<PAGE>


                          SECURITIES AND EXCHANGE COMMISSION
                                           
                                WASHINGTON, D.C. 20549
                                           

                                      FORM 10-Q
                                           
[ X ]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the period ended:  September 27, 1997
                       ------------------
                                      or
                                           
[   ]    Transition Report Pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934

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

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

                           MONACO COACH CORPORATION

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

                            91320 Industrial Way 
                            Coburg, Oregon 97408
                  (Address of principal executive offices)
                                           
     Registrant's telephone number, including area code (541) 686-8011 
                                           
    Indicate by check mark whether the registrant  (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and  (2) has been subject to 
such filing requirements for the past 90 days.

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

    The number of shares outstanding of common stock, $.01 par value, as of 
September 27, 1997:  5,493,523

<PAGE>

                               MONACO COACH CORPORATION

                                      FORM 10-Q

                                 SEPTEMBER 27, 1997 

                                       INDEX

                                                                     Page
PART I - FINANCIAL INFORMATION                                     Reference
----------------------------------------------------------------------------
   ITEM 1.  FINANCIAL STATEMENTS.

     Condensed Consolidated Balance Sheets as of                       4
       December 28, 1996 and September 27, 1997. 

     Condensed Consolidated Statements of Income                       5
       for the quarter ended September 28, 1996 and
       September 27, 1997 and for the nine months ended
       September 28, 1996 and September 27, 1997. 

     Condensed Consolidated Statements of Cash                         6
       Flows for the nine months ended September 28, 1996
       and September 27, 1997.

     Notes to Condensed Consolidated Financial Statements.           7 - 10

   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS.                  11 - 19

   ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT             19
              MARKET RISK. 


PART II - OTHER INFORMATION
---------------------------
   ITEM 1.  LEGAL PROCEEDINGS.                                         20

   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.                          20

   SIGNATURES                                                          21


                                                                             2
<PAGE>

                            PART I - FINANCIAL INFORMATION
                                           
                            ITEM 1.  FINANCIAL STATEMENTS


3
<PAGE>

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


<TABLE>
<CAPTION>
                                                          DECEMBER 28,    SEPTEMBER 27,
                                                              1996            1997
                                                          ------------    -------------
<S>                                                        <C>            <C>
ASSETS
Current assets:
  Trade receivables                                        $   14,891     $   29,848
  Inventories                                                  46,930         42,697
  Prepaid expenses                                              1,343            214
  Deferred tax assets                                           8,278          8,978
  Notes receivable                                              1,064          1,617
  Assets held for sale                                          1,383              0
                                                           ----------     ----------
     Total current assets                                      73,889         83,354

Notes receivable                                                  636          2,021
Debt issuance costs, net of accumulated amortization
  of $343 and $652, respectively                                1,760          1,463
Property, plant and equipment, net                             38,309         50,911
Goodwill, net of accumulated amortization of $2,084
  and $2,574, respectively                                     20,774         20,683

     Total assets                                          $  135,368     $  158,432
                                                           ----------     ----------
                                                           ----------     ----------

LIABILITIES

Current liabilities:
  Book overdraft                                           $    2,455     $    6,136
  Short-term borrowings                                         9,991          3,548
  Current portion of long-term note payable                     2,000          3,125
  Accounts payable                                             24,218         30,021
  Accrued expenses and other liabilities                       23,361         26,395
  Income taxes payable                                          7,362            736
                                                           ----------     ----------
     Total current liabilities                                 69,387         69,961

Deferred income                                                   200            200
Notes payable, less current portion                            16,500         14,000
Deferred tax liability                                          2,787          3,472
                                                           ----------     ----------
                                                               88,874         87,633
                                                           ----------     ----------

Redeemable convertible preferred stock                          2,687
                                                           ----------

Commitments and contingencies (Note 9)

STOCKHOLDERS' EQUITY

Common stock, $.01 par value; 20,000,000 shares
  authorized, 5,493,523 shares (4,430,467 shares
  at December 28, 1996) issued and outstanding                     44             55
Additional paid-in capital                                     25,430         44,100
Retained earnings                                              18,333         26,644
                                                           ----------     ----------
     Total stockholders' equity                                43,807         70,799
                                                           ----------     ----------
     Total liabilities and stockholders' equity            $  135,368     $  158,432
                                                           ----------     ----------
                                                           ----------     ----------
</TABLE>


See accompanying notes.


                                                                              4
<PAGE>

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


<TABLE>
<CAPTION>
                                                       QUARTER ENDED               NINE MONTHS ENDED
                                                 -------------------------     -------------------------
                                                   SEP 28,        SEP 27,        SEP 28,        SEP 27,
                                                    1996           1997           1996           1997
                                                 ----------     ----------     ----------     ----------
<S>                                              <C>            <C>            <C>            <C>
Net sales                                        $  102,065     $  105,796     $  270,758     $  320,799
Cost of sales                                        87,121         91,712        236,679        277,353
                                                 ----------     ----------     ----------    -----------
  Gross profit                                       14,944         14,084         34,079         43,446

Selling, general and administrative expenses         10,637          8,546         24,563         26,826
Management fees                                          18             18             54             54
Amortization of goodwill                                180            159            489            478
                                                 ----------     ----------     ----------    -----------
  Operating income                                    4,109          5,361          8,973         16,088

Other expense (income), net                             (96)           (40)          (145)          (118)
Interest expense                                        881            537          3,160          1,924
Gain on Sale of Dealership assets                                     (539)                         (539)
                                                 ----------     ----------     ----------    -----------
  Income before income taxes                          3,324          5,403          5,958         14,821

Provision for income taxes                            1,367          2,244          2,473          6,152
                                                 ----------     ----------     ----------    -----------
  Net income                                          1,957          3,159          3,485          8,669

Preferred stock dividends                               (39)                          (89)           (41)
Accretion of redeemable preferred stock                 (24)                          (57)          (317)
                                                 ----------     ----------     ----------    -----------
  Net income attributable to 
    common stock                                 $    1,894     $    3,159     $    3,339    $     8,311
                                                 ----------     ----------     ----------    -----------
                                                 ----------     ----------     ----------    -----------

Earnings per common share:
  Primary                                             $ .42          $ .56          $ .75         $ 1.69
  Fully diluted (see note 7)                          $ .42          $ .56          $ .75         $ 1.71

Weighted average common shares outstanding:
  Primary                                         4,477,423      5,593,174      4,471,894      4,923,571
  Fully diluted                                   4,708,443      5,593,631      4,650,574      5,084,020
</TABLE>


See accompanying notes.


                                                                             5
<PAGE>
                               MONACO COACH CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (UNAUDITED: DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                 -------------------------
                                                                   SEP 28,        SEP 27,
                                                                    1996           1997 
                                                                 ----------     ----------
<S>                                                              <C>            <C>
INCREASE (DECREASE) IN CASH:

Cash flows from operating activities:
  Net income                                                     $   3,485      $   8,669
  Adjustments to reconcile net income to net cash
   generated (used) by operating activities:
    Gain on sale of retail stores                                                    (539)
    Depreciation and amortization                                    2,249          2,556
    Deferred income taxes                                              225            (15)
    Changes in working capital accounts, net of effect
     of business acquisition and sale of retail stores:
      Trade receivables                                             (6,178)       (14,962)
      Inventories                                                   15,862          1,934
      Prepaid expenses                                                (967)         1,129
      Accounts payable                                                 865          5,803
      Accrued expenses and other current liabilities                 7,314          2,989
      Income taxes payable                                             425         (6,626)
                                                                 ---------      ---------
        Net cash provided by operating activities                   23,280            938
                                                                 ---------      ---------
Cash flows from investing activities:
  Additions to property, plant and equipment                        (1,920)       (14,312)
  Payment for business acquisition (see note 2)                    (24,728)
  Proceeds from sale of retail stores, collections on notes
   receivable, net of closing costs                                  9,866            288
                                                                 ---------      ---------
        Net cash used in investing activities                      (16,782)       (14,024)
                                                                 ---------      ---------
Cash flows from financing activities:
  Book overdraft                                                     5,330          3,681
  Payments on lines of credit, net                                  (8,633)          (241)
  Payments on subordinated note                                    (12,000)
  Advances (payments) on floor financing, net                       (1,834)        (4,650)
  Borrowings on long-term notes payable                             17,940
  Debt issuance costs                                                                 (10)
  Payments on long-term notes payable                               (7,375)        (1,375)
  Issuance of common stock                                              74         16,326
  Cost to issue shares of common stock                                               (645)
  
        Net cash (used in)/provided by financing activities         (6,498)        13,086
                                                                 ---------      ---------
Net increase in cash                                                     0              0
Cash at beginning of period                                              0              0
                                                                 ---------      ---------
Cash at end of period                                            $       0      $       0
                                                                 ---------      ---------
                                                                 ---------      ---------

SUPPLEMENTAL DISCLOSURE

Amount of capitalized interest                                   $     196      $     554
Conversion of preferred stock to common stock                                       3,000
</TABLE>


See accompanying notes.


                                                                             6
<PAGE>

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


1.  BASIS OF PRESENTATION

    The interim condensed consolidated financial statements have been 
    prepared by Monaco Coach Corporation (the "Company") without audit.  In 
    the opinion of management, the accompanying unaudited financial 
    statements contain all adjustments necessary, consisting only of normal 
    recurring adjustments, to present fairly the financial position of the 
    Company as of December 28, 1996 and September 27, 1997, and the results 
    of operations for the quarters and nine-month periods ended September 28, 
    1996 and September 27, 1997, and cash flows of the Company for the 
    nine-month periods ended September 28, 1996 and September 27, 1997.  The 
    condensed consolidated financial statements include the accounts of the 
    Company and its wholly-owned subsidiary, and all significant intercompany 
    accounts and transactions have been eliminated in consolidation.  The 
    balance sheet data as of December 28, 1996 was derived from audited 
    financial statements, but do not include all disclosures contained in the 
    Company's Annual Report to Stockholders. These interim condensed 
    consolidated financial statements should be read in conjunction with the 
    audited financial statements and notes thereto appearing in the Company's 
    Annual Report to Stockholders for the year ended December 28, 1996.

2.  HOLIDAY ACQUISITION

    On March 4, 1996, the Company acquired certain assets of the Holiday 
    Rambler LLC Recreational Vehicle Manufacturing Division ("Holiday 
    Rambler") and ten retail dealerships ("Holiday World") from an affiliate 
    of Harley-Davidson, Inc. ("Harley-Davidson").  The acquisition (the 
    "Holiday Acquisition") was accounted for as a purchase.

    The purchase price for Holiday Rambler and Holiday World was comprised of:

                                                                (IN THOUSANDS)
    Cash, including transaction costs of $2,131,
      net of $836 received from Harley-Davidson                  $    24,645
    Preferred stock                                                    2,599
    Subordinated debt                                                 12,000
                                                                 -----------
                                                                 $    39,244
                                                                 -----------
                                                                 -----------

    The purchase price was allocated to the assets acquired based on 
    estimated fair values at March 4, 1996, as follows:

                                                                (IN THOUSANDS)

        Receivables                                                $   9,536
        Inventories                                                   61,269
        Property and equipment                                        11,592
        Prepaids and other assets                                         86
        Assets held for sale                                           7,100
        Goodwill                                                       2,560
        Notes payable                                                (21,784)
        Accounts payable                                             (16,851)
        Accrued liabilities                                          (14,264)
                                                                   ---------
                                                                   $  39,244
                                                                   ---------
                                                                   ---------

    The allocation of the purchase price and the related goodwill was subject 
    to adjustment upon resolution of pre-Holiday Acquisition contingencies.  
    The effects of resolution of pre-Holiday Acquisition contingencies 
    occurring: (i) within one year of the acquisition date were reflected as 
    an adjustment of the allocation of the purchase price and of goodwill, 
    and (ii) after one year were recognized in the determination of net 
    income.


                                                                             7
<PAGE>

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

2.  Holiday Acquisition (CONTINUED)

    The ten acquired Holiday World retail store properties were classified as 
    "assets held for sale".  Seven of the stores were sold during 1996 at a 
    gain of $1.4 million, which has been reflected as an adjustment of 
    goodwill.  One store was sold during the first quarter of 1997 at a loss 
    of $399,000, which also has adjusted goodwill.  The remaining two stores 
    were sold for a gain of $539,000 in the third quarter which was 
    recognized in the determination of net income for the period.  The 
    Company's results of operations and cash flows include Holiday World 
    since March 4, 1996, as the operating activities of Holiday World are not 
    clearly distinguishable from other continuing operations.  Net sales of 
    Holiday World stores subsequent to the purchase and included in the nine 
    months ended September 28, 1996 and September 27, 1997 were $23.5 million 
    and $6.8 million, respectively.  

    The following unaudited pro forma information presents the consolidated 
    results as if the Holiday Acquisition had occurred at the beginning of 
    1996 and giving effect to the adjustments for the related interest on 
    financing the purchase price, goodwill and depreciation. The pro forma 
    information does not necessarily reflect actual results that would have 
    occurred nor is it necessarily indicative of future operating results.

                                                  (IN THOUSANDS, EXCEPT 
                                                    PER SHARE AMOUNTS)

                                                       NINE MONTHS 
                                                          ENDED
                                                      SEPTEMBER 28,
                                                          1996 
                                                      -------------
         Net sales                                    $    329,560
         Net loss                                            2,115
         Loss per common share                                0.47

3.  INVENTORIES

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

                                                        (IN THOUSANDS)
                                                 DECEMBER 28,   SEPTEMBER 27,
                                                    1996            1997
                                                 -----------    -------------
        Raw materials                            $    16,844     $    18,973
        Work-in-process                               17,592          19,509
        Finished units                                 3,998           4,215
        Holiday World retail inventory                 8,496
                                                 -----------     -----------
                                                 $    46,930     $    42,697
                                                 -----------     -----------
                                                 -----------     -----------


                                                                             8
<PAGE>

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

4.  GOODWILL

    Goodwill represents the excess of the cost of acquisition over the fair 
    value of net assets acquired.  The goodwill arising from the acquisition 
    of the assets and operations of the Company's Predecessor in March 1993 
    is being amortized on a straight-line basis over 40 years and, at 
    September 27, 1997, the unamortized amount was $18.3 million.  The 
    goodwill arising from the Holiday Acquisition is being amortized on a 
    straight-line basis over 20 years; at September 27, 1997 the unamortized 
    amount was $2.4 million.  Management assesses whether there has been 
    permanent impairment in the value of goodwill and the amount of such 
    impairment by comparing anticipated undiscounted future cash flows from 
    operating activities with the carrying value of the goodwill.  The 
    factors considered by management in performing this assessment include 
    current operating results, trends and prospects, as well as the effects 
    of obsolescence, demand, competition and other economic factors.

5.  SHORT-TERM BORROWINGS

    In connection with the Holiday Acquisition, the Company replaced its bank 
    line of credit with new credit facilities consisting, in part, of a 
    revolving line of credit of up to $45.0 million, with interest payable 
    monthly at varying rates based on the Company's interest coverage ratio 
    and interest payable monthly on the unused available portion of the line 
    at 0.375%.  Outstanding borrowings under the line of credit were $3.5 
    million at September 27, 1997.  The revolving line of credit expires 
    March 1, 2001 and is collateralized by all the assets of the Company.  

6.  LONG-TERM BORROWINGS

    The Company has a term loan of $17.1 million outstanding as of September 
    27, 1997 which was obtained in connection with the Holiday Acquisition.  
    The term loan bears interest at various rates based on the Company's 
    interest coverage ratio, and expires on March 1, 2001. The term loan 
    requires monthly interest payments, quarterly principal payments and 
    certain mandatory prepayments, and is collateralized by all the assets of 
    the Company.


                                                                             9
<PAGE>

                            MONACO COACH CORPORATION
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                (UNAUDITED)
7.  EARNINGS PER COMMON SHARE

    Earnings per share is based on the weighted average number of shares 
    outstanding during the period after consideration of the dilutive effect 
    of stock options and convertible preferred stock.  Common shares issued 
    and options granted by the Company are considered outstanding for the 
    period presented, using the treasury stock method. The weighted average 
    number of common shares used in the computation of earnings per common 
    share are as follows:

<TABLE>
<CAPTION>
                                                                                   NINE MONTHS ENDED
                                                            ----------------------------------------------------------------
                                                                    SEPTEMBER 28,                     SEPTEMBER 27,
                                                                        1996                              1997
                                                            ------------------------------    ------------------------------
                                                              Primary      Fully Diluted        Primary      Fully Diluted
                                                            -----------  -----------------    -----------  -----------------
        <S>                                                  <C>             <C>               <C>             <C>
        Issued and outstanding (weighted average)            4,419,775       4,419,775         4,831,088       4,831,088
        Stock options                                           52,119          55,020            92,483         108,352
        Convertible preferred stock                                            175,779                           144,580
                                                             ---------       ---------         ---------       ---------
                                                             4,471,894       4,650,574         4,923,571       5,084,020
                                                             ---------       ---------         ---------       ---------
                                                             ---------       ---------         ---------       ---------
</TABLE>

    Fully diluted earnings per share for the nine months ended September, 
    1997 were greater than primary earnings per share by $.02.  The 
    antidilutive effect was caused principally by the conversion of all 
    shares of preferred stock to shares of common stock during the second 
    quarter, which required all remaining accretion related to preferred 
    stock shares to be charged against retained earnings.

8.  NEW ACCOUNTING PRONOUNCEMENTS

    In February 1997, the Financial Accounting Standards Board (FASB) issued 
    Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings Per 
    Share", which is required to be adopted for periods ending after December 
    15, 1997.  The following table presents unaudited pro forma earnings per 
    share, calculated in accordance with the provisions of this new standard:

<TABLE>
<CAPTION>
                               QUARTER ENDED               NINE MONTHS ENDED
                        ---------------------------------------------------------
                        SEP 28, 1996   SEP 27, 1997   SEP 28, 1996   SEP 27, 1997
                        ------------   ------------   ------------   ------------
              <S>           <C>            <C>            <C>           <C>
              Basic         $ .43          $ .58          $ .76         $ 1.72
              Diluted       $ .42          $ .56          $ .75         $ 1.71
</TABLE>

    In June 1997, the FASB issued SFAS No. 130, "Reporting of Comprehensive 
    Income", which establishes standards for reporting and display of 
    comprehensive income and its components of revenues, expenses, gains, and 
    losses.

    In June of 1997, the FASB also issued SFAS No. 131, "Disclosures about 
    Segments of an Enterprise and Related Information".  This statement 
    establishes standards for reporting information about operating segments.

    Both SFAS No. 130, "Reporting of Comprehensive Income", and SFAS No. 131, 
    "Disclosures about Segments of an Enterprise and Related Information", 
    are effective for periods beginning after December 15, 1997.  The Company 
    will be adopting the requirements of these statements in the first 
    quarter of 1998.

                                                                            10
<PAGE>

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

9.  COMMITMENTS AND CONTINGENCIES

    REPURCHASE AGREEMENTS

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

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

    LITIGATION

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

    OTHER COMMITMENTS

    The Company recently started construction of a new paint facility and 
    finish area adjacent to the new Wakarusa facility.  It is expected that 
    the new paint facility will cost between $7 million to $8 million and 
    will be operational by the end of the first quarter of 1998.


10. STOCK OFFERING

    On June 17, 1997, the Company completed a secondary public offering of 
    800,000 new shares of its common stock.  In connection with the offering, 
    65,217 shares of preferred stock were converted into 230,767 shares of 
    common stock.  The net proceeds of $15.4 million were used to reduce 
    amounts outstanding under short-term borrowings with the remainder being 
    added to working capital.


                                                                            11
<PAGE>

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


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

GENERAL

Monaco Coach Corporation is a leading manufacturer of premium Class A motor 
coaches and towable recreational vehicles ("towables").  The Company's 
product line currently consists of ten models of motor coaches and eight 
models of fifth wheel trailers and travel trailers under the "Monaco", 
"Holiday Rambler", and "McKenzie Towables" brand names.  The Company's 
products range in suggested retail price from $60,000 to $750,000 for motor 
coaches and from $15,000 to $70,000 for towables.

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

The acquired operations were incorporated into the Company's consolidated 
financial statements from March 4, 1996.  Therefore, the Company's 
consolidated financial statements for the first nine months of 1996 include 
only seven months of Holiday Rambler operations while the first nine months 
of 1997 include a full nine months of Holiday Rambler results.  Both 1996 and 
1997 results contain expenses related to the Holiday Acquisition, primarily 
interest expense, and the amortization of debt issuance costs and of Holiday 
Acquisition goodwill.

RESULTS OF OPERATIONS

QUARTER ENDED SEPTEMBER 27, 1997 COMPARED TO QUARTER ENDED SEPTEMBER 28, 1996

Net sales for the third quarter of 1997 were up 3.7 % to $105.8 million 
compared to $102.1 million in the same period in 1996.  1996 sales included 
$6.9 million of used or non-Holiday Rambler product sales at the retail 
stores versus only $2.7 million of such sales in 1997 due to the disposition 
of all 10 Holiday World retail stores acquired in the Holiday Acquisition 
over the last twelve months.  Excluding the sales of the previously-owned or 
non-Holiday Rambler products at the retail dealerships, net sales in the 
third quarter of 1997 would have increased by 8.3% from the third quarter of 
1996.  The Company's overall unit sales were up 2.7% in the third quarter of 
1997 (excluding 38 units in 1997 and 179 units in 1996 that were sold by the 
Company's Holiday World retail dealerships that were either previously-owned 
or non-Holiday Rambler units).  On a wholesale basis sales rose 8.9%, with 
motorized products up 8.8% and towable products up 9.9%.  The Company's 
average unit selling price increased to $77,900 in the third quarter of 1997 
versus $74,100 in the third quarter of 1996 primarily due to the strong 
performance of the Company's High-Line Monaco brand products.  


                                                                           12
<PAGE>

Gross profit for the third quarter of 1997 decreased to $14.1 million, down 
from $14.9 million in the same period in 1996 and gross margin decreased to 
13.3% in 1997 from 14.6% in 1996.  Gross margin in the third quarter of 1997 
was negatively impacted by discounting and write-downs of inventory prior to, 
and at the sale of,  the two remaining Holiday World retail dealerships.  
Factoring out the impact of the stores, gross margin would have been 13.7%.  
Gross margin in the third quarter was also dampened slightly by the 
completion of model changes in all of the plants and the move of the Indiana 
Monaco motor coach line from Elkhart, Indiana to the new motorized facility 
in Wakarusa, Indiana.  The Company's overall gross margin may fluctuate in 
future periods if the mix of products shifts from higher to lower gross 
margin units or if the Company encounters unexpected manufacturing 
difficulties or competitive pressures.

Selling, general, and administrative expenses decreased by $2.1 million to 
$8.5 million in the third quarter of 1997 compared to the same period in 1996 
and decreased as a percentage of sales from 10.4% in the third quarter of 
1996 to 8.1% in the third quarter of 1997.  The relatively large decrease in 
selling, general, and administrative expenses in dollars and as a percentage 
of sales was primarily due to having only two of the original ten Holiday 
World stores in the operating expenses of the third quarter of 1997.  The 
Holiday World stores spent more on selling, general, and administrative 
expenses, on a percentage of sales basis, than the Company's manufacturing 
operations in both periods. Additionally, the Company has reduced and plans 
to continue lowering the level of spending by the Holiday Rambler division 
for selling, general, and administrative expenses as a percentage of sales, 
which has historically been higher than for the Company's Monaco Coach 
operations.  However, the Company's overall selling, general, and 
administrative expenses as a percentage of sales is expected to remain higher 
than the level prior to the Holiday Acquisition.

Amortization of goodwill was $159,000 in the third quarter of 1997 compared 
to $180,000 in the same period in 1996.  The reduction in amortization of 
goodwill from year to year reflects a reduction in  the amount of goodwill 
arising from the Holiday Acquisition due to net gains of $1.0 million on the 
first eight Holiday World store dispositions.  At September 27, 1997, 
goodwill, net of accumulated amortization was $20.7 million.

Operating income was $5.4 million in the third quarter of 1997, a $1.3 
million increase over the $4.1 million in the third quarter of 1996.  The 
substantial decrease in selling, general, and administrative expenses as a 
percentage of sales outweighed the decline in gross margin resulting in an 
improvement in operating margin from 4.0% in  the third quarter of 1996 to 
5.1% in the comparable 1997 period.

Net interest expense was $537,000 in the third quarter of 1997 versus 
$881,000 in the same period of 1996.  The Company capitalized $167,000 of 
interest expense in the third quarter of 1997 relating to the construction in 
progress on the new paint facility in Wakarusa, Indiana and capitalized 
$60,000 of interest in the third quarter of 1996 stemming from the 
acquisition of the Holiday World retail stores held for resale.  The 
Company's interest expense included $32,000 in the third quarter of 1997 and 
$214,000 in the third quarter of 1996 relating to floor plan financing at the 
retail stores.

The Company sold its two remaining Holiday World retail dealerships during 
the third quarter of 1997 and had a pre-tax gain on the sale of the buildings 
and fixed assets from the stores of $539,000 which is reflected as a separate 
line item above income before income taxes on the Company's Condensed 
Consolidated Statements of Income.  This equates to a $315,000 after-tax 
gain, or 5.6 cents per share.

The Company reported a provision for income taxes of $2.2 million, or an 
effective tax rate of 41.5%, in the third quarter of 1997, compared to $1.4 
million, or an effective tax rate of 41.1%, for the comparable 1996 period.

Net income increased by $1.2 million from $2.0 million in the third quarter 
of 1996 to $3.2 million in the same period of 1997 due to the increase in 
operating margin, the reduction in interest expense and the gain on the sale 
of the two remaining Holiday World retail dealerships.


13
<PAGE>

NINE MONTHS ENDED SEPTEMBER 27, 1997 COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 28, 1996

Net sales increased $50.0 million, or 18.5%, for the first nine months of 
1997 compared to the year earlier period.  The increase was primarily due to 
the inclusion of the sales of Holiday Rambler for a full nine months in 1997 
versus seven months in 1996.  Overall unit sales increased to 4,270 units in 
the first nine months of 1997 compared to 3,399 in the first nine months of 
1996 (excluding 211 units in 1997 and 763 units in 1996 that were sold at the 
Holiday World retail dealerships that were either previously-owned or not 
Holiday Rambler units).  On a pro forma basis, assuming the Company had 
acquired Holiday Rambler at the beginning of 1996, wholesale sales for the 
first nine months of 1997 would have been up 8.5%, with motorized products up 
7.8%, and towables up 12.3% over the comparable 1996 period.  The Company's 
overall average unit selling price was $74,500 in the first nine months of 
1997 versus $75,500 in the year earlier period.

Gross profit for the nine month period ended September 27, 1997 was up $9.4 
million to $43.4 million and gross margin increased to 13.5% from 12.6% in 
the comparable 1996 period.  Gross margin for the first nine months of 1996 
was dampened by the expensing of a $1.75 million inventory write-up to fair 
value arising from the Holiday Acquisition.  Without this charge, gross 
margin in the first nine months of 1996 would have been 13.2%.

Selling, general, and administrative expenses increased $2.3 million from 
$24.6 million in the first nine months of 1996 to $26.9 million in the first 
nine months of 1997 and decreased as a percentage of sales from 9.1% in the 
first nine months of 1996 to 8.4% in the comparable 1997 period.  The 
decrease in selling, general, and administrative expenses as a percentage of 
sales was due to a combination of the sale of Holiday World retail 
dealerships, which spent more on selling, general, and administrative 
expenses as a percentage of sales than the manufacturing Company's operations 
and the reduction in selling, general, and administrative expenses as a 
percentage of sales for the Holiday Rambler division which have historically 
been higher than for the Company's Monaco Coach operations.

Amortization of goodwill was $$478,000 for the first nine months of 1997 
compared to $489,000 for the comparable 1996 period.

Operating income was $16.1 million for the first nine months of 1997, a $7.1 
million increase over the year earlier period.  The Company's higher gross 
margin combined with a reduction in selling, general, and administrative 
expense as a percentage of sales, resulted in an improvement in operating 
margin from 3.3% in the first nine months of 1996 to 5.0% in the comparable 
1997 period. Results for the first nine months of 1996 included a $1.75 
million expense related to an inventory write-up to fair value as a result of 
the Holiday Acquisition.  Excluding that charge, operating margin for the 
first nine months of 1996 would have been 4.0% of sales.

Net interest expense declined $1.3 million in the first nine months of 1997 
to $1.9 million from $3.2 million in the comparable 1996 period.  The Company 
capitalized $554,000 of interest expense in the first nine months of 1997 as 
a result of the construction in progress for the new motorized manufacturing 
facility as well as the new paint facility in Wakarusa, Indiana and $196,000 
of interest in the comparable 1996 period related to the Holiday World retail 
dealerships held for resale.  The Company's interest expense in the nine 
month period included $281,000 in 1997 and $837,000  in 1996 related to floor 
plan financing at the Holiday World retail dealerships.

The Company reported a provision for income taxes of $6.2 million, or an 
effective tax rate of 41.5%, for the first nine months of 1997 versus $2.5 
million, or 41.5%, in the comparable 1996 period.

Net income increased to $8.7 million in the first nine months of 1997 from 
$3.5 million in the first nine months of 1997, primarily due to the increase 
in sales combined with an improvement in operating margin and a decrease in 
net interest expense.


14
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity are internally generated cash from 
operations and available borrowings under its credit facilities.  During the 
first nine months of 1997, the Company generated net cash of $938,000 from 
operating activities. Net income and non-cash expenses, such as depreciation 
and amortization, net of the non-operating gain from the sale of the retail 
stores generated $10.7 million.  Increases in accounts payable and accrued 
expenses and decreases in inventories and prepaid expenses generated another 
$11.9 million, but the combination was offset by reductions in income taxes 
payable and an abnormally large increase in trade receivables arising 
primarily from heavy shipments near the end of the quarter.  The increase in 
trade receivables was temporary and the Company's trade receivable balance 
has since returned to a more normal level.

The Company has credit facilities consisting of a term loan of $20.0 million 
(the "Term Loan") and a revolving line of credit of up to $45.0 million (the 
"Revolving Loans").  The Term Loan bears interest at various rates based upon 
the prime lending rate announced from time to time by Banker's Trust Company 
(the "Prime Rate") or LIBOR and is due and payable in full on March 1, 2001. 
The Term Loan requires monthly interest payments, quarterly principal 
payments and certain mandatory prepayments.  The mandatory prepayments 
consist of: (i) an annual payment on April 30 of each year, beginning April 
30, 1997 of seventy-five percent (75%) of the Company's defined excess cash 
flow for the then most recently ended fiscal year (no defined excess cash 
flow existed for the year ended December 28, 1996); and (ii) a payment, 
within two days of the sale of any Holiday World dealership, of the net cash 
proceeds received by the Company from such sale.  While the Company has now 
sold all of the Holiday World dealerships, as of September 27, 1997, the 
Company was still holding $3.6 million in notes receivable relating to the 
sales of the stores which will fall under the (ii) provision when payment is 
received.  At September 27, 1997, the balance on the Term Loan was $17.1 
million and the effective interest rate on the Term Loan was 7.32%.  At the 
election of the Company, the Revolving Loans bear interest at variable 
interest rates based on the Prime Rate or LIBOR.  The Revolving Loans are due 
and payable in full on March 1, 2001, and require monthly interest payments.  
As of September 27, 1997 $3.5 million was outstanding under the Revolving 
Loans, with an interest rate of 8.5%.  The Term Loan and the Revolving Loans 
are collateralized by a security interest in all of the assets of the Company 
and include various restrictions and financial covenants.  As a result of the 
sale of the two remaining Holiday World retail dealerships, the Company no 
longer has any loan outstanding to finance retail inventory.

The Company's principal working capital requirements are for purchases of 
inventory and, to a lesser extent, financing of trade receivables.  The 
Company's dealers typically finance product purchases under wholesale floor 
plan arrangements with third parties as described below.  At September 27, 
1997, the Company had working capital of approximately $13.4 million, an 
increase of approximately $8.9 million from working capital of $4.5 million 
at December 28, 1996.  The Company completed a public offering of a total of 
1,955,000 shares of its Common Stock in June 1997 at $21.25 per share, 
including 800,000 shares sold by the Company.  The approximately $15.4 
million of net proceeds to the Company from this offering were used to pay 
down the outstanding balance under its Revolving Loans with the remainder 
being added to working capital. The Company has been using short-term credit 
facilities and cash flow to finance its construction of facilities and other 
capital expenditures.  The Company primarily used long-term debt and 
redeemable preferred stock to finance the Holiday Acquisition.

The Company's capital expenditures were $14.3 million in the first nine 
months of 1997, primarily for the Wakarusa, Indiana manufacturing facility.  
This facility approximately doubled the Company's production capacity of 
motor coaches.  The total cost of the Wakarusa motorized facility, including 
the main plant and offices, was $15.6 million and the main plant began 
producing Holiday Rambler motorized products at the end of the second quarter 
of 1997.  During the third quarter, the Company started running a second line 
in this facility, moving its Indiana motorized production of Monaco brand 
products from Elkhart, Indiana into the new Wakarusa motorized facility.  The 
Company recently started construction of a new paint facility and finish area 
adjacent to the new Wakarusa facility.  It is expected that the new paint 
facility will cost between $7 million to $8 million and will be operational 
by the end of the first quarter of 1998.

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<PAGE>

The Company believes that cash flow from operations and funds available under 
its credit facilities will be sufficient to meet the Company's liquidity 
requirements for the next twelve months.  The Company anticipates that 
capital expenditures for all of 1997 will total approximately $20.0 million, 
of which an estimated $4 million will be used to start construction of the 
paint facility and up to $2.0 million will be used to upgrade the Company's 
management information systems, including software to handle the "Year 2000" 
issue.  The Company may require additional equity or debt financing to 
address working capital and facilities expansion needs, particularly if the 
Company further expands its operations to address greater than anticipated 
growth in the market for its products.  The Company may also from time to 
time seek to acquire businesses that would complement the Company's current 
business, and any such acquisition could require additional financing.  There 
can be no assurance that additional financing will be available if required 
or on terms deemed favorable by the Company.

As is typical in the recreational vehicle industry, many of the Company's 
retail dealers, utilize wholesale floor plan financing arrangements with 
third-party lending institutions to finance their purchases of the Company's 
products. Under the terms of these floor plan arrangements, institutional 
lenders customarily require the recreational vehicle manufacturer to agree to 
repurchase any unsold units if the dealer fails to meet its commitments to 
the lender, subject to certain conditions.  The Company has agreements with 
several institutional lenders under which the Company currently has 
repurchase obligations.  The Company's contingent obligations under these 
repurchase agreements are reduced by the proceeds received upon the sale of 
any repurchased units.  The Company's obligations under these repurchase 
agreements vary from period to period.  At September 27, 1997, approximately 
$117.9  million of products sold by the Company to independent dealers were 
subject to potential repurchase under existing floor plan financing 
agreements with approximately 10% concentrated with one dealer.  If the 
Company were obligated to repurchase a significant number of units under any 
repurchase agreement, its business, operating results and financial condition 
could be adversely affected.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

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

CYCLICALITY.  The recreational vehicle industry has been characterized by 
cycles of growth and contraction in consumer demand, reflecting prevailing 
economic, demographic and political conditions that affect disposable income 
for leisure-time activities.  Unit sales of recreational vehicles (excluding 
conversion vehicles) reached a peak of approximately 259,000 units in 1994 
and declined to approximately 247,000 units in 1996.  Although unit sales of 
High-Line Class A motor coaches have increased in each year since 1989, there 
can be no assurance that this trend will continue.  Furthermore, as a result 
of the Holiday Acquisition, the Company offers a much broader range of 
recreational vehicle products and will likely be more susceptible to 
recreational vehicle industry cyclicality than in the past.  Factors 
affecting cyclicality in the recreational vehicle industry include fuel 
availability and fuel prices, prevailing interest rates, the level of 
discretionary spending, the availability of credit and overall consumer 


16
<PAGE>

confidence.  In particular, interest rates rose significantly in 1994 and 
while recent interest rates have not had a material adverse effect on the 
Company's business, no assurances can be given that an increase in interest 
rates would not have a material adverse effect on the Company's business, 
results of operations and financial condition.

MANAGEMENT OF GROWTH.  As a result of the Holiday Acquisition, the Company 
has experienced significant growth in the number of its employees, in the 
size of its manufacturing operations and in the scope of its business.  This 
growth has resulted in the addition of new management personnel, increased 
responsibilities for existing management personnel, and has placed added 
pressure on the Company's operating, financial and management information 
systems.  While management believes it has substantially completed the 
integration of Holiday Rambler's operations and personnel into the Company, 
due to the large size of the Holiday Acquisition relative to the Company, 
there can be no assurance that the Company will not encounter problems in the 
future associated with the integration of Holiday Rambler's operations and 
personnel or that the anticipated benefits of the Holiday Acquisition will be 
fully realized.  In addition, there can be no assurance that the Company will 
adequately support and manage the growth of its business and the failure to 
do so could have a material adverse effect on the Company's business, results 
of operations and financial condition.

MANUFACTURING EXPANSION.  The Company significantly increased its 
manufacturing capacity in 1995 by expanding its Elkhart,  Indiana facility 
and opening its Coburg, Oregon facility.  In order to meet market demand and 
realize manufacturing efficiencies, the Company has recently completed 
construction of a new motor coach manufacturing facility in Wakarusa, 
Indiana, relocated its Elkhart, Indiana motor coach production to the new 
Wakarusa facility, and recently completed set-up of a new Springfield, Oregon 
facility to manufacture towables.  The integration of the Company's 
facilities and the expansion of the Company's manufacturing operations 
involve a number of risks including unexpected production difficulties.  In 
1995, the Company experienced start-up inefficiencies in manufacturing the 
Windsor model and, beginning in 1996 and continuing in the first half of 
1997, the Company experienced difficulty in increasing production rates of 
motor coaches at its Coburg facility.  There can be no assurance that the 
Company will successfully integrate its manufacturing facilities or that it 
will  achieve the anticipated benefits and efficiencies from its expanded 
manufacturing operations.  In addition, the Company's operating results could 
be materially and adversely affected if sales of the Company's products do 
not increase at a rate sufficient to offset the Company's increased expense 
levels resulting from this expansion.

The set-up of the new facilities involves risks and costs associated with the 
development and acquisition of new production lines, molds and other 
machinery, the training of employees, and compliance with environmental, 
health and safety and other regulatory requirements.  Since the Company has 
commenced production at these new facilities, it may from time to time 
experience lower than anticipated yields or production constraints that may 
adversely affect its ability to satisfy customer orders.  Any prolonged 
inability to satisfy customer demand could have a material adverse effect on 
the Company's business, results of operations and financial condition.

CONCENTRATION OF SALES TO CERTAIN DEALERS.  Although the Company's products 
were offered by more than 150 dealerships located primarily in the United 
States and Canada, as of September 27, 1997, a significant percentage of the 
Company's sales have been and will continue to be concentrated among a 
relatively small number of independent dealers.  Although no single dealer 
accounted for as much as 10% of the Company's net sales in 1996, the top 
three dealers combined accounted for approximately 22.5% of the Company's net 
sales in that period. The loss of a significant dealer or a substantial 
decrease in sales by such a dealer could have a material adverse effect on 
the Company's business, results of operations and financial condition.

POTENTIAL LIABILITY UNDER REPURCHASE AGREEMENTS.  As is common in the 
recreational vehicle industry, the Company enters into repurchase agreements 
with the financing institutions used by its dealers to finance their 
purchases. These agreements obligate the Company to repurchase a dealers' 
inventory under certain circumstances in the event of a default by the dealer 
to its lender.  In 1993, the Company's then third largest dealer went into 
default with its lenders, and the Company was required to repurchase 16 motor 
coaches.  Although the Company was able to resell these motor coaches within 
three months, the Company incurred expenses of approximately $291,000 in 
connection with this dealer's default.  Additionally, the need to resell 
these motor coaches and the loss of that dealer temporarily limited the 
Company's sales of new motor coaches.  If the Company were obligated to 
repurchase a significant number of its products in the future, it could have 
a material adverse effect on the Company's financial condition, business and 
results of operations.  The Company's contingent obligations under repurchase 
agreements vary from 


17
<PAGE>

period to period and totaled approximately $117.9 million as of September 27, 
1997, with approximately 10% concentrated with one dealer.  See "Liquidity 
and Capital Resources" and Note 9 of Notes to the Company's Condensed 
Consolidated Financial Statements.

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

DEPENDENCE ON CERTAIN SUPPLIERS.  A number of important components for 
certain of the Company's products are purchased from single or limited 
sources, including its turbo diesel engines (Cummins Engine Company, Inc.), 
substantially all of its transmissions (Allison Transmission Division of 
General Motors Corporation), axles for all diesel motor coaches other than 
the Holiday Rambler Endeavor Diesel model (Eaton Corporation) and chassis for 
certain of its Holiday Rambler products (Chevrolet Motor Division of General 
Motors Corporation, Ford Motor Company and Freightliner Custom Chassis 
Corporation).  The Company has no long term supply contracts with these 
suppliers or their distributors, and there can be no assurance that these 
suppliers, or other suppliers, will be able to meet the Company's future 
requirements for these components.  An extended delay or interruption in the 
supply of any of the components currently obtained from a single source 
supplier or limited supplier could have a material adverse effect on the 
Company's business, results of operations and financial condition. 

NEW PRODUCT INTRODUCTIONS.  To address changing consumer preferences, the 
Company modifies and improves its products each model year and typically 
redesigns each model every three to four years.  The Company believes that 
the introduction of new features and new models will be critical to its 
future success.  Delays in the introduction of new models or product 
features, a lack of market acceptance of new models or features, or quality 
problems with new models or features could have a material adverse effect on 
the Company's business, results of operations and financial condition.  For 
example, in the third quarter of 1995 the Company incurred unexpected costs 
associated with three model changes introduced in that quarter which 
adversely affected the Company's gross margin.  There also can be no 
assurance that product introductions in the future will not divert revenues 
from existing models and adversely affect the Company's business, results of 
operations and financial condition.
     
COMPETITION.  The market for the Company's products is highly competitive.  
The Company currently competes with a number of other manufacturers of motor 
coaches, fifth wheel trailers and travel trailers, some of which have 
significantly greater financial resources and more extensive marketing 
capabilities than the Company.  There can be no assurance that either 
existing or new competitors will not develop products that are superior to, 
or that achieve better consumer acceptance than, the Company's products, or 
that the Company will continue to remain competitive.

RISK OF LITIGATION.  The Company is subject to litigation arising in the 
ordinary course of its business, including a variety of product liability and 
warranty claims typical in the recreational vehicle industry.  In addition, 
as a result of the Holiday Acquisition, the Company assumed most of the 
liabilities of Holiday Rambler, including product liability and warranty 
claims.  Although the Company does not believe that the outcome of any 
pending litigation will have a material adverse effect on the business, 
results of operations and financial condition of the Company, due to the 
inherent uncertainties associated with litigation, there can be no assurance 
in this regard.

To date, the Company has been successful in obtaining product liability 
insurance on terms the Company considers acceptable.  The Company's current 
policies jointly provide coverage against claims based on occurrences within 
the policy periods up to a maximum of $26.0 million for each occurrence and 
$27.0 million in the aggregate.  There can be no assurance that the Company 
will be able to obtain insurance coverage in the future at acceptable levels 
or that the costs of insurance will be reasonable.  Furthermore, successful 
assertion against the Company of one or a series of large uninsured claims, 
or of one or a series of claims exceeding any insurance coverage, could have 
a material adverse effect on the Company's business, results of operations 
and financial condition.


18
<PAGE>

ENVIRONMENTAL REGULATION AND REMEDIATION

REGULATION.  The Company's recreational vehicle manufacturing operations are 
subject to a variety of federal and state environmental regulations relating 
to the use, generation, storage, treatment and disposal of hazardous 
materials. These laws are often revised and made more stringent, and it is 
likely that future amendments to these laws will impact the Company's 
operations.

The Company has submitted applications for "Title V" air permits for its 
operations in Elkhart, Indiana, Nappanee, Indiana, Wakarusa, Indiana, Coburg, 
Oregon, and Springfield, Oregon.  The Company has also submitted revisions to 
its application to reflect changing operations in its operations in Elkhart, 
Indiana.  The Company does not currently anticipate that any additional air 
pollution control equipment will be required as a condition of receiving new 
air permits, although new regulations and their interpretation may change 
over time, and there can be no assurance that additional expenditures will 
not be required. The Company believes that there are no ongoing violations of 
any of its existing air permits at any of its owned or leased facilities at 
this time.  However, the failure of the Company to comply with present or 
future regulations could subject the Company to: (i) fines; (ii) potential 
civil and criminal liability; (iii) suspension of production or cessation of 
operations; (iv) alterations to the manufacturing  process;  or (v) costly 
clean-up or capital expenditures, any of which could have a material adverse 
effect on the Company's business, results of operations and financial 
condition.

REMEDIATION.  The Company has identified petroleum and/or solvent ground 
contamination at the Elkhart, Indiana manufacturing facility, the Wakarusa, 
Indiana manufacturing facility and the Leesburg, Florida dealership acquired 
in the Holiday Acquisition.  The Company has remediated the Wakarusa and 
Elkhart site and recommended to the relevant Indiana regulatory authority 
that no further action be taken because the remaining contaminants are below 
the state's clean-up standards.  The Company currently expects that the 
regulatory authority will concur with this finding, although there is no 
assurance that such approval will be forthcoming or that the regulatory 
authority will not require additional investigation and/or remediation.  In 
Florida, the Company and its consultants have completed additional site 
investigations and determined the extent of contamination associated with 
former underground storage tanks at the Leesburg dealership.  Harley-Davidson 
and its consultant are currently preparing a site remediation work plan for 
submittal to the relevant Florida regulatory authority.  With regard to the 
Wakarusa and Leesburg sites,  the Company is indemnified by Harley-Davidson 
for investigation and remediation costs incurred by the Company (subject to a 
$300,000 deductible and a $10 million maximum in the case of the Wakarusa 
site, and a no deductible $5 million maximum in the case of the Leesburg site 
for matters, such as these, that were identified at the closing of the 
Holiday Acquisition).

The Company does not believe that any costs it will bear with respect to 
continued investigation or remediation of the foregoing locations and other 
facilities currently or formerly owned or occupied by the Company will have a 
material adverse effect upon the Company's business, results of operations or 
financial condition.  Nevertheless, there can be no assurance that the 
Company will not discover additional environmental problems or that the cost 
to the Company of the remediation activities will not exceed the Company's 
expectations.

OTHER REGULATORY MATTERS.  The Company, its products and its manufacturing 
operations are subject to a variety of federal, state and local regulations, 
including the National Traffic and Motor Vehicle Safety Act and numerous 
state consumer protection laws and regulations relating to the operation of 
motor vehicles, including so-called "Lemon Laws."  Amendments to these 
regulations and laws and the implementation of new regulations and laws could 
significantly increase the costs of manufacturing, purchasing, operating or 
selling the Company's products and could have a material adverse effect on 
the Company's business, results of operations and financial condition.  The 
failure of the Company to comply with present or future regulations and laws 
could subject the Company to fines, potential civil and criminal liability, 
suspension of production or cessation of operations.

Certain U.S. tax laws currently afford favorable tax treatment for the 
purchase and sale of recreational vehicles that are financed through mortgage 
loans. These laws and regulations have historically been amended frequently, 
and it 


19
<PAGE>

is likely that further amendments and additional laws and regulations will be 
applicable to the Company and its business in the future.  Amendment or 
repeal of these laws and regulations and the implementation of new laws and 
regulations could have a material adverse effect on the Company's business, 
results of operations and financial condition.

The Company is subject to regulations that may require the Company to recall 
products with safety defects.  Product defects may also result in a large 
number of product liability or warranty claims.  The Company has on occasion 
voluntarily recalled certain products.  The occurrence of a major product 
recall or the incurrence of warranty claims in excess of warranty reserves in 
any period could have a material adverse effect on the Company's business, 
results of operations and financial condition.

POSSIBLE VOLATILITY OF STOCK PRICE.  The Company believes that the market 
price of the Company's Common Stock could be subject to wide fluctuations in 
response to quarter-to-quarter variations in operating results, changes in 
earnings estimates by investment analysts, announcements of new products by 
the Company or its competitors, general economic conditions and conditions in 
the recreational vehicle market and other events or factors.  In addition, 
the stocks of many recreational vehicle companies have experienced price and 
volume fluctuations that have not necessarily been directly related to the 
companies' operating performance, and the market price of the Company's 
Common Stock could experience similar fluctuations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 

Not applicable.


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

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


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)  Exhibits

         27.1  Financial data schedule.

    (b)  Reports on Form 8-K

         No reports on Form 8-K were required to be filed during the
         quarter ended September 27, 1997, for which this report is filed.


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<PAGE>

                                SIGNATURES

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


                                        MONACO COACH CORPORATION



Dated:  November 11, 1997               /s/:   JOHN W. NEPUTE   
                                        --------------------------------
                                        John W. Nepute
                                        Vice President of Finance and
                                        Chief Financial Officer (Duly
                                        Authorized Officer and Principal
                                        Financial Officer)



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