<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:  JULY 4, 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

                Delaware                         35-1880244
     (State of Incorporation)                 (I.R.S. Employer
                                             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 
July 4, 1998:  8,304,331

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<PAGE>

                              MONACO COACH CORPORATION
                                          
                                     FORM 10-Q
                                          
                                   JULY 4, 1998 
                                          
                                       INDEX
<TABLE>
<CAPTION>
                                                                  Page
PART I - FINANCIAL INFORMATION                                  Reference
------------------------------                                  ---------
   <S>                                                          <C>
   ITEM 1.  FINANCIAL STATEMENTS.

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

     Condensed Consolidated Statements of Income  
          for the quarters and six month periods ended 
          June 28, 1997 and July 4, 1998.                             5

     Condensed Consolidated Statements of Cash    
          Flows for the six month periods ended
          June 28, 1997 and July 4, 1998.                             6

     Notes to Condensed Consolidated Financial Statements.        7 - 9

   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS.            10 - 15

   ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 
                MARKET RISK.                                         15

PART II - OTHER INFORMATION
---------------------------

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS      16

   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.                        16

   SIGNATURES                                                        17
</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,    JULY 4, 
                                                           1998         1998
                                                        -----------  -----------
<S>                                                     <C>          <C>
ASSETS
Current assets:   
   Trade receivables                                    $    25,309  $    27,043
   Inventories                                               45,421       51,105
   Prepaid expenses                                             928            0
   Deferred tax assets                                        8,222        9,294
   Notes receivable                                           1,552          115
                                                        -----------  -----------
           Total current assets                              81,432       87,557

Notes receivable                                              1,125          814
Property, plant and equipment, net                           55,399       58,071
Debt issuance costs, net of accumulated amortization
     of $755 and $969, respectively                           1,358        1,144
Goodwill, net of accumulated amortization of $2,739
     and $3,061, respectively                                20,518       20,196
                                                        -----------  -----------
           Total assets                                 $   159,832  $   167,782
                                                        -----------  -----------
                                                        -----------  -----------

LIABILITIES
Current liabilities:
   Book overdraft                                       $     6,762  $     7,527
   Short-term borrowings                                      9,353        1,339
   Current portion of long-term note payable                  4,375        5,000
   Accounts payable                                          23,498       30,750
   Income taxes payable                                       1,005          362
   Accrued expenses and other liabilities                    26,027       28,349
                                                        -----------  -----------
           Total current liabilities                         71,020       73,327


Note payable, less current portion                           11,500        7,900
Deferred tax liability                                        2,564        2,738
                                                        -----------  -----------
                                                             85,084       83,965
                                                        -----------  -----------
Commitments and contingencies (Note 8)

STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 20,000,000 shares
     authorized, 8,244,703 and 8,304,331 issued
     and outstanding respectively                                55           83
Additional paid-in capital                                   44,241       44,596
Retained earnings                                            30,452       39,138
                                                        -----------  -----------
           Total stockholders' equity                        74,748       83,817
                                                        -----------  -----------
           Total liabilities and stockholders' equity   $   159,832  $   167,782
                                                        -----------  -----------
                                                        -----------  -----------
</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             SIX MONTHS ENDED
                                                 ------------------------    -----------------------
                                                   JUNE 28,      JULY 4,       JUNE 28,     JULY 4,
                                                     1997         1998           1997        1998
                                                 ----------    ----------    ----------   ----------
<S>                                              <C>           <C>           <C>          <C>
Net sales                                        $  105,981    $  134,673    $  215,005   $  271,841
Cost of sales                                        91,652       116,542       185,642      235,363
                                                 ----------    ----------    ----------   ----------
            Gross profit                             14,329        18,131        29,363       36,478

Selling, general and administrative expenses          8,829         9,831        18,313       20,400
Amortization of goodwill                                159           162           318          322
                                                 ----------    ----------    ----------   ----------
            Operating income                          5,341         8,138        10,732       15,756

Other expense (income), net                             (58)          (76)          (97)        (131)
Interest expense                                        585           526         1,406        1,027
                                                 ----------    ----------    ----------   ----------
            Income before income taxes                4,814         7,688         9,423       14,860

Provision for income taxes                            1,998         3,197         3,910        6,174
                                                 ----------    ----------    ----------   ----------
            Net income                                2,816         4,491         5,513        8,686

Accretion of redeemable preferred stock                (292)                       (317)
                                                 ----------    ----------    ----------   ----------
            Net income attributable to 
                 common stock                    $    2,524    $    4,491    $    5,196   $    8,686
                                                 ----------    ----------    ----------   ----------
                                                 ----------    ----------    ----------   ----------

Earnings per common share:
            Basic                                   $ .37          $ .54         $ .77       $ 1.05
            Diluted                                 $ .36          $ .53         $ .76       $ 1.03

Weighted average common shares outstanding:
            Basic                                 6,852,208     8,289,772     6,752,881    8,271,850
            Diluted                               6,992,578     8,479,823     7,208,997    8,467,911
</TABLE>

See accompanying notes.


                                                                      5
<PAGE>

                              MONACO COACH CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (UNAUDITED: DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED
                                                                          ------------------------
                                                                            JUNE 28,      JULY 4,
                                                                              1997         1998
                                                                          -----------   ----------
<S>                                                                       <C>           <C>
INCREASE (DECREASE) IN CASH:

Cash flows from operating activities:
   Net income                                                             $     5,513   $    8,686
   Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
      Depreciation and amortization                                             1,566        2,346
      Deferred income taxes                                                      (307)        (898)
      Changes in working capital accounts:
         Trade receivables                                                     (8,323)      (1,734)
         Inventories                                                           (5,947)      (5,684)
         Prepaid expenses                                                         378          928
         Accounts payable                                                       7,306        7,252
         Accrued expenses and other current liabilities                         3,502        2,322
         Income taxes payable                                                  (6,306)        (643)
                                                                          -----------   ----------
            Net cash provided by (used in) operating activities                (2,618)      12,575
                                                                          -----------   ----------
Cash flows from investing activities:
   Additions to property, plant and equipment                                  (9,108)      (4,482)
   Proceeds from sale of retail stores, collections on notes
      receivable, net of closing costs                                            241        1,748
                                                                          -----------   ----------
            Net cash used in investing activities                              (8,867)      (2,734)
                                                                          -----------   ----------

Cash flows from financing activities:
   Book overdraft                                                                 437          765
   Borrowings (payments) on lines of credit, net                               (3,789)      (8,014)
   Borrowings (payments) on floor financing, net                                 (194)
   Payments on long-term notes payable                                           (750)      (2,975)
   Issuance of common stock                                                    16,181          383
   Cost to issue shares of common stock                                          (390)
   Other                                                                          (10)
                                                                          -----------   ----------
            Net cash provided by (used in) financing activities                11,485       (9,841)
                                                                          -----------   ----------
Net increase in cash                                                                0            0
Cash at beginning of period                                                         0            0
                                                                          -----------   ----------
Cash at end of period                                                     $         0   $        0
                                                                          -----------   ----------
                                                                          -----------   ----------


SUPPLEMENTAL DISCLOSURE

    Amount of capitalized interest                                        $       387   $       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 July 4, 1998, and 
     the results of operations for the quarters and six-month periods 
     ended  June 28, 1997 and July 4, 1998, and cash flows of the Company 
     for the six-month periods ended June 28, 1997 and July 4, 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 financial statements and notes 
     thereto appearing in the Company's Annual Report to Stockholders for 
     the year ended January 3, 1998.

     On March 16, 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 April 16, 1998 to stockholders of record April 2, 
     1998.  All share and per share data, as appropriate, reflect this 
     split.  The effect of the split is presented within stockholders' 
     equity at April 4, 1998 by transferring the par value for the 
     additional shares issued of $27,549 from the additional paid-in 
     capital account to the common stock account.

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,     JULY 4,
                                                   1998         1998
      <S>                                      <C>          <C>
      Raw materials                            $   20,826   $    22,146
      Work-in-process                              20,212        23,565
      Finished units                                4,383         5,394
                                               ----------   -----------
                                               $   45,421   $    51,105
                                               ----------   -----------
                                               ----------   -----------
</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 $1.3 million at July 4, 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 $12.9 million outstanding as of July 4,
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>
                                                 FOR THE QUARTER ENDED              FOR THE QUARTER ENDED
                                                       JUNE 28, 1997                    JULY 4, 1998
                                         ---------------------------------    -------------------------------
                                          Income                      Per       Income                   Per
                                         (in 000's)     Shares       Share    (in 000's)    Shares      Share
                                         ----------    ---------     -----    ----------   ---------    -----
     <S>                                  <C>          <C>           <C>        <C>        <C>          <C>
     BASIC
     Net income attributable to
     common stock                         $2,524       6,852,208     $0.37      $4,491     8,289,772    $0.54

     EFFECT OF DILUTIVE SECURITIES
     Stock Options                                       140,370                             190,051
     Convertible preferred stock*
                                          ------       ---------                ------     ---------
     DILUTED                              $2,524       6,992,578     $0.36      $4,491     8,479,823    $0.53
                                          ------       ---------                ------     ---------
                                          ------       ---------                ------     ---------
</TABLE>

     * Effect in the second quarter of 1997 would have been anti-dilutive.

<TABLE>
<CAPTION>
                                                  FOR THE SIX MONTHS ENDED             FOR THE SIX MONTHS ENDED
                                                       JUNE 28, 1997                         JULY 4, 1998
                                           ------------------------------------    ---------------------------------
                                             Income                        Per       Income                    Per
                                           (in 000's)       Shares         Share    (in 000's)    Shares       Share
                                           ----------       ------         -----    ----------    ------       -----
     <S>                                      <C>          <C>             <C>       <C>        <C>            <C>
     BASIC
     Net income attributable to
     common stock                             $5,196       6,752,881       $0.77     $8,686     8,271,850      $1.05

     EFFECT OF DILUTIVE SECURITIES
     Stock Options                                           130,734                              196,061
     Convertible preferred stock                 317         325,382
                                              ------       ---------                 ------     --------- 
     DILUTED                                  $5,513       7,208,997       $0.76     $8,686     8,467,911      $1.03
                                              ------       ---------                 ------     --------- 
                                              ------       ---------                 ------     --------- 
</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; and SFAS No. 131, "Disclosures about
       Segments of an Enterprise and Related Information", which establishes
       standards for reporting information about operating segments;  and
       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.  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.

Prior to March, 1996, the Company's product line consisted exclusively of 
High-Line Class A motor coaches (units with retail prices above $120,000).  
On March 4, 1996, the Company acquired Holiday Rambler, a manufacturer of a 
full line of towable products and mid to upper priced motor coaches.  The 
acquisition of Holiday Rambler (the "Holiday Acquisition") more than doubled 
the Company's net sales, significantly broadened the range of products the 
Company offered (including the Company's first offerings of towables and 
entry-level to midrange motor coaches) and significantly lowered the price 
threshold for first-time buyers of the Company's products, making them 
affordable for a significantly larger base of potential customers.  The 
acquired operations were incorporated into the Company's consolidated 
financial statements on March 4, 1996.

RESULTS OF OPERATIONS

QUARTER ENDED  JULY 4, 1998 COMPARED TO QUARTER ENDED JUNE 28, 1997

Second quarter net sales increased 27.1% to $134.7 million compared to $106.0 
million for the same period last year. Gross sales dollars on motorized 
products were up 35.2%, reflecting strong demand for both the Company's new 
and established motorized products combined with expanded motorized 
production capacity that  came on stream in Wakarusa, Indiana last year.  The 
Company's gross towable sales were off 12.5% as dealers deferred purchases of 
towables based on expectations of significant changes to the Company's 
towable products at the upcoming model change.  The Company's overall unit 
sales were up 9.7% in the second quarter of 1998 (excluding 75 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 second quarter of 
1998 to $87,000 from $74,000 in the comparable 1997 quarter.  The Company has 
recently introduced two less expensive gasoline motor coach models which are 
likely to keep the overall average selling price below $100,000.      

Gross profit for the second quarter of 1998 increased to $18.1 million, up 
$3.8 million, from $14.3 million in 1997, and gross margin was unchanged at 
13.5%. Gross margin in the second quarter of 1998 was dampened by costs 
related to model changeovers in all of the plants and by consolidation of the 
two Indiana towable plants into one Company-owned facility in Elkhart, 
Indiana.  This eliminated the need for leased facilities the Company had 
occupied in Wakarusa, Indiana.    

Selling, general, and administrative expenses increased by $1.0 million to 
$9.8 million in the second quarter of 1998 but decreased as a percentage of 
sales from 8.3% in 1997 to 7.3% 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 recently completed 
office space built in conjunction with the expansion of production facilities 
in Wakarusa, Indiana.  


                                                                      10

<PAGE>

Amortization of goodwill was $162,000 in the second quarter of 1998 compared 
to $159,000 in the same period of 1997.  At July 4, 1998, goodwill, net of 
accumulated amortization was $20.2 million.

Operating income was $8.1 million in the second quarter of 1998, an increase 
of $2.8 million, or 52.4%, over the $5.3 million in the similar 1997 period.  
The Company's improvement in selling, general, and administrative expense as 
a percentage of sales combined with stability in the Company's gross margin, 
resulted in an improvement in operating margin to 6.0%  in the second quarter 
of 1998 compared to 5.0% in the second quarter of 1997.

Net interest expense was $526,000 in the second quarter of 1998 compared to 
$585,000 in the comparable 1997 period.  The Company capitalized $241,000 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 $96,000 in 1997 related to floor plan financing at 
the retail stores.  Additionally, second 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 reported a provision for income taxes of $3.2 million, or an 
effective tax rate of 41.6% in the second quarter of 1998, compared to $2.0 
million, or an effective tax rate of 41.5% for the comparable 1997 period.

Net income increased by $1.7 million, or 59.5%,  from $2.8 million in the 
second quarter of 1997 to $4.5 million in 1998 due to the increase in sales 
combined with an increase in operating margin and a small decrease in 
interest expense.

SIX MONTHS ENDED  JULY 4, 1998 COMPARED TO SIX MONTHS ENDED JUNE 28, 1997.

Net sales increased $56.8 million, or 26.4% for the first six months of 1998, 
compared to the year earlier period.  Gross sales dollars on motorized 
products were up 35.2% for the first half of 1998, while gross towable sales 
dollars were off 8.3% for the same period.  Overall unit sales for the 
Company were up 4.0% in the first half of 1998 compared to the similar period 
in 1997 (excludng 173 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 six 
months of 1998 to $86,000 compared to $73,000 in the first half of 1997, 
reflecting the strong showing of the Company's motorized products.  

Gross profit for the six-month period ended July 4, 1998 was up $7.1 million 
to $36.5 million and gross margin decreased to 13.4% in 1998 from 13.7% in 
1997. Gross margin for the first half of 1998 was dampened by lower gross 
margins in the three towable plants due to reduced production volumes in 
those plants and by costs incurred at the end of the six month period 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 $2.1 million to 
$20.4 million in the first six months of 1998 but decreased as a percentage 
of sales from 8.5% in 1997 to 7.5% 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 
recently completed office space built in conjunction with the expansion of 
production facilities in Wakarusa, Indiana.  

Amortization of goodwill was $322,000 in the first half of 1998 compared to 
$318,000 in the same period of 1997.  

Operating income increased $5.0 million in the first six months of 1998 to 
$15.8 million, compared to $10.7 million in the year earlier period.  The 
Company's improvement in selling, general, and administrative expense as a 
percentage of sales was more significant than the decline in the Company's 
gross margin, resulting in an improvement in operating margin to 5.8% in the 
first half of 1998 compared to 5.0% in the first half of 1997.

Net interest expense declined in the first six months of 1998 to $1.0 million 
from $1.4 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 $387,000 of 
interest expense in the first six months of 1997 as a result of the 
construction in progress for the now completed Wakarusa, Indiana 
manufacturing facility.  The Company's interest expense included $249,000 in 
1997 related to floor plan financing at the retail stores.  Additionally, 
second quarter interest expense in both years included $214,000 related to 
the amortization of


                                                                     11

<PAGE>

$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 $6.2 million, or an 
effective tax rate of 41.5% for the first six months of 1998, compared to 
$3.9 million, or an effective tax rate of 41.5% for the comparable 1997 
period.

Net income increased to $8.7 million in the first six months of 1998 from 
$5.5 million in the first six 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 six months of 1998, the Company had cash flows of $12.6 million from 
operating activities, including $11.0 million generated from net income and 
non-cash expenses such as depreciation and amortization. Additionally, 
increases in accounts payable and accrued expenses more than offset increases 
in accounts receivable and inventories.  

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 July 4, 1998,  the Company was 
still holding $929,000 in notes receivable relating to the sales of the 
stores which will fall under provision (ii) when payment  is received.  At 
July 4, 1998, the balance on the Term Loan was $12.9 million, with $12 
million at an effective interest rate of 7.125% and $900,000 at 8.50%.  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 July 4, 1998, $1.3 million was outstanding under the Revolving Loans, 
with an effective interest rate of 8.50%.   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 July 4, 1998, 
the Company had working capital of approximately $14.2 million, an increase 
of $3.8 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.  The Company's capital expenditures were 
$4.5 million in the first six 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 $7.0 to $8.0 million. 
The Company's remaining capital expenditures for 1998 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


                                                                     12

<PAGE>

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 July 4, 1998, approximately $127.3 
million of products sold by the Company to independent dealers were subject 
to potential repurchase under existing floor plan financing agreements with 
approximately 9.2% 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 the Holiday Acquisition and recent new model introductions, the Company 
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, interest rates rose significantly in 1994 
and while recent interest rates have not had a material adverse effect on the 
Company's business, no assurances can be given that an increase in interest 
rates 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 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.  The expansion of the 
Company's manufacturing operations involve a number of risks including 
unexpected 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.


                                                                     13

<PAGE>

The set-up of new models and scale-up of production facilities involve 
various risks and uncertainties, including timely performance of a large 
number of contractors, subcontractors, suppliers and various government 
agencies that regulate and license construction, each of which is beyond the 
control of the Company. The 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 208 dealerships located primarily in the United States and 
Canada at the end of 1997, 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 two dealers 
accounted for approximately 15.0% 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 $127.3 million as of July 4, 1998, with 
approximately 9.2% 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.

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


                                                                     14

<PAGE>

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 less than two years, computer 
systems and/or software used by many companies may need to be upgraded to 
comply with such "Year 2000" requirements.

The Company is currently in the process of implementing "Year 2000 compliant" 
software and hardware to upgrade the Company's management and operating 
information systems at all its locations.  The Company spent approximately 
$700,000 on the implementation in 1997 and expects to spend approximately 
$500,000 in 1998 to complete these upgrades.

The Company has also begun evaluating significant suppliers, financial 
institutions and customers to determine the extent to which the Company is 
vulnerable to those third parties failing to remediate their own Year 2000 
issues.  While the Company currently expects that the Year 2000 will not pose 
significant operational problems, delays in the implementation of the new 
information systems, or a failure of its vendors, customers or financial 
institutions to become Year 2000 compliant could have a material adverse 
effect on the Company's business, financial condition and results of 
operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 

         Not applicable.


                                                                     15

<PAGE>

PART II - OTHER INFORMATION

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

         At the Annual Meeting of Stockholders of the Company, held on May 20,
         1998 in Coburg, Oregon, the Stockholders (i) elected three Class I
         directors to serve on the Company's Board of Directors, and (ii)
         ratified the Company's appointment of Coopers & Lybrand L.L.P. as
         independent auditors.

<TABLE>
<CAPTION>
           Nominee                For                  Withheld
           -------                ---                  --------
        <S>                       <C>                  <C>
        Kay L. Toolson              4,522,807             52,000
        Michael J. Kluger           4,522,807             52,000
        Lee Posey                   4,522,807             52,000
</TABLE>

      The vote for ratifying the appointment of Coopers & Lybrand L.L.P. was 
as follows:

                                    For         Against          Abstained
                                    ---         -------          ---------
                                 4,568,379       5,000            1,428

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 April 4, 1998, for which this report is filed.


                                                                    16

<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: AUGUST 14, 1998               /s/:   JOHN W. NEPUTE
       --------------------------    -------------------------
                                     John W. Nepute
                                     Vice President of Finance and
                                     Chief Financial Officer (Duly
                                     Authorized Officer and Principal
                                     Financial Officer)


                                                                     17