# **SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**(MarkOne)**

 

**ý**** QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended September 30,2005**

 

**o**** TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**Commission file number 001-12085**

 

 

**NATIONAL R.V. HOLDINGS, INC.**

(Exact name of registrant as specified in its charter)

 
| **Delaware**                                                    | ** ** | **33-0371079**                       |
|-----------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer Identification No.) |
|                                                            |       |                                 |
| **3411 N. Perris Blvd., Perris, California**                    | ** ** | **92571**                            |
| (Address of principal executive  offices)                       |       | (Zip Code)                           |

 

Registrant’s telephone number, including area code: **(951) 943-6007**

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

YES ý   NO o

 

Indicateby check mark whether the registrant is an accelerated filer.

 

YES ý   NO o

 

Indicate by check mark whether the registrantis a shell company (as defined in Exchange Act Rule 12b-2 of the ExchangeAct). Yes o  No ý

 

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

 
| **Class**                | ** ** | **Outstanding at November 1, 2005** |
|--------------------------|------------|-------------------------------------|
| Common stock,  par value |       | 10,339,484                          |
| $0.01 per share          |       |                                |

 

 

----

 

**NATIONAL R.V. HOLDINGS, INC.**

### **INDEX**

 
| ** ** | **PART I –  FINANCIAL INFORMATION**                                                                                 | ** ** |
|------------|-------------------------------------------------------------------------------------------------------------------------------|------------|
|       |                                                                                                                          |       |
| Item 1.    | Financial Statements  (Unaudited)                                                                                        |       |
|       | Consolidated Balance Sheets –  September 30, 2005 and December 31, 2004                                        |       |
|       |                                                                                                                          |       |
|       | Consolidated Statements of  Operations – (restated) – Three and Nine-Months Ended September 30, 2005  and 2004 |       |
|       |                                                                                                                          |       |
|       | Consolidated Statements of  Cash Flows – (restated) – Nine-Months Ended September 30, 2005 and 2004                 |       |
|       |                                                                                                                          |       |
|       | Notes to Consolidated  Financial Statements                                                                                   |       |
|       |                                                                                                                          |       |
| Item 2.    | Management’s Discussion and  Analysis of Financial Condition and Results of Operations                                   |       |
|       |                                                                                                                          |       |
| Item 3.    | Quantitative and Qualitative  Disclosures about Market Risk                                                                   |       |
|       |                                                                                                                          |       |
| Item 4.    | Controls and Procedures                                                                                                       |       |
|       |                                                                                                                          |       |
| ** ** | **PART II  – OTHER INFORMATION**                                                                                    | ** ** |
|       |                                                                                                                          |       |
| Item 6.    | Exhibits                                                                                                                      |       |
|       |                                                                                                                          |       |
|       | Signature                                                                                                                     |       |

 

2

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**PART I, ITEM 1**

**Consolidated Financial Statements**

 

**NATIONAL R.V. HOLDINGS, INC.**

**CONSOLIDATED BALANCE SHEETS**

**(In thousands, except share and per share amounts)**

 
| ** **                                                                                                                     | ** ** | **September 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                     | ** ** | **(Unaudited)**              | ** ** | ** **                  | ** ** |
|                                                                                                                           |       |                         |       |                        |       |
| ASSETS                                                                                                                         |       |                         |       |                        |       |
| Current assets:                                                                                                                |       |                         |       |                        |       |
| Cash and cash  equivalents                                                                                                     |       | $                            | 11         |                        | $          | 11 |   |
| Restricted cash                                                                                                                |       | 25                           |       | 251                         |       |
| Receivables,  less allowance for doubtful accounts of $250 and $137, respectively                                              |       | 22,902                       |       | 19,976                      |       |
| Inventories, net                                                                                                               |       | 76,956                       |       | 74,826                      |       |
| Deferred income  taxes                                                                                                         |       | 1,008                        |       | 1,294                       |       |
| Note receivable                                                                                                                |       | 243                          |       | 2,213                       |       |
| Prepaid expenses                                                                                                               |       | 2,363                        |       | 2,924                       |       |
| Total current  assets                                                                                                          |       | 103,508                      |       | 101,495                     |       |
| Property, plant  and equipment, net                                                                                            |       | 39,018                       |       | 37,809                      |       |
| Other assets                                                                                                                   |       | 1,411                        |       | 1,338                       |       |
|                                                                                                                           |       | $                            | 143,937    |                        | $          | 140,642 |   |
|                                                                                                                           |       |                         |       |                        |       |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                      |       |                         |       |                        |       |
| Current liabilities:                                                                                                           |       |                         |       |                        |       |
| Accounts payable                                                                                                               |       | $                            | 17,410     |                        | $          | 16,612 |   |
| Accrued expenses                                                                                                               |       | 25,051                       |       | 22,242                      |       |
| Line of credit                                                                                                                 |       | 22,134                       |       | 12,690                      |       |
| Book overdraft                                                                                                                 |       | 5,010                        |       | 803                         |       |
| Current portion  of capital leases                                                                                             |       | 51                           |       | 51                          |       |
| Total current  liabilities                                                                                                     |       | 69,656                       |       | 52,398                      |       |
| Long-term  accrued expenses                                                                                                    |       | 6,084                        |       | 7,069                       |       |
| Deferred income  taxes                                                                                                         |       | 1,008                        |       | 1,294                       |       |
| Long-term  portion of capital leases                                                                                           |       | 161                          |       | 185                         |       |
| Total  liabilities                                                                                                             |       | 76,909                       |       | 60,946                      |       |
|                                                                                                                           |       |                         |       |                        |       |
| Commitments and contingent liabilities                                                                                         |       | —                       |       | —                      |       |
|                                                                                                                           |       |                         |       |                        |       |
| Stockholders’ equity:                                                                                                     |       |                         |       |                        |       |
| Preferred stock -  $0.01 par value; 5,000 shares authorized, 4,000 issued and outstanding                                      |       | —                       |       | —                      |       |
| Common stock -  $0.01 par value; 25,000,000 shares authorized, 10,339,484 and 10,302,109  issued and outstanding, respectively |       | 103                          |       | 103                         |       |
| Additional  paid-in capital                                                                                                    |       | 37,563                       |       | 37,423                      |       |
| Retained  earnings                                                                                                             |       | 29,362                       |       | 42,170                      |       |
| Total  stockholders’ equity                                                                                               |       | 67,028                       |       | 79,696                      |       |
|                                                                                                                           |       | $                            | 143,937    |                        | $          | 140,642 |   |

 

The accompanying notes are an integral part of the consolidatedfinancial statements.

 

3

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**NATIONAL R.V. HOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OFOPERATIONS**

**(In thousands, except per share amounts)**

**(Unaudited)**

 
| ** **                                                    | ** ** | **Three-Months Ended  September 30,** | ** ** | **Nine-Months Ended  September 30,** | ** ** |
|---------------------------------------------------------------|------------|--------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                    | ** ** | **2005**                                   | ** ** | **2004**                                  | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                    | ** ** | ** **                                 | ** ** | **(Restated)**                            | ** ** | ** ** | ** ** | **(Restated)** | ** ** |
|                                                          |       |                                       |       |                                      |       |   |   |   |   |
| Net sales                                                     |       | $                                          | 108,232    |                                      | $          | 112,525 |   | $ | 357,082 |   | $ | 334,953 |   |
| Cost of goods sold                                            |       | 106,067                                    |       | 104,606                                   |       | 347,201 |   | 310,336 |   |
| Gross profit                                                  |       | 2,165                                      |       | 7,919                                     |       | 9,881 |   | 24,617 |   |
| Selling expenses                                              |       | 4,335                                      |       | 3,003                                     |       | 11,289 |   | 8,298 |   |
| General and administrative expenses                           |       | 3,346                                      |       | 3,063                                     |       | 10,489 |   | 8,642 |   |
| Other expense                                                 |       | —                                     |       | 374                                       |       | — |   | 374 |   |
| Operating income  (loss)                                      |       | (5,516                                     | )          | 1,479                                     |       | (11,897 | ) | 7,303 |   |
| Interest expense                                              |       | 395                                        |       | 52                                        |       | 983 |   | 130 |   |
| Other expense (income)                                        |       | 19                                         |       | (25                                       | )          | (72 | ) | (72 | ) |
| Income (loss)  from continuing operations before income taxes |       | (5,930                                     | )          | 1,452                                     |       | (12,808 | ) | 7,245 |   |
| Provision for income taxes                                    |       | —                                     |       | 608                                       |       | — |   | 2,835 |   |
| Income (loss)  from continuing operations                     |       | (5,930                                     | )          | 844                                       |       | (12,808 | ) | 4,410 |   |
| Loss from discontinued operations                             |       | —                                     |       | 1,532                                     |       | — |   | 2,155 |   |
| Gain from sale of discontinued operations                     |       | —                                     |       | (281                                      | )          | — |   | (281 | ) |
| Benefit for income taxes                                      |       | —                                     |       | (524                                      | )          | — |   | (737 | ) |
| Net loss from discontinued operations                         |       | —                                     |       | (727                                      | )          | — |   | (1,137 | ) |
| Net income (loss)                                             |       | $                                          | (5,930     | )                                         | $          | 117 |   | $ | (12,808 | ) | $ | 3,273 |   |
|                                                          |       |                                       |       |                                      |       |   |   |   |   |
| Basic earnings (loss) per common share:                       |       |                                       |       |                                      |       |   |   |   |   |
| Continuing  operations                                        |       | $                                          | (0.57      | )                                         | $          | 0.08 |   | $ | (1.24 | ) | $ | 0.43 |   |
| Discontinued  operations                                      |       | $                                          | —     |                                      | $          | (0.07 | ) | $ | — |   | $ | (0.11 | ) |
| Total                                                         |       | $                                          | (0.57      | )                                         | $          | 0.01 |   | $ | (1.24 | ) | $ | 0.32 |   |
|                                                          |       |                                       |       |                                      |       |   |   |   |   |
| Diluted earnings (loss) per common share:                     |       |                                       |       |                                      |       |   |   |   |   |
| Continuing  operations                                        |       | $                                          | (0.57      | )                                         | $          | 0.08 |   | $ | (1.24 | ) | $ | 0.42 |   |
| Discontinued  operations                                      |       | $                                          | —     |                                      | $          | (0.07 | ) | $ | — |   | $ | (0.11 | ) |
| Total                                                         |       | $                                          | (0.57      | )                                         | $          | 0.01 |   | $ | (1.24 | ) | $ | 0.31 |   |
|                                                          |       |                                       |       |                                      |       |   |   |   |   |
| Weighted average number of shares:                            |       |                                       |       |                                      |       |   |   |   |   |
| Basic                                                         |       | 10,339                                     |       | 10,222                                    |       | 10,338 |   | 10,203 |   |
| Diluted                                                       |       | 10,339                                     |       | 10,426                                    |       | 10,338 |   | 10,392 |   |

 

The accompanying notesare an integral part of the consolidated financial statements.

 

4

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**NATIONAL R.V. HOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OF CASHFLOWS**

**(In thousands)**

**(Unaudited)**

 
| ** **                                                                            | ** ** | **Nine-Months Ended  September 30,** | ** ** |
|---------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                            | ** ** | **2005**                                  | ** ** | **2004** | ** ** |
| ** **                                                                            | ** ** | ** **                                | ** ** | **(Restated)** | ** ** |
| Cash flows from operating activities:                                                 |       |                                      |       |   |   |
| Net income  (loss)                                                                    |       | $                                         | (12,808    | ) | $ | 3,273 |   |
| Adjustments to  reconcile net income (loss) to net cash used in operating activities: |       |                                      |       |   |   |
| Depreciation and  amortization                                                        |       | 2,760                                     |       | 2,881 |   |
| Bad debt expense  (recovery)                                                          |       | 126                                       |       | (1 | ) |
| Reserve and  write down of inventories                                                |       | 2,630                                     |       | 1,764 |   |
| Loss (gain) on  asset disposal                                                        |       | (35                                       | )          | 61 |   |
| Deferred income  tax provision                                                        |       | —                                    |       | 1,897 |   |
| Changes in  assets and liabilities:                                                   |       |                                      |       |   |   |
| Decrease in  restricted cash                                                          |       | 226                                       |       | — |   |
| Increase in  receivables                                                              |       | (3,052                                    | )          | (2,500 | ) |
| Increase in  inventories                                                              |       | (5,154                                    | )          | (25,821 | ) |
| Decrease  (increase) in prepaid expenses                                              |       | 641                                       |       | (1,612 | ) |
| Increase in  accounts payable                                                         |       | 798                                       |       | 8,209 |   |
| Increase in  accrued expenses                                                         |       | 1,824                                     |       | 874 |   |
|                                                                                  |       |                                      |       |   |   |
| Net cash used in  operating activities                                                |       | (12,044                                   | )          | (10,975 | ) |
|                                                                                  |       |                                      |       |   |   |
| Cash flows from investing activities:                                                 |       |                                      |       |   |   |
| Decrease in  other assets                                                             |       | 45                                        |       | 10 |   |
| Repayments on  note receivable                                                        |       | 1,970                                     |       | — |   |
| Proceeds from  sale of assets                                                         |       | 75                                        |       | 1,932 |   |
| Proceeds from  sale of discontinued operations                                        |       | —                                    |       | 500 |   |
| Purchase of  property, plant and equipment                                            |       | (3,577                                    | )          | (3,372 | ) |
|                                                                                  |       |                                      |       |   |   |
| Net cash used in  investing activities                                                |       | (1,487                                    | )          | (930 | ) |
|                                                                                  |       |                                      |       |   |   |
| Cash flows from financing activities:                                                 |       |                                      |       |   |   |
| Net advances on  line of credit                                                       |       | 9,444                                     |       | 2,150 |   |
| Deferred  financing costs                                                             |       | (236                                      | )          | — |   |
| Increase in book  overdraft                                                           |       | 4,207                                     |       | 7,228 |   |
| Principal  payments on capital leases                                                 |       | (24                                       | )          | — |   |
| Principal  payments on long-term debt                                                 |       | —                                    |       | (18 | ) |
| Proceeds from  issuance of common stock                                               |       | 140                                       |       | 497 |   |
|                                                                                  |       |                                      |       |   |   |
| Net cash  provided by financing activities                                            |       | 13,531                                    |       | 9,857 |   |
| Net decrease in cash and cash equivalents                                             |       | —                                    |       | (2,048 | ) |
| Cash and cash equivalents, beginning of the year                                      |       | 11                                        |       | 2,059 |   |
| Cash and cash equivalents, end of period                                              |       | $                                         | 11         |   | $ | 11 |   |
|                                                                                  |       |                                      |       |   |   |
| Supplementary cash flow information:                                                  |       |                                      |       |   |   |
| Reclassification of inventory for operating lease                                     |       | $                                         | 394        |   | $ | — |   |

 

The accompanying notesare an integral part of the consolidated financial statements.

 

5

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**NATIONAL R.V. HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Unaudited)**

 

## **NOTE 1 – BASIS OF PRESENTATION**

 

**General**

 

The consolidated financial statements include the financial statementsof National RV Holdings, Inc. (the “Company”) and its wholly ownedsubsidiaries National RV, Inc. (“National RV”) and CountryCoach, Inc. (“Country Coach”). As further discussed in Note 9, theoperating results of the travel trailer division have been reclassified as adiscontinued operation for the prior periods.

 

The accompanyingconsolidated balance sheet as of December 31, 2004, which has been derived fromaudited consolidated financial statements, and the unaudited interimconsolidated financial statements have been prepared pursuant to the rules andregulations of the United States Securities and Exchange Commission. Certaininformation and note disclosures normally included in accordance withaccounting principles generally accepted in the United States of America havebeen condensed or omitted pursuant to those rules and regulations, although theCompany believes that the disclosures made are adequate to make the informationnot misleading. These consolidated financial statements should be read inconjunction with the audited consolidated financial statements for the yearended December 31, 2004 and notes thereto included in the Company’s AnnualReport on Form 10-K filed with the Securities and Exchange Commission onOctober 11, 2005.

 

In the opinion ofmanagement, the accompanying unaudited consolidated financial statementscontain all adjustments necessary, consisting of normal recurring adjustments,to state fairly the financial position, the results of operations and cashflows for all periods presented, including the elimination of significantintercompany accounts in consolidation. In addition to the restatementadjustments discussed in Note 2, certain reclassifications have been made toprior period amounts to conform to current period presentation.

 

***SeasonalNature of Business Activities***

 

Results for theinterim period are not necessarily indicative of the results for an entireyear. Seasonal factors, over which the Company has no control, has an effect onthe demand for the Company’s products. Demand in the RV industrycharacteristically declines over the winter season, while sales are generallyhighest during the spring and summer months.

 

***Useof Accounting Estimates***

 

The preparation of the consolidated financial statements in conformitywith accounting principles generally accepted in the United States of Americarequires management to make estimates and judgments that affect the reportedamount of assets and liabilities and disclosure of contingent assets andliabilities at the date of the consolidated financial statements and thereported amount of revenues and expenses for each period. On an on-going basis,management evaluates its estimates and judgments. Management bases itsestimates and judgments on historical experience and on various other factorsthat are believed to be reasonable under the circumstances, the results ofwhich form the basis for making judgments about the carrying value of assets andliabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates under different assumptions or conditions.

 

***Historyof Recent Losses***

 

The Company experienced anet loss for the nine-month period ended September 30, 2005 of $12.8 millioncompared to a net income of $3.3 million during the same period last year.  The Company used cash in operating activitiesfor the nine-month periods ended September 30, 2005 and 2004 of $12.0 millionand $11.0 million, respectively.

 

The Company has incurrednet losses of $9.3 million and $8.4 million for the years endedDecember 31, 2004 and 2003, respectively. The Company used cash from operating activities of $15.8 million for theyear ended December 31, 2004 and provided cash from operating activitiesof $8.1 million for the year ended December 31, 2003.  The RV industry has been historicallycyclical and subject to downturns during periods of weak economic conditions.  With rising fuel prices and continuedeconomic uncertainty, the Company experienced a further decline in demand forits products in 2005.  These conditionsled the Company to assess its short-term liquidity needs and plans to achieveprofitability.

 

6

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Management’s plan to achieve operational profitability includescontinuing or starting a variety of initiatives to improve its earnings andworking capital position, including: i) new product introductions in the fourthquarter of 2005 with additional new product and floor plan introductions in thefirst half of 2006, ii) new dealer additions to fill open market areas orreplace under-performing dealers, iii) reductions in all categories ofinventory, iv) head count re-balancings to current retail sales-supported productionlevels, v) engineering reviews of material components for the removal ofnon-value added items to reduce both material and assembly costs, vi) continuedthorough motorhome inspections to improve quality and to more timely reportfailures, and vii) manufacturing cost reductions resulting from the continuedimplementation of lean manufacturing concepts.

 

Inorder to fund on-going operations in the short-term, the Company remainsdependent upon its ability to utilize outside financing through borrowings onits line of credit until it achieves sustained operational profitabilitythrough a combination of increased sales, cost reductions and improved productmargins.  After consideration of therestrictions of the borrowing capacity noted in Note 5, the Company believes ithas sufficient financial resources to fund its operations in theshort-term.  However, the Company’sability to meet its obligations in the long-term is dependent on its ability togenerate positive cash flows from operations and is dependent on continuedborrowings under its line of credit.  Ifmanagement is unable to achieve its operational profitability plan or ifunforeseen events occur and the Company’s existing line of credit isinsufficient to allow the Company to meet its obligations, the Company may needto implement alternative plans that could include long-term financingcollateralized by real estate (which is presently unencumbered) or obtainingadditional debt financing, additional reductions in operating costs, deferralof capital expenditures, and further reductions in working capital.  While the Company believes that it couldsuccessfully complete the alternative plans, if necessary, there can be noassurance that such alternatives would be available on acceptable terms and conditionsor that the Company would be successful in its implementation of such plans.

 

## **NOTE 2 – RESTATEMENT OF APRIOR PERIOD**

 

The financial statementsincluded herein have been restated for three correcting adjustments. Theseadjustments are discussed in more detail below.

 

*Correction of accounting for dealer sales incentives.*The consolidated financial statements reflectthe restatement of certain dealer sales incentives, which include rebates andfloorplan interest reimbursement paid to dealers to promote the sale of theproduct and retail incentives paid directly to dealer retail salespersons topromote the sale of the product and the return of sale and warrantyinformation. The statements of operations for the three and nine-months endedSeptember 30, 2004 have been restated to reclassify these sales incentivesfrom selling expenses to a reduction of revenue, as required by Emerging IssuesTask Force (“EITF”) Issue No. 01-09, “Accounting for Consideration Givenby a Vendor to a Customer (including a Reseller) of the Vendor’s Products”. Netsales, gross profit and selling expenses were reduced by $0.5 million and $1.6million for the three and nine-months ended September 30, 2004,respectively. This adjustment had no impact on net income (loss) as previouslyreported.

 

*Correction of accounting for deferred payment motorhomesales.* Theconsolidated financial statements reflect the removal of certain motorhomesales previously included in the consolidated financial statements for thethree and nine-month periods ended September 30, 2004. The restatement reflectsthe Company’s determination that it did not correctly recognize revenue withrespect to a limited number of motorhomes sold in the third quarter of 2004under a deferred payment arrangement because the Company held the manufacturer’scertificate of origin as security for payment. The Company determined thatrevenues of approximately $4.5 million previously recognized in the thirdquarter 2004 should have been recognized in the fourth quarter 2004, resultingin a reduction of $0.2 million to net income and a $0.02 reduction to theCompany’s third quarter 2004 diluted earnings per share.

 

*Correction of accounting for gain on sale of travel trailerbusiness.* The Companydetermined that the gain it recognized on the sale of its travel trailerbusiness at the end of the third quarter 2004 was overstated by $0.06 millionwhich amount represented the implied interest portion of the note receivablethe Company received from Weekend Warrior, the purchasing company. Thisadjustment did not affect the Company’s third quarter 2004 discontinuedoperations diluted loss per share.

 

7

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The consolidated financialstatements for the three and nine-months ended September 30, 2004 havebeen restated as follows (in thousands, except per share amounts):

 

**Statements of Operations**

 
| ** **                                             | ** ** | **Three-Months Ended  September 30, 2004** | ** ** | **Nine-Months Ended  September 30, 2004** | ** ** |
|--------------------------------------------------------|------------|-------------------------------------------------|------------|------------------------------------------------|------------|
| ** **                                             | ** ** | **As  previously  reported**                    | ** ** | **As restated**                                | ** ** | **As  previously  reported** | ** ** | **As restated** | ** ** |
| Net sales                                              |       | $                                               | 117,457    |                                           | $          | 112,525 |   | $ | 340,977 |   | $ | 334,953 |   |
| Cost of goods sold                                     |       | 108,672                                         |       | 104,606                                        |       | 314,402 |   | 310,336 |   |
| Gross profit                                           |       | 8,785                                           |       | 7,919                                          |       | 26,575 |   | 24,617 |   |
| Selling expenses                                       |       | 3,512                                           |       | 3,003                                          |       | 9,899 |   | 8,298 |   |
| Operating income                                       |       | 1,836                                           |       | 1,479                                          |       | 7,660 |   | 7,303 |   |
| Income from  continuing operations before income taxes |       | 1,809                                           |       | 1,452                                          |       | 7,602 |   | 7,245 |   |
| Provision for income taxes                             |       | 758                                             |       | 608                                            |       | 2,985 |   | 2,835 |   |
| Income from continuing operations                      |       | 1,051                                           |       | 844                                            |       | 4,617 |   | 4,410 |   |
| Gain from sale of discontinued operations              |       | (336                                            | )          | (281                                           | )          | (336 | ) | (281 | ) |
| Income tax  benefit related to discontinued operations |       | (501                                            | )          | (524                                           | )          | (714 | ) | (737 | ) |
| Net loss from discontinued operations                  |       | (695                                            | )          | (727                                           | )          | (1,105 | ) | (1,137 | ) |
| Net income                                             |       | 356                                             |       | 117                                            |       | 3,512 |   | 3,273 |   |
|                                                   |       |                                            |       |                                           |       |   |   |   |   |
| Basic earnings (loss) per common share:                |       |                                            |       |                                           |       |   |   |   |   |
| Continuing  operations                                 |       | $                                               | 0.10       |                                           | $          | 0.08 |   | $ | 0.45 |   | $ | 0.43 |   |
| Discontinued  operations                               |       | (0.07                                           | )          | (0.07                                          | )          | (0.11 | ) | (0.11 | ) |
| Total                                                  |       | $                                               | 0.03       |                                           | $          | 0.01 |   | $ | 0.34 |   | $ | 0.32 |   |
|                                                   |       |                                            |       |                                           |       |   |   |   |   |
| Diluted earnings (loss) per common share:              |       |                                            |       |                                           |       |   |   |   |   |
| Continuing  operations                                 |       | $                                               | 0.10       |                                           | $          | 0.08 |   | $ | 0.44 |   | $ | 0.42 |   |
| Discontinued  operations                               |       | (0.07                                           | )          | (0.07                                          | )          | (0.10 | ) | (0.11 | ) |
| Total                                                  |       | $                                               | 0.03       |                                           | $          | 0.01 |   | $ | 0.34 |   | $ | 0.31 |   |
|                                                   |       |                                            |       |                                           |       |   |   |   |   |
| Weighted average number of shares:                     |       |                                            |       |                                           |       |   |   |   |   |
| Basic                                                  |       | 10,222                                          |       | 10,222                                         |       | 10,203 |   | 10,203 |   |
| Diluted                                                |       | 10,426                                          |       | 10,426                                         |       | 10,392 |   | 10,392 |   |

 

**NOTE 3 –RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**

 

In November 2004,the FASB issued Statement of Financial Accounting Standards (SFAS)No. 151, “Inventory Costs-an Amendment of ARB No. 43, Chapter 4.”SFAS No. 151 requires that accounting for items such as idle facilityexpense, freight, handling costs, and wasted materials (spoilage) be recognizedas current period charges regardless of whether they meet the criterion of “soabnormal.” In addition, this Statement requires that allocation of fixedproduction overheads to the costs of conversion be based on the normal capacityof the production facilities. This Statement is effective for inventory costsincurred during fiscal years beginning after June 15, 2005. The provisionof this Statement shall be applied prospectively. The Company has notdetermined the impact that adoption of this standard will have on itsconsolidated financial statements.

 

In December 2004,the FASB issued FSP 109-1, “Application of FASB Statement No. 109,Accounting for Income Taxes, to the Tax Deduction on Qualified ProductionActivities Provided by the American Jobs Creation Act of 2004.” The AmericanJobs Creation Act, or AJCA, introduces a special 9% tax deduction on qualifiedproduction activities. FAS 109-1 clarifies that this tax deduction should beaccounted for as a special tax deduction in accordance with Statement 109. FSP109-1 is effective upon its issuance. The adoption of FSP 109-1 did not have amaterial impact on the Company’s consolidated financial statements.

 

8

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In December 2004,the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFASNo. 123R), which replaces SFAS No. 123, “Accounting for Stock-BasedCompensation,” (SFAS 123) and supercedes APB Opinion No. 25, “Accountingfor Stock Issued to Employees.” SFAS No. 123R requires all share-basedpayments to employees, including grants of employee stock options, to berecognized in the financial statements based on their fair values beginningwith the first annual period after June 15, 2005, with early adoptionencouraged. The pro forma disclosures previously permitted under SFAS 123no longer will be an alternative to financial statement recognition. TheCompany is required to adopt SFAS No. 123R in the first calendar quarterof 2006, beginning January 1, 2006. Under SFAS No. 123R, the Companymust determine the appropriate fair value model to be used for valuingshare-based payments, the amortization method for compensation cost and thetransition method to be used at date of adoption. The transition methodsinclude modified prospective and modified retrospective adoption options. Underthe modified retrospective option, prior periods may be restated either as ofthe beginning of the year of adoption or for all periods presented. Themodified prospective method requires that compensation expense be recorded forall unvested stock options and restricted stock at the beginning of the firstquarter of adoption of SFAS No. 123R, while the modified retrospectivemethod would record compensation expense for all unvested stock options andrestricted stock beginning with the first period restated. The Company is evaluatingthe requirements of SFAS 123R. The Company has not yet determined themethod of adoption or the affect of adopting SFAS No. 123R, and theCompany has not determined whether the adoption will result in amounts that aresimilar to the current pro forma disclosures under SFAS No. 123 and 148.

 

InJune 2005, the FASB issued SFAS No. 154, “Accounting Changes andError Corrections–a replacement of APB No. 20 and FAS No. 3” (“SFAS154”). SFAS 154 provides guidance on the accounting for and reporting ofaccounting changes and error corrections. It establishes, unless impracticable,retrospective application as the required method for reporting a change inaccounting principle in the absence of explicit transition requirementsspecific to the newly adopted accounting principle. SFAS 154 also providesguidance for determining whether retrospective application of a change inaccounting principle is impracticable and for reporting a change whenretrospective application is impracticable. The correction of an error in previouslyissued financial statements is not an accounting change. However, the reportingof an error correction involves adjustments to previously issued financialstatements similar to those generally applicable to reporting an accountingchange retrospectively. Therefore, the reporting of a correction of an error byrestating previously issued financial statements is also addressed by SFAS 154.SFAS 154 is required to be adopted in fiscal years beginning afterDecember 15, 2005. The Company does not believe that adoption of thisstandard will have an impact on its consolidated financial statements.

 

InAugust 2005, the FASB issued FSP FAS 123-1, “Classification and Measurement ofFreestanding Financial Instruments Originally Issued in Exchange for EmployeeServices under FASB Statement No. 123R.” In this FSP, the FASB decided to deferthe requirements in FASB Statement No. 123 (Revised 2004), *Share-Based Payment*, that make afreestanding financial instrument subject to the recognition and measurementrequirements of other GAAP when the rights conveyed by the instrument are nolonger dependent on the holder being an employee. The guidance in this FSPshould be applied upon initial adoption of Statement 123R. The Company isevaluating the requirements of SFAS 123R. The Company has not yet determinedthe method of adoption or the affect of adopting SFAS No. 123R, and the Companyhas not determined whether the adoption will result in amounts that are similarto the current pro forma disclosures under SFAS No. 123 and 148.

 

## **NOTE 4 – SUPPLEMENTALBALANCE SHEET INFORMATION**

 

Inventories consist ofthe following (in thousands):

 
| ** **        | ** ** | **September 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|-------------------|------------|------------------------------|------------|-----------------------------|------------|
|              |       |                         |       |                        |       |
| Finished goods    |       | $                            | 16,692     |                        | $          | 16,379 |   |
| Work-in-process   |       | 32,843                       |       | 35,388                      |       |
| Raw materials     |       | 19,620                       |       | 18,398                      |       |
| Chassis           |       | 7,801                        |       | 4,661                       |       |
| Total inventories |       | $                            | 76,956     |                        | $          | 74,826 |   |

 

9

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Accruedexpenses consist of the following (in thousands):

 
| ** **                                        | ** ** | **September 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|---------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
|                                              |       |                         |       |                        |       |
| Current accrued expenses:                         |       |                         |       |                        |       |
| Workers’ compensation self-insurance reserve |       | $                            | 2,595      |                        | $          | 2,720 |   |
| Warranty reserve                                  |       | 9,981                        |       | 8,330                       |       |
| Payroll and other accrued expenses                |       | 12,475                       |       | 11,192                      |       |
| Total current accrued expenses                    |       | $                            | 25,051     |                        | $          | 22,242 |   |
|                                              |       |                         |       |                        |       |
| Long-term accrued expenses:                       |       |                         |       |                        |       |
| Workers’ compensation self-insurance reserve |       | $                            | 5,295      |                        | $          | 6,151 |   |
| Warranty reserve                                  |       | 133                          |       | 175                         |       |
| Deferred compensation                             |       | 656                          |       | 743                         |       |
| Total long-term accrued expenses                  |       | $                            | 6,084      |                        | $          | 7,069 |   |

 

## **NOTE 5 – CREDIT FACILITY**

 

On August 12, 2005, the Company entered into a new three-yearasset-based revolving credit facility with UPS Capital Corporation (“UPSC”) andWells Fargo Bank for $25 million, with the Company having the option, subjectto certain conditions, of increasing the revolver in $5 million increments upto a total credit facility of $40 million. On September 29, 2005, theCompany affected such an increase in the amount of the credit facility from $25million to $30 million. The credit facility is collateralized by all of the Company’sassets other than real estate. Borrowing availability is based on eligibleaccounts receivable and inventory. The facility also includes a requirement tomaintain a blocked account arrangement, whereby remittances from the Company’scustomers reduce the debt outstanding. The credit facility contains, amongother provisions, certain financial covenants, including funded debt to EBITDA,and a fixed charge coverage ratio. If these financial covenants are not met,the Company’s availability under the credit facility will be reduced. The Company did not meet these financialcovenants as of September 30, 2005, and currently does not expect to untilSeptember 30, 2006.  Until thesecovenants are met, the Company’s borrowing availability under its $40 millionfacility is limited to an amount between $27 to $32 million, depending oneligible inventory and accounts receivable. Initial amounts borrowedunder the revolving credit facility bear interest at the prime rate listed inthe Wall Street Journal plus 0.50 percentage points and may be subsequentlyadjusted down based on a trailing twelve month funded debt to EBITDAcalculation.

 

At September 30, 2005 and December 31, 2004, the Company hadoutstanding loans under its line of credit then in effect totaling $22.1million and $12.7 million, respectively. At September 30, 2005, the interestrate on the outstanding borrowings under the line of credit was 7.25%. Theweighted average interest rate for the borrowings under the line of creditduring the nine-month period ended September 30, 2005 and 2004 was 6.56% and5.01%, respectively.

 

## **NOTE 6 – COMMITMENTS ANDCONTINGENCIES**

 

Mostof the Company’s motorhome sales are made on terms requiring payment within 15business days or less of the dealer’s receipt of the unit. Most dealers financeall, or substantially all, of the purchase price of their inventory under floorplan arrangements with banks or finance companies under which the lender paysthe Company directly. Dealers typically are not required to commence loan repaymentsto such lenders for a period of at least six months. The loan is collateralizedby a lien on the motorhome. Consistent with industry practice, the Company hasentered into repurchase agreements with these lenders. In general, therepurchase agreements require the Company to repurchase a unit if the dealerdefaults on the financed unit. Upon a dealer default, the agreements generallyrequire the Company to repurchase RVs at the election of the lender providedcertain conditions are met, such as repossession of the RV by the lender, theRV being new and unused and the time elapsed between invoice date and demandfor repurchase being no longer than a specified period which is typically 18months or less. The Company’s maximum potential exposure under these agreementsapproximated $169 million at September 30, 2005. As with receivables, therisk of loss under the repurchase agreements was spread over a number ofdealers and lenders and was reduced by the resale value of the RVs, which theCompany would be required to repurchase. Losses under these agreements have notbeen material in the past and management does not believe that any futurelosses under such agreements will have a material adverse effect on the Company’sconsolidated financial position, results of operations, or cash flows;consequently, no liability has been recognized in the consolidated financialstatements.

 

10

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TheCompany is involved in legal proceedings in the ordinary course of business,including a variety of warranty, “lemon law” and product liability claimstypical in the recreation vehicle industry. With respect to product liabilityclaims, the Company’s insurance policies cover, in whole or in part, defensecosts and liability costs for personal injury or property damage (excludingdamage to Company motorhomes). While it is not possible to estimate withcertainty the ultimate legal and financial liability with respect to thislitigation, management is of the opinion that while the final resolution of anysuch litigation may have an impact on the Company’s consolidated results for aparticular reporting period, the ultimate disposition of such litigation shouldnot have a material adverse effect on the Company’s financial position, resultsof operations or liquidity.

 

The Company’s warrantyreserve is established based on its best estimate of the amounts necessary tosettle future and existing claims on products sold as of the balance sheetdate. The Company records an estimate for future warranty-related costs basedon recent actual warranty claims. Also, as part of the warranty reserve theCompany’s recall reserve is established, as necessary, based on management’sestimate of the cost per unit to remedy the problem and the estimated number ofunits that will ultimately be brought in for the repair.

 

Nine-Months Ended September 30, 2005 (in thousands)

 
| ** **       | ** ** | **Beginning  Balance** | ** ** | **Additions** | ** ** | **Deductions** | ** ** | **Ending  Balance** | ** ** |
|------------------|------------|------------------------|------------|---------------|------------|----------------|------------|---------------------|------------|
| Warranty reserve |       | $                      | 8,505      |          | $          | 13,228         |       | $                   | 11,619     |   | $ | 10,114 |   |
|                  |            |                        |            |               |            |                |            |                     |            |  |  |  |  |

 

In August 2004, the Company entered into an agreement to acquire,for $3 million, approximately 73 acres of land adjacent to its CountryCoach, Inc. facility in Junction City, Oregon. The Company paid a depositof $0.1 million. The closing of the purchase is subject to customary closingconditions and is expected to occur in 2006.

 

## **NOTE 7 – STOCK BASEDCOMPENSATION**

 

The Company has stockoption plans that enable it to offer equity participation to employees,officers, and directors as well as certain non-employees. Stock options may begranted as incentive or nonqualified options. The Company has four fixed optionplans that reserve shares of common stock for issuance to executives, keyemployees, consultants, and directors. The Company has also issued fixedoptions outside of such plans pursuant to individual stock option agreements.Options granted to non-employee directors generally vest immediately upon grantand expire five to ten years from the date of grant. Options granted toemployees, including employee directors, generally vest in three equal annualinstallments and expire five to ten years from the date of grant. The price ofthe options granted pursuant to these plans will not be less than 100 percentof the market value of the shares on the date of grant.

 

The Company has adoptedthe provisions of Statement of Financial Accounting Standards No. 148, “Accountingfor Stock-Based Compensation - Transition and Disclosure” (SFAS 148), whichamends SFAS Statement 123, “Accounting for Stock-Based Compensation.” Aspermitted by SFAS 148, the Company continues to measure compensation cost inaccordance with Accounting Principles Board Opinion No. 25, “Accountingfor Stock Issued to Employees” (APB 25) and related interpretations, butprovides pro forma disclosures of net loss and loss per share as if thefair-value method had been applied.

 

11

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The following tableillustrates the effect on net income (loss) and earnings (loss) per share ifthe Company had applied the fair value recognition provisions to stock-basedemployee compensation (in thousands, except per share amounts):

 
| ** **                                                                                                                            | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                                                                            | ** ** | **2005**                                   | ** ** | **2004**                                  | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                                                                                                  |       |                                       |       |                                      |       |   |   |   |   |
| Income (loss) from continuing operations                                                                                              |       | $                                          | (5,930     | )                                         | $          | 844 |   | $ | (12,808 | ) | $ | 4,410 |   |
| Loss from discontinued operations                                                                                                     |       | —                                     |       | (727                                      | )          | — |   | (1,137 | ) |
| Net income (loss) - as reported                                                                                                       |       | (5,930                                     | )          | 117                                       |       | (12,808 | ) | 3,273 |   |
| Total  stock-based employee compensation expense determined under fair value based  method for all awards, net of related tax effects |       | 186                                        |       | 138                                       |       | 527 |   | 431 |   |
| Pro forma net income (loss)                                                                                                           |       | $                                          | (6,116     | )                                         | $          | (21 | ) | $ | (13,335 | ) | $ | 2,842 |   |
|                                                                                                                                  |       |                                       |       |                                      |       |   |   |   |   |
| Basic earnings (loss) per share as reported                                                                                           |       |                                       |       |                                      |       |   |   |   |   |
| Continuing  operations                                                                                                                |       | $                                          | (0.57      | )                                         | $          | 0.08 |   | $ | (1.24 | ) | $ | 0.43 |   |
| Discontinued  operations                                                                                                              |       | —                                     |       | (0.07                                     | )          | — |   | (0.11 | ) |
| Total basic  earnings (loss) per share                                                                                                |       | (0.57                                      | )          | 0.01                                      |       | (1.24 | ) | 0.32 |   |
| Total  stock-based employee compensation expense determined under fair value based  method for all awards, net of related tax effects |       | 0.02                                       |       | 0.01                                      |       | 0.05 |   | 0.04 |   |
| Basic earnings (loss) per share pro forma                                                                                             |       | $                                          | (0.59      | )                                         | $          | — |   | $ | (1.29 | ) | $ | 0.28 |   |
|                                                                                                                                  |       |                                       |       |                                      |       |   |   |   |   |
| Diluted earnings (loss) per share as reported                                                                                         |       |                                       |       |                                      |       |   |   |   |   |
| Continuing  operations                                                                                                                |       | $                                          | (0.57      | )                                         | $          | 0.08 |   | $ | (1.24 | ) | $ | 0.42 |   |
| Discontinued  operations                                                                                                              |       | —                                     |       | (0.07                                     | )          | — |   | (0.11 | ) |
| Total diluted  earnings (loss) per share                                                                                              |       | (0.57                                      | )          | 0.01                                      |       | (1.24 | ) | 0.31 |   |
| Total  stock-based employee compensation expense determined under fair value based  method for all awards, net of related tax effects |       | 0.02                                       |       | 0.01                                      |       | 0.05 |   | 0.04 |   |
| Basic earnings (loss) per share pro forma                                                                                             |       | $                                          | (0.59      | )                                         | $          | — |   | $ | (1.29 | ) | $ | 0.27 |   |

 

The weighted-average fairvalue of the stock options has been estimated on the date of grant using theBlack-Scholes option-pricing model. There were no new stock option grantsduring the nine-month period ended September 30, 2005. Additionally, therewere no stock options granted for the three-month period endedSeptember 30, 2004.

 

## **NOTE 8 – INCOME TAXES**

 

As of September 30, 2005,the Company has a current deferred tax asset of $1.0 million and a long-termdeferred tax liability of $1.0 million. During the three and nine-month periodsended September 30, 2005, the Company recorded a non-cash charge of $2.5million and $4.9 million, respectively, to increase the valuation allowance tooffset the change in net deferred tax assets. Recent cumulative losses, the downturn in current market conditions andits impact on near term earnings led the Company to conclude that it was morelikely than not that its recorded net deferred tax asset will not be realized.The Company expects to record a full valuation allowance on future tax benefitsuntil it can sustain an appropriate level of profitability and until such time,the Company would not expect to recognize any significant tax benefits in itsfuture results of operations.

 

12

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## **NOTE 9 – DISCONTINUEDOPERATIONS**

 

On September 24, 2004, the Company sold its travel trailerbusiness assets to Weekend Warrior, a privately owned, California-basedramp-trailer manufacturer. The sale was designed to allow the Company tofurther concentrate its efforts and resources on its growing motorhomebusiness. The total selling price of the business was $3.2 million. The saleincluded inventory totaling $2.8 million and equipment totaling $0.1 million.In addition, the Company recognized a $0.3 million gain on the sale. WeekendWarrior paid $0.5 million at closing with the balance to be paid in ten equalmonthly payments. Furthermore, a payment of 1% of monthly sales for otherassets and trademarks will be made on a monthly basis over a twelve-monthperiod ending October 10, 2005 with a minimum due of $0.3 million whichhas been included in note receivable in the accompanying consolidated balancesheets. The Company also entered into a sublease agreement, which allowedWeekend Warrior to lease a portion of the Company’s facilities for up to twelvemonths.  This sublease terminated inSeptember 2005. Net sales from discontinued operations were $1.4 million and$14.7 million for the three and nine-month periods ended September 30,2004.

 

## **NOTE 10 – EARNINGS (LOSS)PER SHARE**

 

Basic earnings (loss) per share is computed by dividing net earnings(loss) by the weighted average number of common shares outstanding for theperiod. Diluted earnings (loss) per share reflect the potential dilution thatcould occur if options were exercised or converted into common stock. Sharesattributable to the exercise of outstanding options that are anti-dilutive areexcluded from the calculation of diluted loss per share.

 

All amounts in thousands except per share amounts.

 
| ** **                                          | ** ** | **Three-Months Ended  September 30,** | ** ** | **Nine-Months Ended  September 30,** | ** ** |
|-----------------------------------------------------|------------|--------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                          | ** ** | **2005**                                   | ** ** | **2004**                                  | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                |       |                                       |       |                                      |       |   |   |   |   |
| Income (loss) from continuing operations            |       | $                                          | (5,930     | )                                         | $          | 844 |   | $ | (12,808 | ) | $ | 4,410 |   |
| Loss from discontinued operations                   |       | —                                     |       | (727                                      | )          | — |   | (1,137 | ) |
| Net income (loss)                                   |       | $                                          | (5,930     | )                                         | $          | 117 |   | $ | (12,808 | ) | $ | 3,273 |   |
|                                                |       |                                       |       |                                      |       |   |   |   |   |
| Basic weighted  average common shares outstanding   |       | 10,339                                     |       | 10,222                                    |       | 10,338 |   | 10,203 |   |
| Effect of dilutive stock options                    |       | —                                     |       | 204                                       |       | — |   | 189 |   |
|                                                |       |                                       |       |                                      |       |   |   |   |   |
| Diluted weighted  average common shares outstanding |       | 10,339                                     |       | 10,426                                    |       | 10,338 |   | 10,392 |   |
|                                                |       |                                       |       |                                      |       |   |   |   |   |
| Basic earnings (loss) per share as reported         |       |                                       |       |                                      |       |   |   |   |   |
| Continuing  operations                              |       | $                                          | (0.57      | )                                         | $          | 0.08 |   | $ | (1.24 | ) | $ | 0.43 |   |
| Discontinued  operations                            |       | —                                     |       | (0.07                                     | )          | — |   | (0.11 | ) |
| Total basic  earnings (loss) per share              |       | $                                          | (0.57      | )                                         | $          | 0.01 |   | $ | (1.24 | ) | $ | 0.32 |   |
|                                                |       |                                       |       |                                      |       |   |   |   |   |
| Diluted earnings (loss) per share as reported       |       |                                       |       |                                      |       |   |   |   |   |
| Continuing  operations                              |       | $                                          | (0.57      | )                                         | $          | 0.08 |   | $ | (1.24 | ) | $ | 0.42 |   |
| Discontinued  operations                            |       | —                                     |       | (0.07                                     | )          | — |   | (0.11 | ) |
| Total diluted  earnings (loss) per share            |       | $                                          | (0.57      | )                                         | $          | 0.01 |   | $ | (1.24 | ) | $ | 0.31 |   |

 

For the three-monthsended September 30, 2005 and 2004, excluded from the computation of dilutedearnings per share were stock options to purchase 931,796 shares and 12,000shares, respectively. For the nine-months ended September 30, 2005 and2004, excluded from the computation of diluted earnings per share were stockoptions to purchase 931,796 and 12,000 shares, respectively.

 

13

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**NATIONALR.V. HOLDINGS, INC.**

**PART I,ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS**

 

## **Disclosure RegardingForward Looking Statements**

 

This Quarterly Report on Form 10-Q contains forward-lookingstatements within the meaning of the Private Securities Litigation Reform Actof 1995. Investors are cautioned that forward-looking statements are inherentlyuncertain. Actual performance and results may differ materially from thatprojected or suggested herein due to certain risks and uncertainties including,without limitation, potential fluctuations in the Company’s operating results;any material weaknesses in the Company’s internal control over financialreporting or the failure to remediate any of the previously disclosed materialweaknesses; any failure to implement required new or improved controls;resumption of losses; seasonality and economic conditions; dependence oncertain dealers and concentration of dealers in certain regions; dependence onchassis suppliers; potential liabilities under repurchase agreements;competition; government regulation; warranty claims; and product liabilityclaims. Certain risks and uncertainties that could cause actual results todiffer materially from that projected or suggested are set forth in theForm 10-K, in the Company’s filings with the Securities and ExchangeCommission (the “SEC”) and the Company’s public announcements, copies of whichare available from the SEC or from the Company upon request. The Companyundertakes no obligation to revise or update publicly any forward-lookingstatements for any reason.

 

## **Restatement of FinancialStatements**

 

Thefollowing discussion and analysis gives effect to the restatements for thethree and nine-months ended September 30, 2004 described in Note 2 to theunaudited consolidated financial statements for the three and nine-months endedSeptember 30, 2005 contained herein. Accordingly, certain of the data set forth in this section are notcomparable to discussions and data in our previously filed annual and quarterlyreports for corresponding periods.

 

*Correction of accounting for dealer sales incentives.*The consolidated financial statements reflectthe restatement of certain dealer sales incentives, which include rebates andfloorplan interest reimbursement paid to dealers to promote the sale of theproduct and retail incentives paid directly to dealer retail salespersons topromote the sale of the product and the return of sale and warrantyinformation. The statements of operations for the three and nine-months endedSeptember 30, 2004 have been restated to reclassify these sales incentivesfrom selling expenses to a reduction of revenue, as required by Emerging IssuesTask Force (“EITF”) Issue No. 01-09, “Accounting for Consideration Givenby a Vendor to a Customer (including a Reseller) of the Vendor’s Products”. Netsales, gross profit and selling expenses were reduced by $0.5 million and $1.6million for the three and nine-months ended September 30, 2004,respectively. This adjustment had no impact on net income (loss) as previouslyreported.

 

*Correction of accounting for deferred payment motorhome sales.* The consolidated financial statementsreflect the removal of certain motorhome sales previously included in theconsolidated financial statements for the three and nine-month periods endedSeptember 30, 2004. The restatement reflects the Company’s determination thatit did not correctly recognize revenue with respect to a limited number ofmotorhomes sold in the third quarter of 2004 under a deferred paymentarrangement because the Company held the manufacturer’s certificate of originas security for payment. The Company determined that revenues of approximately$4.5 million previously recognized in the third quarter 2004 should have beenrecognized in the fourth quarter 2004, resulting in a reduction of $0.2 millionto net income and a $0.02 reduction to the Company’s third quarter 2004 dilutedearnings per share.

 

*Correction of accounting for gain on sale of travel trailerbusiness.* The Companydetermined that the gain it recognized on the sale of its travel trailerbusiness at the end of the third quarter 2004 was overstated by $0.06 millionwhich amount represented the implied interest portion of the note receivablethe Company received from Weekend Warrior, the purchasing company. Thisadjustment did not affect the Company’s third quarter 2004 discontinuedoperations diluted loss per share.

 

14

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The consolidated financialstatements for the three and nine-months ended September 30, 2004 havebeen restated as follows (in thousands, except per share amounts):

 

**Statements of Operations**

 
| ** **                                             | ** ** | **Three-Months Ended  September 30, 2004** | ** ** | **Nine-Months Ended  September 30, 2004** | ** ** |
|--------------------------------------------------------|------------|-------------------------------------------------|------------|------------------------------------------------|------------|
| ** **                                             | ** ** | **As  previously  reported**                    | ** ** | **As restated**                                | ** ** | **As  previously  reported** | ** ** | **As restated** | ** ** |
| Net sales                                              |       | $                                               | 117,457    |                                           | $          | 112,525 |   | $ | 340,977 |   | $ | 334,953 |   |
| Cost of goods sold                                     |       | 108,672                                         |       | 104,606                                        |       | 314,402 |   | 310,336 |   |
| Gross profit                                           |       | 8,785                                           |       | 7,919                                          |       | 26,575 |   | 24,617 |   |
| Selling expenses                                       |       | 3,512                                           |       | 3,003                                          |       | 9,899 |   | 8,298 |   |
| Operating income                                       |       | 1,836                                           |       | 1,479                                          |       | 7,660 |   | 7,303 |   |
| Income from  continuing operations before income taxes |       | 1,809                                           |       | 1,452                                          |       | 7,602 |   | 7,245 |   |
| Provision for income taxes                             |       | 758                                             |       | 608                                            |       | 2,985 |   | 2,835 |   |
| Income from continuing operations                      |       | 1,051                                           |       | 844                                            |       | 4,617 |   | 4,410 |   |
| Gain from sale of discontinued operations              |       | (336                                            | )          | (281                                           | )          | (336 | ) | (281 | ) |
| Income taxes  related to discontinued operations       |       | (501                                            | )          | (524                                           | )          | (714 | ) | (737 | ) |
| Net loss from discontinued operations                  |       | (695                                            | )          | (727                                           | )          | (1,105 | ) | (1,137 | ) |
| Net income                                             |       | 356                                             |       | 117                                            |       | 3,512 |   | 3,273 |   |
|                                                   |       |                                            |       |                                           |       |   |   |   |   |
| Basic earnings (loss) per common share:                |       |                                            |       |                                           |       |   |   |   |   |
| Continuing  operations                                 |       | $                                               | 0.10       |                                           | $          | 0.08 |   | $ | 0.45 |   | $ | 0.43 |   |
| Discontinued  operations                               |       | (0.07                                           | )          | (0.07                                          | )          | (0.11 | ) | (0.11 | ) |
| Total                                                  |       | $                                               | 0.03       |                                           | $          | 0.01 |   | $ | 0.34 |   | $ | 0.32 |   |
|                                                   |       |                                            |       |                                           |       |   |   |   |   |
| Diluted earnings (loss) per common share:              |       |                                            |       |                                           |       |   |   |   |   |
| Continuing  operations                                 |       | $                                               | 0.10       |                                           | $          | 0.08 |   | $ | 0.44 |   | $ | 0.42 |   |
| Discontinued  operations                               |       | (0.07                                           | )          | (0.07                                          | )          | (0.10 | ) | (0.11 | ) |
| Total                                                  |       | $                                               | 0.03       |                                           | $          | 0.01 |   | $ | 0.34 |   | $ | 0.31 |   |
|                                                   |       |                                            |       |                                           |       |   |   |   |   |
| Weighted average number of shares:                     |       |                                            |       |                                           |       |   |   |   |   |
| Basic                                                  |       | 10,222                                          |       | 10,222                                         |       | 10,203 |   | 10,203 |   |
| Diluted                                                |       | 10,426                                          |       | 10,426                                         |       | 10,392 |   | 10,392 |   |

 

15

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## **Executive Overview**

 

National R.V. Holdings, Inc. (“the Company”) operates in onebusiness segment that designs, manufactures, and markets motorhomes through itswholly owned subsidiaries, National R.V., Inc. (NRV) and CountryCoach, Inc. (CCI). The RVs are marketed primarily in the United States ofAmerica by NRV under the Dolphin, Islander, Sea Breeze, Tradewinds andTropi-Cal brand names and by CCI under brand names including Affinity, Allure,Inspire, Intrigue, Magna and Prevost by Country Coach.

 

The following table setsforth for the periods indicated the percentage of net sales represented bycertain items reflected in the Company’s Consolidated Statements of Operations:

 
| ** **                                                    | ** ** | **Three-Months Ended  September 30,** | ** ** | **Nine-Months Ended  September 30,** | ** ** |
|---------------------------------------------------------------|------------|--------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                    | ** ** | **2005**                                   | ** ** | **2004**                                  | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                    | ** ** | ** **                                 | ** ** | **(Restated)**                            | ** ** | ** ** | ** ** | **(Restated)** | ** ** |
| Net sales                                                     |       | 100.0                                      | %          | 100.0                                     | %          | 100.0 | % | 100.0 | % |
| Cost of goods sold                                            |       | 98.0                                       |       | 93.0                                      |       | 97.2 |   | 92.7 |   |
| Gross profit                                                  |       | 2.0                                        |       | 7.0                                       |       | 2.8 |   | 7.3 |   |
| Selling expenses                                              |       | 4.0                                        |       | 2.7                                       |       | 3.2 |   | 2.4 |   |
| General and administrative expenses                           |       | 3.1                                        |       | 2.7                                       |       | 2.9 |   | 2.6 |   |
| Other expense                                                 |       | 0.0                                        |       | 0.3                                       |       | 0.0 |   | 0.1 |   |
| Operating income  (loss)                                      |       | (5.1                                       | )          | 1.3                                       |       | (3.3 | ) | 2.2 |   |
| Interest expense                                              |       | 0.4                                        |       | 0.0                                       |       | 0.3 |   | 0.0 |   |
| Other expense (income)                                        |       | 0.0                                        |       | 0.0                                       |       | 0.0 |   | 0.0 |   |
| Income (loss)  from continuing operations before income taxes |       | (5.5                                       | )          | 1.3                                       |       | (3.6 | ) | 2.2 |   |
| Provision for income taxes                                    |       | 0.0                                        |       | 0.5                                       |       | 0.0 |   | 0.9 |   |
| Income (loss)  from continuing operations                     |       | (5.5                                       | )          | 0.8                                       |       | (3.6 | ) | 1.3 |   |
| Loss from discontinued operations                             |       | 0.0                                        |       | 1.4                                       |       | 0.0 |   | 0.6 |   |
| Gain from sale of discontinued operations                     |       | 0.0                                        |       | (0.2                                      | )          | 0.0 |   | (0.1 | ) |
| Benefit for income taxes                                      |       | 0.0                                        |       | (0.5                                      | )          | 0.0 |   | (0.2 | ) |
| Net loss from discontinued operations                         |       | 0.0                                        |       | (0.7                                      | )          | 0.0 |   | (0.3 | ) |
| Net income (loss)                                             |       | (5.5                                       | )%         | 0.1                                       | %          | (3.6 | )% | 1.0 | % |

 

During the three-monthperiod ended September 30, 2005, the Company incurred a net loss of $5.9million compared to net income of $0.8 million from continuing operations forthe same quarter last year. The three-month period ended September 30, 2005diluted loss per share was $0.57 compared to earnings per diluted share fromcontinuing operations of $0.08 for the comparable period in 2004. The net lossfor the nine-month period ended September 30, 2005 was $12.8 million, or $1.24per diluted share, as compared to income of $4.4 million from continuingoperations, or $0.42 per diluted share, for the comparable period in 2004.

 

## **Looking Forward**

 

The Company is continuingto focus on aggressive product development, improved productivity and costcontrol, and increasing the quantity and quality of its dealer network. Inaddition, given the current softness in the RV market, driven by decliningconsumer confidence, the Company is extremely focused on reducing its fixedoverhead costs to make money even in a potential prolonged downturn.

 

Improved productivity andcost control remain significant objectives. The Company is making a significantinvestment this year in manufacturing engineers at its Country Coach facilitiesin an effort to increase productivity. Controlling costs also remains a highpriority, specifically in the manufacturing cost areas, warranty, and workers’compensation. The Company continues to focus on improving the quality of itsmotorhomes to increase consumer satisfaction and decrease future warrantycosts. Also, the Company has instituted a number of safety programs, which haveresulted in measurably reduced workers’ compensation costs. The Company expectsfurther progress in containing its costs as it continues to implement leanmanufacturing concepts.

 

16

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A continued focus ondealer acquisition and enhanced training programs for the Company’s workforce,service centers, dealers, and consumers are also key initiatives. The Companyhas undertaken efforts in the areas of safety; with new distance learningcapabilities, the Company is looking forward to broadcasting its servicetraining programs directly to dealers and service providers, driving themovement for increased customer satisfaction in areas of technical maintenance.In addition, factory-training programs are providing the Company’s customers abasis for self-diagnostics and a better understanding of the equipment they areoperating.

 

The Recreational VehicleIndustry Association’s (RVIA) market expansion campaign, GO RVing, now in itseighth year, is fostering greater awareness and garnering media attention. Thecampaign is designed to promote the RV lifestyle. Though the RVIA expectssubstantial growth for the industry in the long-term driven by favorabledemographic trends, the industry is anticipating continued weakness through2006.

 

## **Results of Operations**

 

**Comparisonof Continuing Operations for the Three and Nine-Months Ended September 30,2005 to the Three and Nine-Months Ended September 30, 2004:**

 

(Amounts in tables are inthousands, except percentages)

 

**Net sales**

 
| ** **                | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|---------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
| ** **                | ** ** | ** **                                                 | ** ** | ** **                                                | ** ** | **(As Restated)** | ** ** | ** ** | ** ** | ** ** | ** ** | **(As Restated)** | ** ** |
|                      |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Net sales                 |       | $                                                          | 108,232    |                                                      | (3.8       | )% | $ | 112,525 |   | $ | 357,082 |   | 6.6 | % | $ | 334,953 |   |
| as a percent of net sales |       | 100.0                                                      | %          |                                                      |       | 100.0 | % | 100.0 | % |   |   | 100.0 | % |
|                           |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Net sales of $108.2million for the three-month period ended September 30, 2005 decreased $4.3million or 3.8% from the same three-month period ended September 30, 2004.A shift in mix to higher-priced diesel motorhomes was more than offset bydeclining unit shipments. Wholesale unit shipments of diesel motorhomes for thethree-month period ended September 30, 2005 were 302 units, down 4% from315 units during the same period last year. Shipments of gas motorhomes forthree-month period ended September 30, 2005 were 303 units, down 35%compared to the 466 gas units sold during the same period last year. Thedecrease in net sales for the three-month period ended September 30, 2005 ismainly the result of declining consumer confidence resulting, in part, from thenatural disasters that occurred in the United States of America during thethird quarter combined with economic factors of higher interest rates and fuelprices which has perpetuated the industry-wide slump in demand for Class Amotorhomes.

 

Net sales of $357.1million for the nine months ended September 30, 2005 increased $22.1 million or6.6% from the same period last year. Wholesale unit shipments of dieselmotorhomes were 1,087, up 3% from 1,057 units during the same period last year.Wholesale unit shipments of gas motorhomes were 1,073, down 20% from 1,334units during the same period last year. The increase in net sales for thenine-month period ended September 30, 2005 is mainly attributable to the changein the sales mix to include more of the highline diesel motorhomes, which havehigher average sales prices than midline diesel units and gas powered units.

 

**Grossprofit and gross profit margin**

 
| ** **          | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|---------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **          | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
| ** **          | ** ** | ** **                                                 | ** ** | ** **                                                | ** ** | **(As Restated)** | ** ** | ** ** | ** ** | ** ** | ** ** | **(As Restated)** | ** ** |
|                |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Gross profit        |       | $                                                          | 2,165      |                                                      | (72.7      | )% | $ | 7,919 |   | $ | 9,881 |   | (59.9 | )% | $ | 24,617 |   |
| Gross profit margin |       | 2.0                                                        | %          | (71.4                                                     | )%         | 7.0 | % | 2.8 | % | (61.6 | )% | 7.3 | % |
|                     |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

17

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The gross profit margin for the three-month periodended September 30, 2005 was 2.0% compared to 7.0% for the same period lastyear. For the nine-month period ended September 30 2005, the gross profitmargin was 2.8% compared to 7.3% for the same period last year. The primaryfactors that led to the decrease in gross margins, in order of significance,were (1) higher sales incentive costs, (2) high production inefficiencies, (3)higher warranty costs, and (4) other increases in overhead including higherspending on inventory control and product development. The high sales incentivecosts, concentrated on the Company’s lower-priced products, were driven by anoversupply of product in a weakening market. The production inefficiency costswere also concentrated primarily at the Company’s Perris, California plant andwere driven by challenges with 2006 model-year introductions, commodity flowdifficulties, and the working down of excess work-in-process inventory,combined with lower production rates leading to lower fixed-cost absorption.

 

**Sellingexpenses**

 
| ** **                | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|---------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
| ** **                | ** ** | ** **                                                 | ** ** | ** **                                                | ** ** | **(As Restated)** | ** ** | ** ** | ** ** | ** ** | ** ** | **(As Restated)** | ** ** |
|                      |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Selling expenses          |       | $                                                          | 4,335      |                                                      | 44.4       | % | $ | 3,003 |   | $ | 11,289 |   | 36.0 | % | $ | 8,298 |   |
| as a percent of net sales |       | 4.0                                                        | %          | 2.7                                                       | %          | 3.2 | % | 2.4 | % |   |   |   |   |
|                           |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Selling expensesincreased $1.3 million or 44.4% for the three-month period endedSeptember 30, 2005 over the same period last year. Selling expenses forthe nine-months ended September 30, 2005 increased $3.0 million or 36.0%over the same period last year. Selling expenses increased mainly due to highermedia and marketing costs to support the Company’s dealer expansion and otherinitiatives, higher dealer convention expenses, and higher sales commissionsresulting from higher sales.

 

**Generaland administrative expenses**

 
| ** **                          | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|-------------------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                          | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
|                                |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| General and administrative expenses |       | $                                                          | 3,346      |                                                      | 9.2        | % | $ | 3,063 |   | $ | 10,489 |   | 21.4 | % | $ | 8,642 |   |
| as a percent of net sales           |       | 3.1                                                        | %          |                                                      |       | 2.7 | % | 2.9 | % |   |   | 2.6 | % |
|                                     |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

General andadministrative expenses totaling $3.3 million for the three-month period endedSeptember 30, 2005 were up $0.3 million, or 9.2%, compared to the same periodlast year. For the nine-month period ended September 30, 2005, general andadministrative expenses were $10.5 million, representing an increase of $1.8million, or 21.4%, compared to the same period last year. The increase ingeneral and administrative expenses is due to higher audit and professionalfees, as well as higher staffing levels to support increased sales andproduction and increased staffing to support ongoing Sarbanes-Oxley compliance.

 

**Interestexpense**

 
| ** **                | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|---------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
|                      |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Interest expense          |       | $                                                          | 395        |                                                      | 659.6      | % | $ | 52 |   | $ | 983 |   | 656.2 | % | $ | 130 |   |
| as a percent of net sales |       | 0.4                                                        | %          |                                                      |       | 0.0 | % | 0.3 | % |   |   | 0.0 | % |
|                           |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Interest expense for thethree-month periods ended September 30, 2005 and 2004 was $395,000 and $52,000,respectively. For the nine-month periods ended September 20, 2005 and 2004,interest expense was $983,000 compared to $130,000 for the same period lastyear. The change in interest expense is primarily attributable to increasedborrowings on the line of credit.

 

18

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**Otherexpense (income)**

 
| ** **                | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|---------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
|                      |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Other expense (income)    |       | $                                                          |  19   |                                                      | 176.0      | % | $ |  (25 | ) | $ |  (72 | ) | 0.0 | % | $ |  (72 | ) |
| as a percent of net sales |       | 0.0                                                        | %          |                                                      |       | 0.0 | % | 0.0 | % |   |   | 0.0 | % |
|                           |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Otherexpense (income) for the three-month periods ended September 30, 2005 and2004 was immaterial. Other income for the nine-month periods endedSeptember 30, 2005 was mainly interest and fees related to the notereceivable. Other income for the nine-month period ended September 30,2004 was mainly the gain on the sale of real property in Florida. As apercentage of net sales, the amount is immaterial.

 

**Provisionfor income taxes**

 
| ** **                 | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|----------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                 | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
|                       |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Provision for income taxes |       | $                                                          | —     |                                                      | (100.0     | )% | $ | 608 |   | $ | — |   | (100.0 | )% | $ | 2,835 |   |
| as a percent of net sales  |       | 0.0                                                        | %          |                                                      |       | 0.5 | % | 0.0 | % |   |   | 0.9 | % |
|                            |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

As discussed in Note 8 tothe consolidated financial statements included in this Form 10-Q, recentcumulative losses, the downturn in current market conditions and its impact onnear-term earnings led the Company to conclude that it was more likely than notthat its net deferred tax asset will not be realized. As a result, the Companycontinues to record a full valuation allowance against its net deferred taxassets resulting in a zero effective tax rate for 2005. The effective tax ratefor the three and nine-month periods ended September 30, 2004 was 41.9% and39.1%, respectively. The Company expects to record a full valuation allowanceon future tax benefits until it can sustain an appropriate level ofprofitability.

 

**Net lossfrom discontinued operations**

 
| ** **                             | ** ** | **Three-Months Ended  September 30,  Percent Change** | ** ** | **Nine-Months Ended  September 30,  Percent Change** | ** ** |
|----------------------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                             | ** ** | **2005**                                                   | ** ** | ** **                                                | ** ** | **2004** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
|                                   |       |                                                       |       |                                                      |       |   |   |   |   |   |   |   |   |
| Net loss from  discontinued operations |       | $                                                          | —     |                                                      | (100.0     | )% | $ | (727 | ) | $ | — |   | (100.0 | )% | $ | (1,137 | ) |
| as a percent of net sales              |       | 0.0                                                        | %          |                                                      |       | (0.7 | )% | 0.0 | % |   |   | (0.3 | )% |
|                                        |            |                                                            |            |                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

On September 24,2004, the Company sold its Travel Trailer business assets to Weekend Warrior, aprivately owned, California-based ramp-trailer manufacturer. The net loss fromdiscontinued operations (including a $0.3 million gain on the sale) for the three-monthand nine-month periods ended September 30, 2004 was $0.7 million and $1.1million, respectively.

 

## **Liquidity and CapitalResources**

 

At September 30,2005 and December 31, 2004, the Company had cash and cash equivalents of$11,000 (excluding restricted cash totaling $25,000 and $251,000, respectively,required to secure a letter of credit in connection with one of the Company’sinsurance policies). During the nine-month period ended September 30, 2005, theCompany financed its operations primarily through its existing working capitaland its line of credit with UPS Capital Corporation (UPSC).

 

During the nine-monthperiod ended September 30, 2005 the Company used $12.0 million of cash inits operations, with the largest contributing factors being a $12.8 million netloss, a $3.1 million increase in receivables and a $5.2 million increase ininventories, being partially offset by a $1.8 million increase in accruedexpenses. During the nine-month period ended September 30, 2004 the Companyused $11.0 million of cash in its operations, with the two largest contributingfactors being a $25.8 million increase in inventories and a $2.5 millionincrease in receivables, and the largest offsetting factor being an $8.2million increase in accounts payable.

 

19

----

 

On September 30,2005, the Company had working capital of $33.9 million compared to $49.1million at December 31, 2004. This decrease of $15.2 million was primarilydue to a $9.4 million increase in borrowings on the line of credit and a $4.2million increase in the book overdraft, partially offset by a $2.9 millionincrease in receivables and a $2.1 million increase in inventories.

 

For the nine-month periodended September 30, 2005, net cash used in investing activities was $1.5million, consisting primarily of $3.6 million in capital expenditures,partially offset by repayments on note receivable of $2.0 million. Net cashprovided by financing activities was $13.5 million, primarily due to netadvances on the line of credit of $9.4 million and a $4.2 million increase inbook overdraft.

 

On August 12, 2005, the Company entered into a new three-yearasset-based revolving credit facility with UPSC and Wells Fargo Bank for $25million, with the Company having the option, subject to certain conditions, ofincreasing the revolver in $5 million increments up to a total credit facilityof $40 million. On September 29, 2005, the Company affected such anincrease in the amount of the credit facility from $25 million to $30 million.The credit facility is collateralized by all of the Company’s assets other thanreal estate. Borrowing availability is based on eligible accounts receivableand inventory. The facility also includes a requirement to maintain a blockedaccount arrangement, whereby remittances from the Company’s customers reducethe debt outstanding. The credit facility contains, among other provisions,certain financial covenants, including funded debt to EBITDA, and a fixedcharge coverage ratio. If these financial covenants are not met, the Company’savailability under the credit facility will be reduced. The Company did not meet these financial covenants as of September 30,2005, and currently does not expect to until September 30, 2006.  Until these covenants are met, the Company’sborrowing availability under its $40 million facility is limited to an amountbetween $27 to $32 million, depending on eligible inventory and accountsreceivable. Initial amounts borrowed under the revolving credit facilitybear interest at the prime rate listed in the Wall Street Journal plus 0.50percentage points and may be subsequently adjusted down based on a trailingtwelve month funded debt to EBITDA calculation.

 

At September 30, 2005 and December 31, 2004, the Company hadoutstanding loans under its line of credit then in affect totaling $22.1million and $12.7 million, respectively. At September 30, 2005, the interestrate on the outstanding borrowings under the line of credit was 7.25%. Theweighted average interest rate for the borrowings under the line of creditduring the nine-month period ended September 30, 2005 and 2004 was 6.56%and 5.01%, respectively.

 

Management’s plan toachieve operational profitability includes continuing or starting a variety ofinitiatives to improve its earnings and working capital position, including: i)new product introductions in the fourth quarter of 2005 with additional newproduct and floor plan introductions in the first half of 2006, ii) new dealeradditions to fill open market areas or replace under-performing dealers, iii)reductions in all categories of inventory, iv) head count re-balancings tocurrent retail sales-supported production levels, v) engineering reviews ofmaterial components for the removal of non-value added items to reduce bothmaterial and assembly costs, vi) continued thorough motorhome inspections toimprove quality and to more timely report failures, and vii) manufacturing costreductions resulting from the continued implementation of lean manufacturingconcepts.

 

In order to fund on-goingoperations in the short-term, the Company remains dependent upon its ability toutilize outside financing through borrowings on its line of credit until itachieves sustained operational profitability through a combination of increasedsales, cost reductions and improved product margins. After consideration of therestrictions of the borrowing capacity noted in Noted 5, the Company believesit has sufficient financial resources to fund its operations in the short-term.However, the Company’s ability to meet its obligations in the long-term isdependent on its ability to generate positive cash flows from operations and isdependent on continued borrowings under its line of credit. If management isunable to achieve its operational profitability plan or unforeseen events occurand the Company’s existing line of credit is insufficient to allow the Companyto meet its obligations, the Company may need to implement alternative plansthat could include long-term financing collateralized by real estate (which ispresently unencumbered) or obtaining additional debt financing, additionalreductions in operating costs, deferral of capital expenditures, and furtherreductions in working capital.  While theCompany believes that it could successfully complete the alternative plans, ifnecessary, there can be no assurance that such alternatives would be availableon acceptable terms and conditions or that the Company would be successful inits implementation of such plans.

 

Asfurther discussed in Note 6 to the consolidated financial statements includedin this Form 10-Q, the Company generally agrees with its dealers’ lendersto repurchase any unsold RVs in the event of various circumstances. The Company’smaximum potential exposure under these agreements approximated $169 million atSeptember 30, 2005. As with receivables, the risk of loss under the repurchaseagreements was spread over a number of dealers and lenders and was reduced bythe resale value of the RVs, which the Company would be required to repurchase.Losses under these agreements have not been material in the past and managementdoes not believe that any future losses under such agreements will have amaterial adverse effect on the Company’s consolidated financial position,results of operations, or cash flows.

 

20

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InAugust 2004, the Company entered into an agreement to acquire, for $3million, approximately 73 acres of land adjacent to its CountryCoach, Inc. facility in Junction City, Oregon. The Company paid a depositof $0.1 million. The closing of the purchase is subject to customary closingconditions and is expected to occur in 2006. The Company believes thecombination of internally generated funds and unused borrowing availability willbe sufficient to meet this obligation.

 

**Recently Issued Accounting Pronouncements**

 

In November 2004, the FASB issued Statement of FinancialAccounting Standards (SFAS) No. 151, “Inventory Costs-an Amendment of ARBNo. 43, Chapter 4.” SFAS No. 151 requires that accounting for itemssuch as idle facility expense, freight, handling costs, and wasted materials(spoilage) be recognized as current period charges regardless of whether theymeet the criterion of “so abnormal.” In addition, this Statement requires thatallocation of fixed production overheads to the costs of conversion be based onthe normal capacity of the production facilities. This Statement is effectivefor inventory costs incurred during fiscal years beginning after June 15,2005. The provision of this Statement shall be applied prospectively. TheCompany has not determined the impact that adoption of this standard will haveon its consolidated financial statements.

 

In December 2004,the FASB issued FSP 109-1, “Application of FASB Statement No. 109,Accounting for Income Taxes, to the Tax Deduction on Qualified ProductionActivities Provided by the American Jobs Creation Act of 2004.” The AmericanJobs Creation Act, or AJCA, introduces a special 9% tax deduction on qualifiedproduction activities. FAS 109-1 clarifies that this tax deduction should beaccounted for as a special tax deduction in accordance with Statement 109. FSP109-1 is effective upon its issuance. The adoption of FSP 109-1 did not have amaterial impact on the Company’s consolidated financial statements.

 

In December 2004,the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFASNo. 123R), which replaces SFAS No. 123, “Accounting for Stock-BasedCompensation,” (SFAS 123) and supercedes APB Opinion No. 25, “Accountingfor Stock Issued to Employees.” SFAS No. 123R requires all share-basedpayments to employees, including grants of employee stock options, to berecognized in the financial statements based on their fair values beginningwith the first annual period after June 15, 2005, with early adoptionencouraged. The pro forma disclosures previously permitted under SFAS 123no longer will be an alternative to financial statement recognition. TheCompany is required to adopt SFAS No. 123R in the first calendar quarterof 2006, beginning January 1, 2006. Under SFAS No. 123R, the Companymust determine the appropriate fair value model to be used for valuingshare-based payments, the amortization method for compensation cost and thetransition method to be used at date of adoption. The transition methodsinclude modified prospective and modified retrospective adoption options. Underthe modified retrospective option, prior periods may be restated either as ofthe beginning of the year of adoption or for all periods presented. Themodified prospective method requires that compensation expense be recorded forall unvested stock options and restricted stock at the beginning of the firstquarter of adoption of SFAS No. 123R, while the modified retrospectivemethod would record compensation expense for all unvested stock options andrestricted stock beginning with the first period restated. The Company isevaluating the requirements of SFAS 123R. The Company has not yetdetermined the method of adoption or the affect of adopting SFAS No. 123R,and the Company has not determined whether the adoption will result in amountsthat are similar to the current pro forma disclosures under SFAS No. 123and 148.

 

In June 2005, theFASB issued SFAS No. 154, “Accounting Changes and Error Corrections–areplacement of APB No. 20 and FAS No. 3” (“SFAS 154”). SFAS 154provides guidance on the accounting for and reporting of accounting changes anderror corrections. It establishes, unless impracticable, retrospectiveapplication as the required method for reporting a change in accountingprinciple in the absence of explicit transition requirements specific to thenewly adopted accounting principle. SFAS 154 also provides guidance fordetermining whether retrospective application of a change in accountingprinciple is impracticable and for reporting a change when retrospectiveapplication is impracticable. The correction of an error in previously issuedfinancial statements is not an accounting change. However, the reporting of anerror correction involves adjustments to previously issued financial statementssimilar to those generally applicable to reporting an accounting changeretrospectively. Therefore, the reporting of a correction of an error byrestating previously issued financial statements is also addressed by SFAS 154.SFAS 154 is required to be adopted in fiscal years beginning afterDecember 15, 2005. The Company does not believe that adoption of thisstandard will have an impact on its consolidated financial statements.

 

In August 2005, the FASBissued FSP FAS 123-1, “Classification and Measurement of Freestanding FinancialInstruments Originally Issued in Exchange for Employee Services under FASBStatement No. 123R.” In this FSP, the FASB decided to defer the requirements inFASB Statement No. 123 (Revised 2004), *Share-BasedPayment*, that make a freestanding financial instrument subject tothe recognition and measurement requirements of other GAAP when the rightsconveyed by the instrument are no longer dependent on the holder being an employee.The guidance in this FSP should be applied upon initial adoption of Statement123R. The Company is evaluating the requirements of SFAS 123R. The Company hasnot yet determined the method of adoption or the affect of adopting SFAS No.123R, and the Company has not determined whether the adoption will result inamounts that are similar to the current pro forma disclosures under SFAS No.123 and 148.

 

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**NATIONAL R.V. HOLDINGS, INC.**

**PART I, ITEM 3 - Quantitativeand Qualitative Disclosures about Market Risk**

 

The Company has nosignificant financial instruments. The Company does not have any significantforeign currency exposure because it does not transact business in foreigncurrencies. However, the Company is exposed to interest rate changes relatedprimarily to cash borrowings on the Company’s credit facility. The weightedaverage interest rate for the borrowings on the credit facility during thenine-month period ended September 30, 2005 was 6.56%. For every 0.25% increasein interest rates, the Company would expect a quarterly increase in interestexpense of approximately $0.6 thousand for each $1.0 million borrowed.

 

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**NATIONALR.V. HOLDINGS, INC.**

**PART I, ITEM 4 – CONTROLSAND PROCEDURES**

 

**DisclosureControls and Procedures**

 

The Company maintainsdisclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in the Company’s reports under the Securities ExchangeAct of 1934, as amended (the “Exchange Act”), is recorded, processed,summarized and reported within the time periods specified in the SEC’srules and forms, and that such information is accumulated and communicatedto management, including the Company’s Chief Executive Officer (“CEO”) andChief Financial Officer (“CFO”), as appropriate, to allow timely decisionsregarding required disclosure. In designing and evaluating the disclosurecontrols and procedures, management recognized that any controls and procedures,no matter how well designed and operated, can provide only reasonable assuranceof achieving the desired control objectives, as the Company’s are designed todo, and management necessarily was required to apply its judgment in evaluatingthe cost-benefit relationship of possible controls and procedures.

 

In connection with thepreparation of this Quarterly Report on Form 10-Q, as of September 30,2005, an evaluation was performed under the supervision and with theparticipation of the Company’s management, including the CEO and CFO, of theeffectiveness of the design and operation of the Company’s disclosure controlsand procedures (as defined in Rule 13a-15(e) under the Exchange Act).In light of the material weaknesses referenced below which the Company firstidentified in connection with the assessment required by Section 404 ofthe Sarbanes-Oxley Act of 2002 and disclosed in its Form 10-K for the yearended December 31, 2004 and which continued to exist as of the end of theperiod covered by this report, the Company’s CEO and CFO concluded that, as ofthe end of the period covered by this report, the disclosure controls andprocedures were not effective at a reasonable assurance level as of September30, 2005.

 

A material weakness is acontrol deficiency, or a combination of control deficiencies, that results inmore than a remote likelihood that a material misstatement of the annual orinterim financial statements will not be prevented or detected. We identifiedthe following material weaknesses in the Company’s internal control overfinancial reporting:

 

*1.**                          Insufficientpersonnel resources and technical expertise within its accounting function.*The Company did not maintain effective controls over the financial reportingprocess at its NRV division and at corporate because of insufficient personnelresources and technical expertise within the accounting function. This materialweakness contributed to the following individual material weaknesses:  (a) errors in the preparation and reviewof schedules and reconciliations supporting certain general ledger accountbalances. As a result, errors were not detected in certain accrued liabilityaccounts, including sales and marketing, warranty, legal and workers’compensation, and the related income statement accounts, including cost ofgoods sold, selling and general and administrative expenses at the NRVdivision; (b) inadequate financial statement disclosures, primarilyrelated to the sale of a division and capital leases were not identified by thecorporate accounting staff; and (c) accounting cutoff errors primarilyrelated to accrued marketing expenses and an inability to properly and timelyaccount for capital leases entered into during the year were not identified atthe NRV division. This control deficiency resulted in audit adjustments to the2004 annual consolidated financial statements affecting accrued liabilities,property, plant and equipment, and the related income statement accounts,primarily cost of goods sold, selling, general and administrative, amortizationand interest. Insufficient personnel resources and technical expertise alsocontributed to the material weaknesses discussed in 2, 3, 4 and 5 below.Additionally, these control deficiencies could result in misstatements in theaforementioned accounts that would result in a material misstatement to theannual or interim consolidated financial statements that would not be preventedor detected.

 

*2.**                          RevenueRecognition*– The Company did not maintain effective controls over thetiming of the revenue recognition related to the sale of certain motorhomes atits NRV division. Specifically, under a deferred payment arrangement theCompany held the manufacturer’s certificate of origin as security for payment.This control deficiency resulted in the restatement of the Company’s thirdquarter 2004 consolidated financial statements to correct the timing of revenuerecognition. This control deficiency also resulted in audit adjustments to the2004 annual consolidated financial statements. Additionally, this controldeficiency could result in a misstatement of revenue and deferred revenue thatwould result in a material misstatement to the annual or interim consolidatedfinancial statements that would not be prevented or detected.

 

*3.*                          *Accounting for Sales Incentives –* The Company did notmaintain effective controls over the accounting for sales incentives.Specifically, certain sales incentive programs which are paid directly to thedealer or dealer sales representatives were improperly classified as sellingexpenses and should have been classified as a reduction of revenue. Thiscontrol deficiency resulted in the restatement of the Company’s 2003 and 2002consolidated financial statements. This control deficiency also resulted inaudit adjustments to the 2004 annual consolidated financial statements.Additionally, this control deficiency could result in a misstatement of revenueand selling expenses that would result in a material misstatement to the annualor interim consolidated financial statements that would not be prevented ordetected.

 

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*4.**                          Accountingfor Income Taxes –*The Company did not maintain effective controls over thedetermination and reporting of the provision for income taxes and related deferredincome tax balances. Specifically, the Company did not maintain effectivecontrols to review and monitor the accuracy of the valuation allowance as wellas other components of the income tax provision calculations and relateddeferred income taxes. This control deficiency resulted in an audit adjustmentto the fourth quarter 2004 annual consolidated financial statements.Additionally, this control deficiency could result in a misstatement of theincome tax provision or related deferred income tax balances that would resultin a material misstatement to the annual or interim consolidated financialstatements that would not be prevented or detected.

 

 

*5.**                          Physicalinventory process* – The Company did not maintain effective controls overthe accuracy of the physical inventory process at its NRV division.Specifically, the NRV division did not have controls to ensure all of theindividuals involved in the physical inventory count were properly trained andsupervised and that discrepancies between quantities counted and the accountingrecords were properly investigated. Further, the NRV division did not havecontrols to ensure the accounting records were adjusted to reflect the actualquantities counted during the physical inventory process. This control deficiencyresulted in an audit adjustment to the fourth quarter 2004 annual consolidatedfinancial statements. Additionally, this control deficiency could result in amisstatement of inventory and cost of goods sold that would result in amaterial misstatement to the annual or interim consolidated financialstatements that would not be prevented of detected.

 

*6.**                          Unrestrictedaccess to programs and data* – The Company did not maintain effectivecontrols over access to certain financial application programs and data at itsNRV division. Specifically, there were instances in which informationtechnology personnel and users with accounting and reporting responsibilitieshad access to financial accounting application programs and data that wasincompatible with their functional business requirements. Further, theactivities of these individuals were not subject to independent monitoring.These control deficiencies applied to certain systems and processes includingthe financial statement preparation, human resources, payroll, purchasing,receiving and revenue and billing. These control deficiencies did not result inan adjustment to the 2004 interim or annual consolidated financial statements.However, these control deficiencies could result in a misstatement to financialstatement accounts that would result in a material misstatement to the annualor interim consolidated financial statements that would not be prevented ordetected.

 

#### **Remediation of Material Weaknesses**

 

During fiscal year 2005,management has taken a number of steps that it believes will impact theeffectiveness of our internal control over our financial reporting includingthe following:

 

**1.****              *Insufficientpersonnel resources and technical expertise within its accounting function*

 

Management has assessed the organization of its accounting personneland the technical expertise within the accounting function. As a result, theCompany has established an accounting function at the parent company level. TheNRV divisional controller was promoted to Corporate Controller and will beresponsible for setting and establishing accounting policies for the Companyand its two divisions in accordance with accounting principles generallyaccepted in the United States of America (“GAAP”) and guidelines required bythe Securities and Exchange Commission (“SEC”). To assist the CorporateController, the Company has also promoted an individual to a newly createdposition of Manager of Financial Reporting. In addition, the Company hassubscribed to an on-line research tool to assist this group in staying abreastof new accounting pronouncements, proper accounting disclosure and alsoresearch technical accounting issues relating to the Company’s ongoing businesstransactions. At the NRV division, the Company has hired a new Controller andAccounting Manager.

 

2.               *Revenue Recognition*

 

Effective April 1,2005, the NRV division discontinued the deferred payment arrangement underwhich it held the manufacturer’s certificate of origin as security for payment.During the second quarter of 2005, the NRV division revised its quarterlyclosing procedures to strengthen its review of any new agreements or otherterms to determine whether the related transactions are accounted for in theproper period.

 

3.               *Accounting for Sales Incentives*

 

Effective May 31,2005, the Company changed its method of accounting for sales incentive programsthat are paid directly to the dealer sales representatives. These salesincentives are now classified as a reduction of revenue rather than as aselling expense. These sales incentives were restated for all years presentedin the fiscal year 2004 Form 10-K and have been properly classified in thefirst and second quarters of fiscal year 2005. As more fully discussed in 1above, the Company has increased its personnel and expertise within theaccounting function. In addition, the Company has revised its quarterly closingprocedures to strengthen its review of all existing sales incentive programs toensure they are accounted for properly.

 

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4.*               Accounting forIncome Taxes*

 

As more fully discussedin 1 above, the Company has recently increased its personnel and technicalexpertise within the accounting function. In addition, the Company revised itsquarterly closing procedures to strengthen its review of the income taxprovision to ensure the accuracy of the components of the income tax provisionand related deferred income taxes.

 

5*.**               Physicalinventory process*

 

Beginning with the firstquarter of 2005, management increased its training of all personnel involved inthe physical inventory process at the NRV division, particularly thoseindividuals performing the data entry function. Additionally, the physicalinventory report was revised such that any inventory item, which does notinclude a corresponding item number, will result in an exception-requiringfollow-up by management. In addition, the NRV division has implemented enhancedreview procedures by senior management of the reconciliation process betweenthe quantities obtained from the physical inventory tags and the quantitiesobtained from the updated perpetual inventory report.

 

6.               *Unrestricted access to programs and data*

 

TheNRV division has corrected access rights for known instances in whichinformation technology personnel and users with accounting and reportingresponsibilities had access to financial accounting applications programs anddata that was incompatible with their functional business requirements. The NRVdivision is also in the process of refining and developing ongoing processes toensure that proper access rights are granted, reviewed and maintained in atimely manner.

 

The Company believes thatit will be able to improve its disclosure controls and procedures and remedythe material weaknesses and additional control deficiencies identified as partof its assessment process. Notwithstanding the Company’s remediation efforts,because of the inherent limitations in a cost-effective control system,misstatements due to error or fraud may occur and not be detected.

 

#### **Changes in Internal Control over Financial Reporting**

 

Except as disclosedabove, there have been no changes in the Company’s internal control overfinancial reporting during the most recently completed fiscal quarter that hasmaterially affected, or is reasonably likely to materially affect, the Company’sinternal control over financial reporting.

 

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**NATIONAL R.V. HOLDINGS, INC.**

**PART II - OTHER INFORMATION**

 

**ITEM 6.****EXHIBITS**

 

A. Exhibits

 
| 10.1   | Credit Agreement, dated as of August 12, 2005  between the Company, NRV, CCI and UPS Capital Corporation and Wells Fargo  Bank, as lenders.          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                 |
| 10.2   | Loan Modification Agreement, dated as October 4,  2005, between the Company, NRV, CCI and UPS Capital Corporation and Wells  Fargo Bank, as lenders. |
|   |                                                                                                                                                 |
| 31.1   | Certification of Chief Executive Officer pursuant to  Rule 13a-14(a)/15d-14(a) of the Exchange Act.                                        |
|   |                                                                                                                                                 |
| 31.2   | Certification of Chief Financial Officer pursuant to  Rule 13a-14(a)/15d-14(a) of the Exchange Act.                                        |
|   |                                                                                                                                                 |
| 32.1   | Certification pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                  |

 

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**SIGNATURE**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
| ** **              | **NATIONAL  R.V. HOLDINGS, INC.** |                             |
|-------------------------|-----------------------------------|----------------------------------|
|                    | (Registrant)                      |                             |
|                    |                              |                             |
|                    |                              |                             |
| Date: November  4, 2005 | By                                | /s/ THOMAS  J. MARTINI, CPA |   |
|                    |                              |                             |
|                    | Thomas J.  Martini                |
|                    | Chief Financial  Officer          |
|                    | (Principal  Accounting and        |
|                    | Financial Officer)                |
|                         |                                   |                                  |  |  |

 

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