday World dealership, of the net cash proceeds received by the
Company from such sale. While the Company has sold all of the Holiday World
dealerships, as of October 3, 1998, the Company was still holding $903,000 in
notes receivable relating to the sales of the stores which will fall under
provision (ii) when payment is received. At October 3, 1998, the balance on the
Term Loan was $11.7 million, with $11.0 million at an effective interest rate of
7.0% and $650,000 at 8.25%. At the election of the Company, the Revolving Loans
bear interest at variable interest rates based on the Prime Rate or LIBOR. The
Revolving Loans are due and payable in full on March 1, 2001, and require
monthly interest payments. As of October 3, 1998, $6.4 million was outstanding
under the Revolving Loans, with an effective interest rate of 8.25%. The Term
Loan and the Revolving Loans are collateralized by a security interest in all of
the assets of the Company and include various restrictions and financial
covenants. The Company utilizes "zero balance" bank disbursement accounts in
which an advance on the line of credit is automatically made for checks clearing
each day. Since the balance of the disbursement account at the bank returns to
zero at the end of each day, a book overdraft arises from the outstanding checks
of the Company. These book overdraft accounts are combined with the Company's
positive cash balance accounts to reflect a net book overdraft or a net cash
balance for financial reporting.

The Company's principal working capital requirements are for purchases of
inventory and, to a lesser extent, financing of trade receivables. The Company's
dealers typically finance product purchases under wholesale floor plan
arrangements with third parties as described below. At October 3, 1998, the
Company had working capital of approximately $19.2 million, an increase of $8.8
million from working capital of $10.4 million at January 3, 1998. The Company
has been using short-term credit facilities and cash flow to finance its
construction of facilities and other capital expenditures.

The Company believes that cash flow from operations and funds available under
its credit facilities will be sufficient to meet the Company's liquidity
requirements for the next 12 months(1). The Company's capital expenditures were
$6.0 million in the first nine months of 1998, primarily for the completion of
the new Indiana paint facility. The Company anticipates that capital
expenditures for all of 1998 will total approximately $12.0 million(1). The
Company recently announced plans to expand its Coburg, Oregon manufacturing
facilities. The Company is increasing capacity on its existing high-end diesel
line from 3 to 4 units per day. Additionally, the Company will build a separate
manufacturing facility designed to build up to 12 gasoline motor homes per day
to provide 

--------------------------
(1)  Forward looking statement.

                                                                            12
<PAGE>

additional capacity to build its gasoline motor home models which are 
currently built exclusively in Wakarusa, Indiana. The Company expects to 
spend approximately $15 to $16 million to complete these two projects, 
including the cost of the land, with approximately $5 million of that to be 
spent in the fourth quarter of 1998(1). The remaining capital expenditures for 
1998 and 1999 are expected to be for computer system upgrades and various 
smaller-scale plant expansion or remodeling projects as well as normal 
replacement of outdated or worn-out equipment. The Company may require 
additional equity or debt financing to address working capital and facilities 
expansion needs, particularly if the Company further expands its operations 
to address greater than anticipated growth in the market for its products. 
The Company may also from time to time seek to acquire businesses that would 
complement the Company's current business, and any such acquisition could 
require additional financing. There can be no assurance that additional 
financing will be available if required or on terms deemed favorable by the 
Company.

As is typical in the recreational vehicle industry, many of the Company's retail
dealers utilize wholesale floor plan financing arrangements with third party
lending institutions to finance their purchases of the Company's products. Under
the terms of these floor plan arrangements, institutional lenders customarily
require the recreational vehicle manufacturer to agree to repurchase any unsold
units if the dealer fails to meet its commitments to the lender, subject to
certain conditions. The Company has agreements with several institutional
lenders under which the Company currently has repurchase obligations. The
Company's contingent obligations under these repurchase agreements are reduced
by the proceeds received upon the sale of any repurchased units. The Company's
obligations under these repurchase agreements vary from period to period. At
October 3, 1998, approximately $160.1 million of products sold by the Company to
independent dealers were subject to potential repurchase under existing floor
plan financing agreements with approximately 8.7% concentrated with one dealer.
If the Company were obligated to repurchase a significant number of units under
any repurchase agreement, its business, operating results and financial
condition could be adversely affected.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS The Company's net sales, gross
margin and operating results may fluctuate significantly from period to period
due to factors such as the mix of products sold, the ability to utilize and
expand manufacturing resources efficiently, the introduction and consumer
acceptance of new models offered by the Company, competition, the addition or
loss of dealers, the timing of trade shows and rallies, and factors affecting
the recreational vehicle industry as a whole. In addition, the Company's overall
gross margin on its products may decline in future periods to the extent the
Company increases its sales of lower gross margin towable products or if the mix
of motor coaches shifts to lower gross margin units. Due to the relatively high
selling prices of the Company's products (in particular, its High-Line Class A
motor coaches), a relatively small variation in the number of recreational
vehicles sold in any quarter can have a significant effect on sales and
operating results for that quarter. Demand in the overall recreational vehicle
industry generally declines during the winter months, while sales and revenues
are generally higher during the spring and summer months. In addition, unusually
severe weather conditions in certain markets could delay the timing of shipments
from one quarter to another.

CYCLICALITY The recreational vehicle industry has been characterized by cycles
of growth and contraction in consumer demand, reflecting prevailing economic,
demographic and political conditions that affect disposable income for
leisure-time activities. Unit sales of recreational vehicles (excluding
conversion vehicles) reached a peak of approximately 259,000 units in 1994 and
declined to approximately 247,000 units in 1996. Although unit sales of
High-Line Class A motor coaches have increased in each year since 1989, there
can be no assurance that this trend will continue. Furthermore, as a result of
recent new model introductions, the Company now offers a much broader range of
recreational vehicle products and will likely be more susceptible to
recreational vehicle industry cyclicality than in the past. Factors affecting
cyclicality in the recreational vehicle industry include fuel availability and
fuel prices, prevailing interest rates, the level of discretionary spending, the
availability of credit and overall consumer confidence. In particular, a decline
in consumer confidence and/or a slowing of the overall economy has had a
material adverse effect on the recreational vehicle market in the past and no
assurances can be given that the reoccurrence of these conditions would not have
a material adverse effect on the Company's business, results of operations and
financial condition.

MANAGEMENT OF GROWTH Over the past three years the Company has experienced 
significant growth in the number of its employees and the scope of its 
business. This growth has resulted in the addition of new management 
personnel, increased responsibilities for existing management personnel, and 
has placed added pressure on the Company's operating, financial and 
management information systems. While management believes it has been 
successful in managing this expansion there can be no assurance that the 
Company will not encounter problems in 

--------------------------
(1)  Forward looking statement.

                                                                            13
<PAGE>

the future associated with the continued growth of the Company. Failure to 
adequately support and manage the growth of its business could have a 
material adverse effect on the Company's business, results of operations and 
financial condition.

MANUFACTURING EXPANSION The Company has significantly increased its 
manufacturing capacity over the last few years and has recently announced 
plans for additional expansion of manufacturing facilities. The expansion of 
the Company's manufacturing operations involve a number of risks including 
unexpected building and production difficulties. In the past the Company 
experienced start-up inefficiencies in manufacturing a new model and also has 
experienced difficulty in increasing production rates at a plant.

The set-up of new models and scale-up of production facilities involve various
risks and uncertainties, including timely performance by a large number of
contractors, subcontractors, suppliers and various government agencies that
regulate and license construction, each of which is beyond the control of the
Company. The set-up of production for new models involves risks and costs
associated with the development and acquisition of new production lines, molds
and other machinery, the training of employees, and compliance with
environmental, health and safety and other regulatory requirements. The
inability of the Company to complete the scale-up of its facilities and to
commence full-scale commercial production in a timely manner could have a
material adverse effect on the Company's business, results of operations and
financial condition. In addition, the Company may from time to time experience
lower than anticipated yields or production constraints that may adversely
affect its ability to satisfy customer orders. Any prolonged inability to
satisfy customer demand could have a material adverse effect on the Company's
business, results of operations and financial condition.

CONCENTRATION OF SALES TO CERTAIN DEALERS Although the Company's products were
offered by 238 dealerships located primarily in the United States and Canada at
the end of the third quarter of 1998, a significant percentage of the Company's
sales have been and will continue to be concentrated among a relatively small
number of independent dealers. Although no single dealer accounted for as much
as 10.0% of the Company's net sales in 1997, the top three dealers accounted for
approximately 19.5% of the Company's net sales in that period. The loss of a
significant dealer or a substantial decrease in sales by such a dealer could
have a material adverse effect on the Company's business, results of operations
and financial condition.

POTENTIAL LIABILITY UNDER REPURCHASE AGREEMENTS As is common in the recreational
vehicle industry, the Company enters into repurchase agreements with the
financing institutions used by its dealers to finance their purchases. These
agreements obligate the Company to repurchase a dealer's inventory under certain
circumstances in the event of a default by the dealer to its lender. If the
Company were obligated to repurchase a significant number of its products in the
future, it could have a material adverse effect on the Company's financial
condition, business and results of operations. The Company's contingent
obligations under repurchase agreements vary from period to period and totaled
approximately $160.1 million as of October 3, 1998, with approximately 8.7%
concentrated with one dealer. See "Liquidity and Capital Resources" and Note 8
of Notes to the Company's Condensed Consolidated Financial Statements.

AVAILABILITY AND COST OF FUEL An interruption in the supply, or a significant
increase in the price or tax on the sale, of diesel fuel or gasoline on a
regional or national basis could have a material adverse effect on the Company's
business, results of operations and financial condition. Diesel fuel and
gasoline have, at various times in the past, been difficult to obtain and there
can be no assurance that the supply of diesel fuel or gasoline will continue
uninterrupted, that rationing will not be imposed, or that the price of or tax
on diesel fuel or gasoline will not significantly increase in the future, any of
which could have a material adverse effect on the Company's business, results of
operations and financial condition.

DEPENDENCE ON CERTAIN SUPPLIERS A number of important components for certain of
the Company's products are purchased from single or limited sources, including
its turbo diesel engines (Cummins), substantially all of its transmissions
(Allison), axles for all diesel motor coaches other than the Holiday Rambler
Endeavor Diesel model and chassis for certain of its Holiday Rambler products
(Chevrolet, Ford and Freightliner). The Company has no long term supply
contracts with these suppliers or their distributors. Allison continues to have
all chassis manufacturers on allocation with respect to one of the transmissions
the Company uses. The Company believes that its allocation is sufficient to
enable the unit volume increases that are planned for models using that
transmission and does not foresee any operating difficulties with respect to
this issue. Nevertheless, there can be no assurance that Allison or any of the
other suppliers will be able to meet the Company's future requirements for
transmissions or other key components. An extended delay or interruption in the
supply of any components obtained from a single or limited source supplier could
have a material adverse effect on the Company's business, results of operations
and financial condition.

                                                                            14
<PAGE>

NEW PRODUCT INTRODUCTIONS The Company believes that the introduction of new
features and new models will be critical to its future success. Delays in the
introduction of new models or product features or a lack of market acceptance of
new models or features and/or quality problems with new models or features could
have a material adverse effect on the Company's business, results of operations
and financial condition. For example, in the third quarter of 1995 the Company
incurred unexpected costs associated with three model changes introduced in that
quarter which adversely affected the Company's gross margin. There also can be
no assurance that product introductions in the future will not divert revenues
from existing models and adversely affect the Company's business, results of
operations and financial condition.

COMPETITION The market for the Company's products is highly competitive. The
Company currently competes with a number of other manufacturers of motor
coaches, fifth wheel trailers and travel trailers, some of which have
significantly greater financial resources and more extensive marketing
capabilities than the Company. There can be no assurance that either existing or
new competitors will not develop products that are superior to, or that achieve
better consumer acceptance than, the Company's products, or that the Company
will continue to remain competitive.

RISKS OF LITIGATION The Company is subject to litigation arising in the ordinary
course of its business, including a variety of product liability and warranty
claims typical in the recreational vehicle industry. Although the Company does
not believe that the outcome of any pending litigation, net of insurance
coverage, will have a material adverse effect on the business, results of
operations or financial condition of the Company, due to the inherent
uncertainties associated with litigation, there can be no assurance in this
regard.

To date, the Company has been successful in obtaining product liability
insurance on terms the Company considers acceptable. The Company's current
policies jointly provide coverage against claims based on occurrences within the
policy periods up to a maximum of $41.0 million for each occurrence and $42.0
million in the aggregate. There can be no assurance that the Company will be
able to obtain insurance coverage in the future at acceptable levels or that the
costs of insurance will be reasonable. Furthermore, successful assertion against
the Company of one or a series of large uninsured claims, or of one or a series
of claims exceeding any insurance coverage, could have a material adverse effect
on the Company's business, results of operations and financial condition.

IMPACT OF THE YEAR 2000 ISSUE

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

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

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

INTERNAL COMPUTER HARDWARE INFRASTRUCTURE

During the Company's acquisition of Holiday Rambler in 1996, the Company 
decided not to purchase the existing hardware or software that was being used 
by that operation. Instead, the Company decided to convert the operation to a 
client/server based hardware configuration which is Year 2000 compliant. 
Following the conversion in the Wakarusa facilities to the new hardware 
configurations during 1996, the Company has continued to upgrade the hardware 
infrastructure at all other Company facilities in Indiana and Oregon. The 
upgrading of computer hardware is on schedule and the Company estimates that 
approximately 90 percent of these upgrades had been completed by 

                                                                            15

<PAGE>

October 3, 1998. The certification and testing phase is ongoing as affected 
components are remediated and upgraded. All hardware infrastructure 
activities are expected to be completed by the end of the second quarter of 
1999(1).

APPLICATION SOFTWARE

As part of the system conversion in Wakarusa in 1996, the Company decided to 
convert company-wide to a fully integrated financial and manufacturing 
application called Intergy, purchased from PowerCerv. The Intergy 
implementation, which is expected to make approximately 90 percent of the 
Company's business application software Year 2000 compliant, is scheduled for 
company-wide completion during the second quarter of 1999. Implementation of 
Intergy is behind the original schedule; however, the software conversion was 
approximately 80 percent complete at October 3, 1998 and full implementation is 
still expected by mid-1999(1). Other application software that the Company 
uses is in the remediation phase which is being accomplished through vendor 
software replacements or upgrades. These application upgrades are 
approximately 85% complete and are expected to be completed by the end of the 
first quarter of 1999(1). The certification and testing phase of all 
application software is ongoing and is expected to be complete by mid-1999(1).

IMBEDDED CHIP TECHNOLOGY

Year 2000 risk does exist among other types of machinery and equipment that 
use imbedded computer chips or processors. For example: phone systems, 
elevators, security alarm systems, or other diagnostic equipment may contain 
computer chips that rely on date information to function properly. The 
Company will begin the assessment phase of this category during fourth 
quarter of 1998 which is on schedule with its Year 2000 project timeline. The 
Company does not expect that a significant amount of equipment used by the 
Company will be found to have Year 2000 problems that will require extensive 
remediation efforts or contingency plans(1). All phases of this category are 
scheduled to be completed in the second quarter of 1999.

THIRD-PARTY SUPPLIERS AND CUSTOMERS

The third-party suppliers and customers category includes completing all phases
of the Year 2000 project using a prioritized list of third-parties most critical
to the Company's operations and communicating with them about their plans and
progress toward addressing the Year 2000 problem. The most significant
third-party relationships and dependencies exist with financial institutions,
along with suppliers of materials, communication services, utilities, and
supplies. The Company is currently on schedule within this category in the phase
of assessing the most critical third-parties' state of readiness for Year 2000.
These assessments will be followed by development of strategies and contingency
plans, with completion scheduled for mid-1999. Less critical third-party
dependencies will be in the assessment phase in the fourth quarter of 1998 with
contingency planning scheduled for completion by the latter part of 1999.

COSTS

From the time the Company began its hardware infrastructure and application 
software upgrades in 1996, the Company has spent approximately $1,100,000 
through October 3, 1998 and expects to spend a total of approximately 
$250,000 in the future to complete upgrades in these categories(1). No 
significant costs have been incurred in the categories of imbedded chip 
technology and third-party suppliers and customers. Total future costs 
related to these two categories are estimated to be less than $200,000(1).

RISKS

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

--------------------------
(1)  Forward looking statement.

                                                                            16
<PAGE>

PART II - OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

     (a)     Exhibits

             27.1  Financial data schedule.

     (b)     Reports on Form 8-K

             No reports on Form 8-K were required to be filed during the
             quarter ended October 3, 1998, for which this report is filed.





                                                                            17
<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.

                                       MONACO COACH CORPORATION

Dated:   November 17, 1998                    /s/:   John W. Nepute
       ----------------------                 --------------------------------
                                              John W. Nepute
                                              Vice President of Finance and
                                              Chief Financial Officer (Duly
                                              Authorized Officer and Principal
                                              Financial Officer)






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