<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


   
                                    FORM 10-K/A
    

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended DECEMBER 31, 1996 or

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

                          Commission File No. 333-08871

                            MCII HOLDINGS (USA), INC.
             (Exact name of registrant as specified in its charter)

               Delaware                               86-0830781
    (State or other jurisdiction of      (I.R.S. Employer Identification No.)
    (incorporation or organization)


                 10 East Golf Road, Des Plaines, Illinois 60016
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (847) 299-9900


        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None


    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 ___

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

    The aggregate market value of the voting stock held by non-affiliates of the
registrant: None as of March 15, 1997.

    The number of shares outstanding of the registrant's Common Stock: 1,000
shares as of March 15, 1997.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

                            REDUCED DISCLOSURE FORMAT

    The registrant meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore filing this Form with the reduced
disclosure format.


<PAGE>   2


ITEM 1. BUSINESS

GENERAL



    MCII Holdings (USA), Inc. ("MCII Holdings") is a Delaware corporation and a
wholly-owned subsidiary of Consorcio G Grupo Dina, S.A. de C.V. ("Grupo Dina").
On January 31, 1997, Grupo Dina contributed to MCII Holdings 99.99% of the
shares of Dina Autobuses, S.A. de C.V. ("Autobuses"). As this transaction
occurred after year end and, as such, is not included in the MCII Holdings
financial statements, a description of its business is not included herein.

    MCII Holdings designs, manufactures, assembles and markets intercity coaches
and replacement parts for intercity coaches and transit buses. MCII Holdings is
the leading manufacturer of intercity coaches in the United States, with a
market share consistently in excess of 50%. Management believes that MCII
Holdings is the largest distributor of replacement parts to the combined
intercity coach and transit bus industries in the United States and Canada.

      Revenues and operating income from continuing operations for each of the
segments for the last three years are as follows:

<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31
                                               --------------------------------
                                                 1996         1995         1994
                                               --------------------------------
                                                         (in millions)
<S>                                            <C>          <C>          <C>   
Revenues:
Coach manufacturing and                        $502.1       $375.8       $332.8
Replacement parts                               159.2        140.5        134.6
                                               ------       ------       ------
                                               $661.3        516.3        467.4
                                               ======       ======       ======
Operating income:
Coach manufacturing and support                $ 40.1       $ 23.3       $ 26.8
Replacement parts                                14.6         15.0         19.2
Nonrecurring merger expenses                       --           --        (11.3)
                                               ------       ------       ------
                                               $ 54.7       $ 38.3       $ 34.7
                                               ======       ======       ======
</TABLE>

COACH

      MCII Holdings designs, manufactures, assembles and markets intercity
coaches principally in the United States and Canada. MCII Holdings, through its
indirect subsidiary, Motor Coach Industries Limited, a Canadian corporation
("MCIL"), began manufacturing intercity coaches and providing replacement parts
in Canada in 1932, and began manufacturing these products in the United States
with the incorporation of Motor Coach Industries, Inc. ("MCI") in 1963. In 1995,
MCII Holdings began marketing in the United States an intercity coach
manufactured by Grupo Dina. This coach, the Viaggio, is used primarily for tour
and charter service and intercity regularly scheduled passenger service. MCII
Holdings' coaches are used primarily for intercity regularly scheduled passenger
service, tour and charter service and suburban commuting. Management believes
that MCII Holdings' coaches have a reputation for solid construction,
durability, ease of maintenance and comfort.


      MARKET. MCII Holdings' management believes that there is currently an
industry-wide fleet of over 30,000 intercity coaches in operation in the United
States and Canada, having an average age of approximately nine years. Coaches
are used primarily to transport passengers between cities at regularly scheduled
intervals ("line-haul operations") or on special tour or charter trips. Certain
state and municipal transportation agencies, such as New Jersey Transit, utilize
intercity coaches to transport passengers who have a relatively long daily
commute.


                                       1
<PAGE>   3
      The coach business in the United States and Canada is highly cyclical.
During times of general economic weakness, many coach operators postpone fleet
replacement programs and may even reduce the size of their fleets. As economic
recovery occurs, they tend to accelerate fleet replacement and may increase
fleet size.

      BACKLOG. MCII Holdings' coach backlog was 577 units at December 31, 1996
which included 27 units for Greyhound Lines, Inc. ("GLI"), compared to 619 units
at December 31, 1995, which included 151 units for GLI. No material part of MCII
Holdings' backlog at December 31, 1996 is attributable to government orders.

      PRODUCTS. MCII Holdings currently produces, under the trademark of MCI,
three integral-frame models. Two of MCII Holdings' models are standard 40-foot
long vehicles and the third is a 45-foot long vehicle. The Model 102D3 is a
40-foot long, 102-inch wide European-styled vehicle. The Model 102DL3 is a
45-foot long, 102-inch wide model with increased passenger and baggage capacity,
with a standard configuration of 55 seats, giving it an increased passenger
capacity of 17% over the 40-foot models which generally enables operators to
reduce their operating cost per passenger mile. The MC-12 model is a
lower-priced, line-haul coach, 40-feet long and 96 inches wide, produced
principally for GLI. The two 40-foot coach models generally sell in a price
range of $240,000 to $325,000 and the 45-foot coach sells in a range of $290,000
to $350,000. These prices depend on width, options, special features and volume
purchased. Substantially all of MCII Holdings' coaches are built to order with
over 2,000 options available. The standard warranty period is 24 months.

      MCII Holdings also markets the Viaggio, a body-on-chassis constructed
model manufactured by Grupo Dina. The Viaggio, which name is a trademark of
Marcopolo S.A. -- Carrocerias e Omnibus of Brazil used under license by Grupo
Dina, sells in a range of $225,000 to $270,000. The standard warranty period for
the U.S. market is 24 months.

      MCII Holdings is currently in the process of developing two new coach
models to replace its current product offerings. The first model, which
management expects to introduce in 1997, will consist of a 45-foot luxury tour
and charter model. The second model will consist of a lower-priced, durable
line-haul model, which management anticipates offering in 41-foot, 45 foot and
11 meter versions. The introduction of the 41-foot line-haul model is expected
in late 1998. These development efforts will result in significant product
development and capital expenditures being made over the next few years.

      MARKETING. In the United States and Canada MCII Holdings relies on its
direct-sales force to market the MCI and Viaggio coaches, with 18 full-time new
coach sales representatives who make regular visits to both current and
potential customers and attend major industry trade shows. Management believes
that the attentiveness and visibility of MCII Holdings' sales force among coach
operators solidify MCII Holdings' reputation and enhance its sales position.
MCII Holdings uses agents to market its coaches overseas. MCII Holdings does not
use distributors in the United States or Canada.

      CUSTOMERS. The customer base in the intercity coach industry in the United
States and Canada is highly diversified. The largest coach transportation
company in the United States, GLI, currently has a fleet of over 2,000 coaches,
or 7% of the 30,000 industry-wide fleet. The remaining 93% of the market is
comprised of smaller to mid-size operators. The primary customers for intercity
coaches are independent coach operators, national coach fleet operators,
including GLI and Greyhound Lines of Canada, Ltd. ("GLOC"), government agencies
that use coaches for public transit services, international customers and custom
coach converters. While management estimates that in the past three years the
average order size (excluding GLI orders) for any single operator has been
approximately 2.7 units, order size has ranged from one coach up to
approximately 100 coaches.


                                       2
<PAGE>   4
      INDEPENDENT OPERATORS. Management estimates that in the United States,
independent regional operators (i.e., operators other than GLI and GLOC) of
regular route or tour and charter operations account, on average, for
approximately 75% of MCII Holdings' annual coach sales. Management believes that
purchasing decisions by these buyers are based upon a number of factors,
including service and parts availability, operating costs, resale value,
financing terms, curbside appeal and interior amenities. In 1996, MCII Holdings
sold coaches to 412 different independent operators of whom only 50 purchased
five or more coaches.

      GLI AND GLOC. GLI is a nationwide regular route operator in the United
States and GLOC is a regular route operator throughout most of Canada. GLI's
fleet totaled over 2,000 coaches at December 31, 1996. GLOC currently operates
approximately 390 coaches. For the years ended 1996, 1995 and 1994, GLI and GLOC
accounted for 14%, 11%, and 17%, respectively, of consolidated revenue.

      Management believes that important purchase criteria for GLI and GLOC
include life cycle costs, reliability, availability of replacement parts and
support, passenger comfort, interior amenities and purchase price. MCII Holdings
and GLI have an agreement, which extends through March 18, 1998, which provides
that GLI will purchase from MCII Holdings at least 75% of its annual
requirements for new coaches of the type produced (or planned, at the time
ordered, to be produced) by MCII Holdings. MCII Holdings and GLOC have entered
into a similar agreement which runs through 2002. Pursuant to those agreements,
228 coaches were delivered to GLI and seven to GLOC in 1996. No assurance can be
given regarding GLI's and GLOC's future ability or need to purchase coaches from
MCII Holdings.

      GOVERNMENT AGENCIES. Government-funded public transportation agencies
utilize a variety of commuter, wheelchair-lift compatible and other specialty
coaches. Management believes that the primary buying criterion for such
customers is initial price for a given set of design specifications, with
overall lifecycle costs as a secondary concern. The demand from such customers
varies widely from year to year as government agencies periodically make large
procurements, every three to six years on average, and in any given year, such
customers may represent over 10% of MCII Holdings' sales of new coaches.

      MCII Holdings sold 700 coaches to the New Jersey Transit Authority
("NJTA") which were delivered in 1982 through 1984, and 415 coaches to NJTA
which were delivered in 1987 and 1988. NJTA uses these coaches for public
transport of passengers with relatively long daily commutes or in intercity
service. Because over 90% of NJTA's fleet consists of MCII Holdings coaches,
management believes it will have a competitive advantage when NJTA's next
purchase is made. However, there can be no assurance that NJTA will order new
coaches, when such order will occur or that MCII Holdings will be awarded the
contract.

      Government contracts generally contain provisions permitting the purchaser
to terminate the contract at will. Such contracts provide that the purchaser
must reimburse the manufacturer for completed product and pay the manufacturer's
cost of termination. It is MCII Holdings' experience that this type of provision
is rarely exercised.

      COACH CONVERTERS. The coach conversion market involves the customizing of
a coach interior for personal or corporate use. MCII Holdings sells coach shells
to coach conversion companies and, until 1996, customized coaches for sale to
the final user. In June 1996, MCII Holdings exited the business of customizing
coaches for sale to the final user by selling the assets of Custom Coach
Corporation ("Custom Coach"), MCII Holdings' former coach conversion subsidiary.
Custom Coach served the high end of the coach conversion market, focusing on
motor homes for commercial and personal applications, executive style coaches
for business travel, specialized units for training and entertainer bunkhouse
units. Over the past three years, MCII Holdings has averaged sales of 17 units,
including sales to Custom Coach, to the conversion market.


                                       3
<PAGE>   5
      COMPETITION. MCII Holdings has two principal competitors in the United
States and Canadian coach market: Prevost, a subsidiary of Volvo, which
management believes to be the largest of its competitors, and Van Hool. MCII
Holdings has maintained a strong market position in the new coach market in the
face of lower prices by competitors, which management believes is primarily due
to customer loyalty stemming from a quality product and strong aftermarket parts
and service capability. An additional factor contributing to customer loyalty is
the convenience and cost efficiencies which operators derive from managing and
servicing a fleet of coaches manufactured and supported by a single supplier.
These efficiencies may exist for both larger, multi-site operators as well as
smaller, independent operators, which rely on MCII Holdings for a variety of
support services.

      FINANCING. MCII Holdings primarily sells coaches for cash, occasionally
offers terms (generally net 30 days) to its most creditworthy customers, and
provides long-term financing as a necessary adjunct to its coach manufacturing
business. Demand for new coach financing from MCII is primarily dependent upon
the annual level of new coach sales as well as the availability of alternative
sources of financing. MCII Holdings had $32.2 million of contract receivables at
December 31, 1996.

      MCII Holdings provides new and used coach financing to its intercity coach
customers principally through its financing subsidiary, MCI Acceptance Corp.
("MCIAC"). MCIAC provides financing primarily at a floating rate of interest for
three to five years, in the case of used coaches, and seven to 10 years in the
case of new coaches. MCII Holdings, through its leasing subsidiary BusLease,
Inc., also provides coaches to customers under operating leases. The leases
require security deposits and usually have a duration of three to seven years.
At December 31, 1996, the book value of coaches being leased to customers under
operating leases was $18.1 million.

      Periodically, MCIAC sells contract receivables to financial institutions
and provides a limited guarantee to those institutions against losses related to
such contracts with respect to debtor defaults.

USED COACHES

      MCII Holdings provides used coach brokerage and dealership services
through Hausman Bus Sales Inc. ("HBSI"), which was acquired in 1989. The used
coach operations provided revenues for the years 1996, 1995, and 1994, of $51.3
million, $47.2 million, and $46.8 million, respectively. During that period, the
used coach operation accounted for $15.0 million to $31.0 million of MCII
Holdings' inventories. The size of the used coach business is dependent upon
several factors, including the size of the entire coach fleet, new coach orders
which generate trade-ins and the level of changes in the fleet composition of
coach operators. Management estimates that the existing industry-wide fleet of
over 30,000 coaches changes ownership every 12 years, creating an average used
coach volume of about 2,500 units per year.

      Due to MCII Holdings' installed base of coaches, its maintenance and
repair capabilities, customer network and industry knowledge, HBSI is able to
repurchase and resell a substantial volume of used coaches. Management believes
that MCII Holdings' capacity to accept used coaches in support of new coach
sales and resell them through its distribution system provides MCII Holdings
with a competitive advantage. Management believes that HBSI's largest competitor
in the dealership business is ABC Bus, Inc., which also serves as Van Hool's
United States sales agent for new coaches.

      RESEARCH AND DEVELOPMENT. As part of MCII Holdings' new coach development
project it received $7.4 million in contributions from the Government of Canada
and the Province of Manitoba. These contributions have been applied against
research and development expenses. Contributions may be repayable should the
project not be completed, or, for the first five years following project
completion, should the ratio of Canadian employees to total employees of MCII
Holdings be less then 40%.


                                       4
<PAGE>   6
REPLACEMENT PARTS

      Management believes that MCII Holdings is a leading supplier of original
equipment manufacturer ("OEM") quality replacement parts for the combined
intercity coach and transit bus aftermarkets in the United States and Canada.
MCII Holdings offers over 67,000 items necessary for coach and bus repair and
regularly scheduled maintenance. MCII Holdings has six strategically located
distribution outlets in the United States and Canada which allow MCII Holdings
to promptly (if necessary, within 24 hours) deliver replacement parts
nationwide. Management believes that MCII Holdings' breadth of product line and
geographic scope are unmatched in the industry. In addition to the core
intercity coach and transit bus parts business, MCII Holdings also distributes
parts for school buses and diesel engines.

      In the replacement parts business, MCII Holdings has improved
responsiveness to customer demands through the development of its information
systems. MCII Holdings has installed remote order entry terminals in over 260
customer locations in order to minimize lead times and to accelerate the
delivery process. Management believes that the installation of these electronic
order entry terminals at customer locations expedites replacement parts orders
and strengthens customer loyalty.

      MCII Holdings' competitive position in the parts business is further
enhanced by the large installed base of its vehicles. The approximately 23,000
coaches and 47,000 transit buses in the United States and Canada produced by
MCII Holdings create a core demand for MCII Holdings parts, approximately 20% of
which are proprietary to MCII Holdings and may not be purchased elsewhere.
Despite the fact that MCII Holdings no longer manufactures transit buses, MCII
Holdings continues to supply replacement parts to the Canadian transit bus
market, and until November 1999, will provide OEM replacement parts for the RTS
line of transit buses previously manufactured in the United States by MCII
Holdings.

      PRODUCT LINE. The replacement parts business is segmented into high
quality parts supplied by an OEM which may fit coaches made by other
manufacturers, and non-OEM parts, which are marketed primarily on a value basis.
Management believes that MCII Holdings' current strength is in providing OEM
parts that are either manufactured by MCII Holdings or acquired by MCII Holdings
from the original equipment manufacturer. MCII Holdings' Universal Coach Parts
("UCP") subsidiary in the United States and MCIL in Canada offer a wide
selection of replacement and repair parts to MCII Holdings' coach customers. In
an effort to leverage further the competitive strength of its replacement parts
business and distribution facilities, UCP has developed its own brand of
alternate, non-OEM parts under the COACHGUARD name. More than sixty products
have been introduced for this segment since its inception in 1993. MCII Holdings
has also developed a line of remanufactured parts and components, which were
introduced during 1994. Management believes that the availability of
remanufactured products has permitted MCII Holdings to access new markets that
are currently served by local and regional parts rebuilders.

      In 1994, MCII Holdings began marketing diesel engine parts under the name
DIESEL GUARD and also began targeting the school bus parts market. As a result
of its focus on the school bus market, MCII Holdings purchased the operations of
a school bus parts distributor in April 1995 for $2.9 million.

      MARKETING. For sales of replacement parts, MCII Holdings utilizes 13
full-time field representatives, as well as telemarketing salespersons. The
sales force makes regular visits to both current and potential customers,
attends major industry trade shows, responds to advertisements for bids to
supply replacement parts and uses telemarketing techniques. In addition,
customer orders are facilitated through the use, by the sales force and certain
of MCII Holdings' larger customers, of remote order entry terminals to minimize
lead time. Management believes that MCII Holdings' efficiency and responsiveness
allow customers to minimize inventory holding costs and to increase fleet
utilization ratios.


                                       5
<PAGE>   7
      COACH PARTS CUSTOMERS. Customers served by MCII Holdings include both
purchasers of MCII Holdings coaches as well as purchasers of non-MCII Holdings
coaches such as Grupo Dina's Viaggio coach model. Management believes that
customers place considerable emphasis on the quality of parts purchased as well
as the speed and efficiency provided by their parts suppliers. Under an
agreement with GLI, which is terminable by either party upon 180 days notice but
not before April 30, 1997, MCII Holdings supplies and manages most of GLI's
inventory of replacement parts.

      TRANSIT PARTS CUSTOMERS. Management believes that the demand for transit
parts is a function of the number of transit buses currently in operation, the
average level of usage for each bus and the average age of the bus fleet.
Management believes that purchasers of transit parts are more price-sensitive
and less service sensitive than customers in the coach aftermarket, as the
opportunity cost to the transit authority of a transit bus out of operation is
less significant than the lost revenue of a line-haul coach operator. As a
result, a large percentage of transit parts purchases are conducted on a public
bid basis. Customers often choose to make a major purchase of parts inventory
upon the procurement of additional new transit buses to ensure the availability
of parts and to minimize cost through volume purchasing.

      COMPETITION. The replacement parts business is highly fragmented and
competitive. Management believes that MCII Holdings' largest competitors are
Prevost and Mohawk, for coach replacement parts, and the major transit
manufacturers - BIA and Neopart (the parts operation of Neoplan), for transit
bus replacement parts. The remaining competitors include other coach
manufacturers, diesel engine manufacturers, niche marketers and local vendors.
Management believes that the factors influencing the choice of parts suppliers
include a supplier's proximity to the customer, the number of replacement parts
offered, level of technical knowledge and support and, to a lesser extent,
minimum price. In addition, management believes that the installed base of
vehicles manufactured by MCII Holdings, its predecessors and successors also
provides MCII Holdings a distinct competitive advantage.

      Management estimates that MCII Holdings has consistently captured a
significant share of the replacement parts business in its core intercity coach
and transit bus parts segments (excluding engines, transmissions and related
parts).

DISCONTINUED OPERATIONS

      In November 1993, the Board of Directors of MCII Holdings approved a plan
of disposition of the transit manufacturing segment. This decision was based
upon management's review of market activities, business prospects, competitive
bidding, evaluation of backlogs, economic value analysis, and opportunities for
cost reduction, which indicated that the transit manufacturing business may not
achieve acceptable profitability in the foreseeable future. In November 1994,
MCII Holdings sold the fixed assets and certain of the inventory of the transit
manufacturing business, as well as the right to manufacture, remanufacture and
distribute transit buses previously made by MCII Holdings. Additionally, the
purchaser, for a period of five years from the sale date, has agreed not to
distribute parts to transit buses previously made by MCII Holdings. MCII
Holdings retained all other assets and all of the remaining liabilities of the
transit manufacturing business. As of December 31, 1996, the remaining net
liabilities of the transit manufacturing business totaled $(0.1) million and
were comprised principally of warranty and product liability reserves, offset
somewhat by receivables.


                                       6
<PAGE>   8
RAW MATERIALS/COMPONENTS

      MCII Holdings' manufacturing operations utilize raw materials supplied by
diverse sources and component parts provided by other original equipment
manufacturers, which are assembled into intercity coaches. For certain materials
and components, MCII Holdings relies primarily on a limited number of suppliers,
namely Rockwell International Corporation for axles, Detroit Diesel Corporation
for engines, Allison Transmission for transmissions and Atlas Alloys for
stainless steel. Alternate suppliers used to a lesser extent or available for
use are Dana Corporation and Eaton Corporation for axles, Cummins Engine Company
and Caterpillar Inc. for engines, Eaton Fuller and ZF Friedrichshafen AG for
transmissions and Namasco Ltd and others for stainless steel.

GOVERNMENT REGULATION

      The operations of, and the products manufactured by, MCII Holdings'
subsidiaries are subject to various United States federal and state and Canadian
federal and provincial laws and agency regulations. In the United States, these
regulations include the Clean Air Act and other environmental acts which
regulate coach engine emissions and plant operations; federal motor vehicle
safety standards which establish minimum safety standards for various components
of coaches; the Americans with Disabilities Act which specifies accessibility
standards for the physically challenged; and Buy America legislation prohibiting
the use of federal funds for coaches with less than 60% United States content.
In Canada, regulations include various environmental acts which regulate coach
plant operations and Canadian motor vehicle safety regulations which establish
minimum safety standards for various coach components. Although the Canadian
government has not adopted accessibility standards for the physically
challenged, such standards are currently the subject of several official
studies. MCII Holdings cannot accurately predict future expenses or liability
which might be incurred as a result of such laws and regulations.

      The Americans with Disabilities Act requires, among other things, that the
U.S. Department of Transportation (the "DOT") promulgate handicapped
accessibility standards for coaches. Although the DOT has not issued proposed
regulations for public comment, there are indications that the regulations
(which may be issued and finalized in 1997) might require each coach in an
operator's fleet to be handicapped accessible, rather than permitting the
operation of a limited number of accessible coaches. Requiring complete fleet
accessibility could have a material adverse effect on an operator's business and
possibly on MCII Holdings' coach business. The final regulations will be
applicable to operators with larger fleets 2 years after issuance of the final
regulations and applicable to operators with smaller fleets 3 years after
issuance of the final regulations.

PATENTS AND TRADEMARKS

      MCII Holdings owns numerous trademarks representing goodwill in the
businesses using the marks and own a number of patents which MCII Holdings
believes give it a competitive advantage in the marketplace. United States
trademark registrations are for a term of 10 years, renewable every 10 years so
long as the trademarks are used in the regular course of trade. The trademarks
owned and used by MCII Holdings include the well known MCI and FLXIBLE marks.
The marks COACH GUARD and DIESEL GUARD are in use in the replacement parts
operations and filings have been made to register these trademarks. MCII
Holdings owns numerous patents protecting, among other things, various aspects
of the MCI coaches. Patents are granted for a term of 17 years. MCII Holdings
has the right to use the Greyhound name and the "Image of the Running Dog" for
the manufacture and sale of intercity coaches, transit buses and replacement
parts in all countries other than the United States, Canada and Mexico.


                                       7
<PAGE>   9
EMPLOYEES

      MCII Holdings, through its subsidiaries, had approximately 3,300
employees, as of December 31, 1996, with approximately 1,300 in the United
States and 2,000 employees in Canada. The hourly workers at most locations are
organized and represented by unions. Approximately 2,000 employees of the total
work force are represented by labor unions. The largest contracts are with the
International Association of Machinists and Aerospace Workers (the "IAM") in
Winnipeg, Manitoba and Pembina, North Dakota. The IAM contracts with
Winnipeg/Pembina expire September 30, 1997. MCII's subsidiaries have
historically enjoyed satisfactory relations with both union and nonunion
employees.



ITEM 2. PROPERTIES

      COACH. MCII Holdings conducts its coach manufacturing operations through
subsidiaries located both in the United States and Canada. The operations in
Winnipeg produce metal bus components, fiberglass parts, subassemblies for
intercity coaches and complete intercity coach shells. Once assembled, outer
shells of coaches are transported by truck-hauled flatbed trailers to its
Pembina, North Dakota plant. In Pembina, the manufacturing process is completed
by installing components such as engines, transmissions, axles, wheels, tires,
electrical components, air conditioning systems and passenger seats, as well as
completing final paint scheme requirements. Finished units are distributed from
the Pembina facility to customers throughout the United States and are returned
to Winnipeg for sale and delivery to Canadian customers. With the
Winnipeg/Pembina complex in full production, MCII Holdings is capable of
producing approximately 1,400 coach units per year.

      PARTS. MCII Holdings distributes products from six locations,
strategically located across the United States and Canada, with sites in Dayton,
New Jersey; Chicago, Illinois; Los Angeles, California; Huntsville, Texas;
Winnipeg, Manitoba; and Newcastle, Ontario. In addition, there are two parts
manufacturing locations: Delaware, Ohio and Loudonville, Ohio.

      OTHER PROPERTIES. MCII Holdings also has leases on warehouses and parking
lots.

      MCII Holdings believes that its facilities are adequate for its present
needs and that its properties are generally in good condition, well maintained
and suitable for their intended use. The following table is a summary of MCII's
primary facilities as of December 31, 1996.


                                       8
<PAGE>   10

<TABLE>
<CAPTION>
                                     LOCATION/OWNERSHIP
                                     ------------------
                                       U.S.     Canada    Building sq. ft.       Segment
                                      ------    ------    ----------------    -------------
<S>                                   <C>       <C>       <C>                 <C>
MANUFACTURING AND ASSEMBLY PLANTS:
1149 St. Matthews Ave.                  -       Owned          128,000            Coach
Winnipeg, Canada

841 & 850 Erin Street                   -       Owned           78,000            Coach
Winnipeg, Canada

400 Archibald Street                    -       Owned           36,000            Coach
Winnipeg, Canada

1475 Clarence Ave.                      -       Owned          381,000            Coach
Winnipeg, Canada

552 W. Stutsman Ave.                  Owned       -            186,000            Coach
Pembina, ND

140 Otter Street                        -       Owned          144,000            Coach
Winnipeg, Canada

MODIFICATION OR REPAIR FACILITIES:

10 E. Golf Road                       Owned       -             60,000        Coach Support
Des Plaines, IL                                                      

9846 Atlantic Ave.                    Leased      -             16,000        Coach Support
Southgate, CA                                                        

14 Harmon Dr.                         Leased      -             28,000        Coach Support
Blackwood, NJ                                                        

1250 Slocum Street                    Leased      -             30,000        Coach Support
Dallas, TX                                                           

REPLACEMENT PARTS FACILITIES:

1558 Wilson Place                       -       Leased          60,000            Parts
Winnipeg, Canada

105 E. Oakton                         Owned       -            180,000            Parts
Des Plaines, IL

55 Howard Street                      Leased      -             75,000            Parts
Des Plaines, IL

9 Nicholas Court                      Leased      -            106,000            Parts
Dayton, NJ

7030 East Slauson                     Leased      -             50,000            Parts
Los Angeles, CA

Huntsville, TX                        Leased      -             75,000            Parts

260 Toronto Street                      -       Owned           44,000            Parts
Newcastle, Ontario

920 Pittsburgh Drive                  Leased      -            245,000            Parts
Delaware, OH

520 North Spring Drive                Owned                    356,000            Parts
Loudonville, OH
</TABLE>


                                       9
<PAGE>   11
ITEM 3. LEGAL PROCEEDINGS

      MCII Holdings and certain of its subsidiaries are parties either as
plaintiffs or defendants to various actions, proceedings and pending claims,
certain of which involve claims for compensatory, punitive or other damages.
Litigation is subject to many uncertainties and it is possible that some of the
legal actions, proceedings or claims referred to above could be decided against
MCII Holdings. Although the ultimate amount for which MCII Holdings may be held
liable with respect to matters where MCII Holdings is a defendant is not
ascertainable, MCII Holdings believes that any resulting liability will not
materially affect its financial condition or results of operations.

    MCII Holdings' Canadian income tax returns for 1982 through 1992 are
currently under review by Revenue Canada, which is reviewing certain profit
allocation procedures between MCIL and MCI and may seek to impute additional
Canadian income to MCIL. MCII Holdings is of the opinion that Revenue Canada's
arguments are without merit. See Note I to the Consolidated Financial Statements
at page F-15 herein.


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

    This item has been omitted pursuant to General Instruction J of Form 10-K
which provides for a reduced disclosure format.


                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Not applicable.


ITEM 6. SELECTED FINANCIAL DATA

    This item has been omitted pursuant to General Instruction J of Form 10-K
which provides for a reduced disclosure format.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

    Pursuant to General Instruction J of Form 10-K, which provides for a reduced
disclosure format, the following is management's narrative analysis of the
material changes in the Statement of Consolidated Income and is in lieu of
management's discussion and analysis pursuant to Regulation S-K 303. The
following discussion should be read in conjunction with MCII Holding's
consolidated financial statements included in this Annual Report.

RESULTS OF OPERATIONS

1996 COMPARED TO 1995

      General. Revenues for 1996 were $661.3 million, an increase of 28.1% from
$516.3 million for 1995. The improvement was due to a 33.6% increase in revenues
in the coach manufacturing and support segment and a 13.3% increase in the
replacement parts segment. The overall gross margin, defined as sales less cost
of sales (exclusive of depreciation and amortization), as a percentage of sales
was 20.7% for 1996 compared to 22.1% for 1995.


                                       10
<PAGE>   12
      Operating income was $54.7 million in 1996 compared to $38.3 million in
1995. The increase was primarily attributable to increased revenues partially
offset by the lower gross margin percentage, increased research and development
expenses and depreciation and amortization expenses.

      Income from continuing operations was $22.8 million in 1996, compared to
$18.3 million in 1995. Net income for 1996 was $16.9 million which included an
after-tax loss of $5.0 million from discontinued operations resulting from an
adjustment to the estimated loss on the disposal of the transit manufacturing
segment and an $851,000 after-tax extraordinary charge due to the write-off of
unamortized debt issuance costs.

      Coach Manufacturing and Support. Coach manufacturing and support revenues
for 1996 increased 33.6% to $502.1 million, reflecting sales of 1,521 new units
(1,295 MCIs and 226 Viaggios), compared to $375.8 million for 1995 which was
driven by sales of 1,119 new units (1,007 MCIs and 112 Viaggios). In addition to
the units sold, 50 units were delivered in 1995 to customers who entered into
operating leases with the Company and, as such, were not reflected in sales
until 1996 when the customers purchased the units. Taking into account these
units, new coach deliveries increased 25.8% from 1,169 to 1,471 units. This
increase was due to increased demand from the Company's broad base of
independent tour and charter operators, a 67 unit improvement in deliveries to
GLI and continuing customer acceptance of the Viaggio model that was first
introduced to the U.S. market in 1995.

      In 1996, the gross margin percentage decreased to 20.8% compared to 21.6%
for 1995. The decrease in gross margin was principally due to a higher mix of
low-margin Viaggio sales. In 1996, Viaggio sales represented 10.9% of segment
revenues and produced a gross margin of 2.6%, compared to a 7.1% share of
segment sales, with a 6.6% gross margin in 1995. Since the Viaggio is
manufactured by Autobuses, the manufacturing profit accrues to the benefit of
Autobuses. Additionally, the gross margin was impacted by a reduction in the
margin realized on the resale of used units, however, this was more than offset
by a margin improvement on MCI new coach sales which was principally due to the
increased volume of units produced.

      Order backlog as of December 31, 1996 was 577 units, which included 27
units for GLI, compared to 619 units at December 31, 1995, which included 151
units for GLI.

      Replacement Parts. Replacement parts revenues were $159.2 million for 1996
compared to $140.5 million in 1995. The 13.3% improvement was primarily
attributable to an increase in volume based supply agreements entered into with
coach operators whereby the Company becomes their principal supplier of
replacement parts, as well as revenue gains in the Company's new diesel engine
and school bus parts lines.

      The gross margin percentage decreased to 20.6% in 1996 from 23.2% in 1995
primarily as a result of a large inventory obsolescence provision reflected in
1996 for anticipated losses on dispositions of obsolete and excess inventory due
to the planned phase-out of two distribution centers, increased volume discounts
attributable to the new volume based supply agreements and increased competition
in the transit parts market.

      Depreciation and Amortization. Depreciation and amortization expenses
increased to $16.7 million in 1996, a 14.4% increase over the $14.6 million
recorded in 1995. The increase was primarily attributable to an increase in
coaches held for lease and property, plant and equipment additions.

      Research and Development. Research and development expenses increased to
$7.3 million, a $4.4 million increase over the $2.9 million recorded in 1995
reflecting increased expenditures for the new tour and charter coach model to be
introduced in 1997.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased slightly to $58.5 million in the twelve months
of 1996 compared to $60.4 million in 1995.


                                       11
<PAGE>   13
Furthermore, as a percentage of sales, SG&A expenses decreased to 10.4% in 1996
from 11.8% in 1995. The decrease in SG&A is principally due to higher consulting
costs incurred in 1995 due to the implementation of a new information system for
use in new coach manufacturing.

      Interest Expense. Interest expense was relatively unchanged at $13.3
million in the twelve months of 1996 and $13.4 million in 1995.

      Loss (gain) on equity investments. For 1995, the Company realized a $10.5
million gain on sale of an investment in GLI common stock. In 1996, the Company
recorded a $1.2 million write-down of a 10% investment in a Mexican coach
company (See Note Q to the consolidated financial statements).

      Income Taxes. The Company's effective income tax rates in 1996 and 1995,
excluding non-deductible goodwill amortization, a lower Canadian capital gains
rate realized on the GLI gain and the tax effect of a foreign dividend received
in 1995, were 41.0% and 40.7%, respectively.

1995 COMPARED TO 1994

      General. Revenues for 1995 were $516.3 million, up 10.4% from $467.5
million for 1994. The increase is primarily attributable to an increase in new
and used coach sales. The overall gross margin, defined as sales less cost of
sales (exclusive of depreciation and amortization) as a percent of sales, was
22.1% for 1995 compared to 23.4% for 1994.

      Operating income was $38.3 million and $34.7 million in 1995 and 1994,
respectively. Excluding merger related expenses and the additional depreciation
and amortization which resulted from the Merger, operating income would have
been $44.7 million in 1995 compared to $48.7 million in 1994. On an adjusted
basis, the overall operating margin declined from 10.4% in 1994 to 8.7% in 1995.

      Income from continuing operations was $18.3 million, up 22.0% from $15.0
million during 1994. Income from continuing operations in 1995 included an
after-tax gain from the sale of an investment in GLI common stock of $6.9
million while 1994 included expenses of $8.6 million after tax related to the
Merger. Excluding these items, income from continuing operations would have been
$11.4 million and $23.6 million for 1995 and 1994, respectively.

      Coach manufacturing and support. Coach manufacturing and support revenues
were $375.8 million reflecting 1,119 new units sold (of which 112 units were
Grupo Dina's Viaggio model) in 1995 compared to $332.8 million based on 1,059
new units sold (of which none were Viaggio models) in 1994. This increase in
revenues was due to an increase in the average sales price of new coaches and a
change in the mix of units sold as higher-priced 45-foot models comprised a
larger percentage of units sold while lower-priced GLI models comprised a
smaller percentage. GLI purchased 282 units in 1994 compared to 111 units in
1995. Also, in 1995 50 units were delivered to GLI under intermediate-term
leases and, as such, these units were not included in sales for 1995. Including
these 50 units, total new coach deliveries in 1995 were 1,169 units compared to
1,059 units for 1994. Gross margins decreased to 21.6% in 1995 from 22.8% in
1994. The decrease in gross margin percentage resulted primarily from an
increase in sales of lower-margin Viaggio units, which only produced a 6.6%
margin for MCII.

      Replacement parts. Replacement parts revenues increased by 4.3% to $140.5
million in 1995 from $134.7 million in 1994. The introduction of a line of
diesel engine parts and increased school bus parts sales and sales to GLI
contributed to the increase in replacements parts revenues. The increase in
school bus parts sales is primarily attributable to the April 1995 acquisition
of a school bus parts distribution company. Gross margin as a percent of
revenues decreased to 23.2% in 1995 from 24.9% in the preceding year. The
reduction in gross margin percentage primarily resulted from higher distribution
costs in 1995 compared to 1994 reflecting an increase in capacity to accommodate
anticipated growth from diesel engine and school bus parts sales.


                                       12
<PAGE>   14
      Depreciation and amortization. Depreciation and amortization increased
from $9.1 million during 1994 to $14.6 million during 1995. The increase is due
to the depreciation and amortization related to the revaluation of fixed assets
and recognition of goodwill, which occurred due to the Merger with Grupo Dina.

      Research and development expenses. For 1995 research and development
expenses were $2.9 million, or $1.2 million higher than 1994. The increase is
due to higher spending in 1995 for the development of a new tour and charter
model.

      Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $60.4 million for 1995 from $54.4 million
for 1994. During 1995, MCII experienced increased payroll and consulting
expenses as a result of the introduction of the diesel engine and school bus
parts lines and implementation of a new information system for use in new coach
manufacturing. However, as a percentage of revenues, selling, general and
administrative expenses in 1995 were consistent with 1994 at 11.7% and 11.6%,
respectively.

      Interest expense. Interest expense for 1995 was $13.4 million compared to
$4.3 million in the preceding year. The increase is a result of additional
borrowings outstanding and a higher average interest rate during 1995 compared
to 1994.

      Loss (gain) on equity investments. For 1995, the Company realized a $10.5
million gain on sale of an investment in GLI common stock.

      Income taxes. MCII Holdings' effective combined income tax rates,
excluding the effect of non-deductible goodwill amortization, merger related
costs in 1994, a lower Canadian capital gains rate and the tax effect of a
foreign dividend received, were 40.7% and 41.2% for 1995 and 1994, respectively.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    MCII Holdings' consolidated financial statements and Report of Independent
Accountants is set forth at pages F-1 to F-26 of this Annual Report on Form
10-K.


                                       13
<PAGE>   15
      The following table sets forth the condensed quarterly operating results
of MCII Holdings. In the opinion of management, such quarterly information has
been prepared on the same basis as MCII Holdings' annual audited consolidated
financial statements and includes all adjustments consisting of normal recurring
adjustments, necessary to present fairly the information for the periods when
read in conjunction with the consolidated financial statements and notes
thereto. The operating results for any one quarter are not necessarily
indicative of the results to be achieved for a full year or any future quarter.


                  Unaudited Supplementary Financial Information
                            (In Millions of Dollars)

<TABLE>
<CAPTION>
                         Mar 31,    Jun 30,    Sep 30,    Dec 31,    Mar 31,    Jun 30,    Sep 30,    Dec 31,
                            1995       1995       1995       1995       1996       1996       1996       1996
<S>                      <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>  
Revenues                   124.4      145.6       96.6      149.7      142.1      177.7      127.1      214.4

Operating Income            10.6       17.8        1.4        8.5        8.1       20.6        7.6       18.3

Income (Loss) From                 
Continuing Operations        4.2        8.1       (1.8)       7.8        2.4       10.1        2.6        7.7

Discontinued
Operations                                                                         (5.0)

Extraordinary Charges                                                                                    (0.9)
Net Income (Loss)            4.2        8.1       (1.8)       7.8        2.4        5.1        2.6        6.8
</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

    None.


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    This Item has been omitted pursuant to General Instruction J of Form 10-K
which provides for a reduced disclosure format.


ITEM 11. EXECUTIVE COMPENSATION

    This item has been omitted pursuant to General Instruction J of Form 10-K
which provides for a reduced disclosure format.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    This item has been omitted pursuant to General Instruction J of Form 10-K
which provides for a reduced disclosure format.


                                       14
<PAGE>   16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    This item has been omitted pursuant to General Instruction J of Form 10-K
which provides for a reduced disclosure format.


                                     PART IV


ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

    (A) LIST OF DOCUMENTS FILED

   1. FINANCIAL STATEMENTS

      Report of Independent Accountants

      Balance Sheet, December 31, 1996 and 1995

      Statement of Consolidated Income,
      years ended December 31, 1996 and 1995, the five month period ended
      December 31, 1994 and the seven month period ended July 31, 1994.

      Statement of Consolidated Changes in Stockholder's Equity,
      years ended December 31, 1996 and 1995, the five month period ended
      December 31, 1994 and the seven month period ended July 31, 1994.


      Statement of Consolidated Cash Flows,
      years ended December 31, 1996 and 1995, the five month period ended
      December 31, 1994 and the seven month period ended July 31, 1994.


      Notes to Consolidated Financial Statements

   2. FINANCIAL STATEMENT SCHEDULES

      Report of Independent Accountants

      Schedule I -- Condensed Financial Information of Registrant

      All other schedules are omitted because they are not applicable or the
      required information is presented in the consolidated financial statements
      or notes thereto.

   3. EXHIBITS


      EXHIBIT NO.                         DESCRIPTION
      -----------                         -----------

         3.1*    Restated Certificate of Incorporation of MCII Holdings

         3.2*    Bylaws of MCII Holdings

         4.1*    $125,000,000 Credit Agreement, dated as of September
                 30, 1996, among Transportation Manufacturing
                 Operations, Inc. as the Borrower, the Lenders Parties
                 thereto and NBD Bank as Administrative Agent.


                                       15
<PAGE>   17
         4.2     Amendment No. 1 dated December 17, 1996 to $125,000,000
                 Credit Agreement dated as of September 30, 1996.

         4.3**   $125,000,000 9.02% Senior Notes Due November 15, 2002 Note
                 Agreement, as amended by letter agreement, dated April 1995.

         4.4*    Form of Amendment to $125,000,000 9.02% Senior Notes Due
                 November 15, 2002 Note Agreement as executed by the requisite
                 holders of the Notes.

         4.5*    Intercreditor Agreement, dated as of September 30, 1996, by and
                 among the Lenders under the $125,000,000 Credit Agreement dated
                 as of September 30, 1996, NBD Bank, and the holders of the
                 9.02% Senior Notes due 2002 issued by Transportation
                 Manufacturing Operations, Inc.

   
         4.6     Indenture, dated as of April 30, 1996, between Grupo Dina and
                 IBJ Schroder Bank & Trust Company, as Trustee, relating to the
                 Notes, including the form of Old Note and New Note, filed as
                 Exhibit 2.4 to Grupo Dina's Annual Report on Form 20-F for the
                 year ended December 31, 1995 and incorporated by reference
                 herein.
    
        10.1**   Bus Purchase Requirements Agreement by and among GLI Operating
                 Company, Greyhound Lines, Inc., Transportation Manufacturing
                 Corporation and Motor Coach Industries, Inc., as amended by: a
                 letter agreement dated June 15, 1987 from GLI Holding Company
                 to The Greyhound Corporation; Amendment to Bus Purchase
                 Requirements Agreement; entered into as of June 30, 1988 by and
                 among GLI Operating Company, Transportation Leasing Co.,
                 Transportation Manufacturing Corporation and Motor Coach
                 Industries, Inc.; Term Sheet/Agreement in Principle dated July
                 13, 1988 among GLI Holding Company and The Greyhound
                 Corporation; Claims Treatment Agreement made and entered into
                 as of August, 1991 among Greyhound Lines, Inc., the other
                 Debtors signatory thereto and The Greyhound Corporation; and
                 Amendment Number 2 to Bus Purchase Requirements Agreement
                 executed as of December 21, 1994 by Greyhound Lines, Inc.,
                 Transportation Leasing Co., Motor Coach Industries, Inc. and
                 Transportation Manufacturing Corporation.

        10.2*    In Re: The Flxible Corporation, United State Bankruptcy
                 Court, Southern District of Ohio, Eastern Division,
                 Order Authorizing and Approving Sale of Debtor's Assets
                 Pursuant to Sections 363 and 365 of the Bankruptcy Code.

        10.3**   Parts Purchase and Supply Agreement entered into as of
                 May 1, 1994 by and between Greyhound Lines, Inc. and
                 Universal Coach Parts, Inc., as amended by Amendment
                 No. 1 entered into as of May 1, 1994.

        10.4**   Limited Recourse Chattel Paper Purchase Agreement dated
                 as of March 31, 1994 between MCI Acceptance Corp. and
                 The CIT Group/Equipment Financing, Inc. and related
                 Guaranty dated as of March 31, 1994; and Amendment No.
                 1 dated May 15, 1995 and related Guaranty dated as of
                 May 15, 1995.

        10.5***  Registration Agreement, dated June 3, 1996, among Grupo Dina,
                 MCII Holdings and Salomon Brothers, Inc., Alliance Capital
                 Management Corporation and John Hancock Mutual Life Insurance
                 Company.

        10.6*    Coach Purchase Agreement, dated August 1, 1995, between
                 Dina Autobuses, S.A. de C.V. and Hausman Bus Sales, Inc.
   
        10.7*    Employment Agreement, dated as of September 30, 1996, between
                 Universal Coach Parts, Inc. and Jerry W. Bost.
    

   
        10.8*    Employment Agreement, dated as of September 30, 1996, between
                 Transportation Manufacturing Operations, Inc. and James P.
                 Bernacchi.
    

        12       Computation of ratio of earnings to fixed charges.

        21       List of Subsidiaries of MCII Holdings.

        27       EDGAR Financial Data Schedule.


                                       16
<PAGE>   18



      * Previously filed on Form F-1/S-1, Registration No. 333-08843, and
incorporated herein by reference.

      ** Previously filed on Form 20F for the year ended December 31, 1994 and
incorporated herein by reference.

      *** Previously filed on Form 20F for the year ended December 31, 1995 and
incorporated herein by reference.

      (B) REPORTS ON FORM 8-K

      The Company did not file any reports on Form 8-K during the fourth quarter
of the fiscal year covered by this report.


                                       17
<PAGE>   19
                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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.

DATE:  March 24, 1997            MCII HOLDINGS (USA), INC. (Registrant)


                                        By: /s/ Guillermo Kareh Aarun
                                           ------------------------------------
                                        Director, General Counsel and Secretary


      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signature                              Title                         Date
        ---------                              -----                         ----
<S>                           <C>                                        <C> 
 /s/ Rafael Gomez Flores                President and Director           March 24, 1997
--------------------------          (Principal Executive Officer)
   Rafael Gomez Flores

 /s/ Juan Jaime Petersen         Vice President and Chief Financial      March 24, 1997
--------------------------             Officer and Director
   Juan Jaime Petersen          (Principal Financial and Accounting
                                              Officer)

/s/ Gamaliel Garcia Cortes                    Director                   March 24, 1997
--------------------------
  Gamaliel Garcia Cortes

/s/ Guillermo Kareh Aarun     Director, General Counsel and Secretary    March 24, 1997
--------------------------
  Guillermo Kareh Aarun               

  /s/ Stephen P. Glennon                      Director                   March 27, 1997
--------------------------
    Stephen P. Glennon
</TABLE>


                                       18
<PAGE>   20
                            MCII HOLDINGS (USA), INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                                  AND SCHEDULES


<PAGE>   21
Report of Independent Accountants

February 28, 1997

To the Stockholder of MCII Holdings (USA), Inc.:

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, changes in stockholder's equity and cash
flows present fairly, in all material respects, the financial position of MCII
Holdings (USA), Inc. and its subsidiaries (the Company) at December 31, 1996,
and the results of their operations and their cash flows for the year in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

The financial statements of the Company for the years ended December 31, 1995
and 1994 were audited by other independent accountants whose reports dated
February 19, 1996 and February 24, 1995, respectively, expressed unqualified
opinions.

Price Waterhouse LLP

Chicago, Illinois 


                                    
<PAGE>   22
                            MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                           CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>
                                                                               December 31,    December 31,
(000 omitted, except share data)                                                  1996             1995
-----------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>      
                                     ASSETS
Current assets:
  Cash and cash equivalents                                                     $   7,979       $  30,607
  Receivables, less allowance of $1,637 and $1,903                                 48,740          34,936
  Current portion of notes receivable                                               4,615           4,722
  Inventories                                                                     169,883         146,718
  Deferred income taxes                                                            12,308           8,570
  Other current assets                                                              3,589           4,073
                                                                                ---------       ---------
    Total current assets                                                          247,114         229,626
Property, plant and equipment                                                      81,046          75,021
Notes receivable                                                                   27,574          30,909
Assets and liabilities of discontinued operations, net                                             11,311
Deferred income taxes                                                               8,208          14,350
Intangibles                                                                       236,954         242,923
Other assets                                                                        8,273           9,902
                                                                                ---------       ---------
                                                                                $ 609,169       $ 614,042
                                                                                =========       =========

                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Bank overdrafts                                                               $   2,656       $     504
  Accounts payable                                                                 31,157          24,722
  Accrued compensation and other benefits                                          11,641          13,101
  Accrued warranties                                                                9,543           5,381
  Accrued income taxes                                                              6,713          11,924
  Insurance reserves                                                                5,325           5,337
  Other current liabilities                                                        15,782          11,972
                                                                                ---------       ---------
    Total current liabilities                                                      82,817          72,941
Long-term debt                                                                    210,520         217,668
Pensions and other benefits                                                        11,185           8,866
Assets and liabilities of discontinued operations, net                                 89
Other deferred items and insurance reserves                                        17,785          13,146
Deferred income taxes                                                               6,073           6,613
Commitments and contingent liabilities (Notes G,I,L,M,N,O,S)
Stockholder's equity:
  Common stock, $.01 par value, 1,000 shares authorized and issued
  Additional capital                                                              317,465         317,465
  Deficit                                                                         (31,923)        (18,856)
  Unfunded pension loss, net of taxes                                                (423)
  Cumulative translation adjustments                                               (4,419)         (3,801)
                                                                                ---------       ---------
    Total stockholder's equity                                                    280,700         294,808
                                                                                ---------       ---------
                                                                                $ 609,169       $ 614,042
                                                                                =========       =========
</TABLE>


                 See notes to consolidated financial statements.


                                     F - 1

<PAGE>   23
                           MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                        STATEMENT OF CONSOLIDATED INCOME

<TABLE>
<CAPTION>
                                                                                                               Predecessor
                                                                                                              --------------
                                                                Year Ended December 31,   Five Months Ended    Seven Months
                                                                -----------------------      December 31,     Ended July 31, 
(000 omitted)                                                    1996            1995            1994              1994
----------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>         <C>                 <C>      
Revenues:
  Sales                                                       $ 653,032       $ 509,925       $ 191,789         $ 271,797
  Finance income                                                  8,261           6,412           2,584             1,297
                                                              ---------       ---------       ---------         ---------
                                                                661,293         516,337         194,373           273,094
                                                              ---------       ---------       ---------         ---------
Operating costs and expenses:                                                                                  
  Cost of sales (exclusive of items shown separately below)     517,571         397,395         151,614           203,538
  Depreciation and amortization                                  16,658          14,618           5,841             3,279
  Interest expense, finance operations                            3,605           2,658             693               291
  Research and development expenses                               7,287           2,915             492             1,238
  Provision for relocation of Corporate office (Note R)           3,000                                        
  Selling, general and administrative expenses                   58,519          60,412          26,614            27,825
                                                              ---------       ---------       ---------         ---------
                                                                606,640         477,998         185,254           236,171
                                                              ---------       ---------       ---------         ---------
Operating income                                                 54,653          38,339           9,119            36,923
                                                              ---------       ---------       ---------         ---------
Other (income) and expense:                                                                                    
  Interest expense                                               13,347          13,435           2,464             1,812
  Other (income)                                                 (1,245)           (469)           (189)             (225)
  Loss (gain) on equity investments (Note Q)                      1,200         (10,522)                       
  Merger related expenses (Note B)                                                                                 11,294
  Minority interests                                                                                                  378
                                                              ---------       ---------       ---------         ---------
                                                                 13,302           2,444           2,275            13,259
                                                              ---------       ---------       ---------         ---------
Income before income taxes                                       41,351          35,895           6,844            23,664
Income taxes                                                     18,567          17,637           3,958            11,522
                                                              ---------       ---------       ---------         ---------
Income from continuing operations                                22,784          18,258           2,886            12,142
                                                              ---------       ---------       ---------         ---------
Discontinued operations:                                                                                       
  Loss on disposal of transit manufacturing, net of                                                            
    tax benefit of $3,130 and $1,885                             (5,000)                                           (3,500)
                                                              ---------       ---------       ---------         ---------
Income before extraordinary charge                               17,784          18,258           2,886             8,642
Extraordinary charge for early retirement of debt,                                                             
  net of tax benefit of $550                                       (851)                                       
                                                              ---------       ---------       ---------         --------- 
Net income                                                    $  16,933       $  18,258       $   2,886         $   8,642
                                                              =========       =========       =========         =========
</TABLE>                                                                        


                See notes to consolidated financial statements.


                                      F-2
<PAGE>   24
                           MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

            STATEMENT OF CONSOLIDATED CHANGES IN STOCKHOLDER'S EQUITY



<TABLE>
<CAPTION>
                                                                              Unfunded   Cumulative
                                         Common    Additional                 Pension    Translation
(000 omitted)                             Stock     Capital        Deficit      Loss     Adjustment      Total
----------------------------------------------------------------------------------------------------------------
<S>                                      <C>       <C>           <C>          <C>        <C>           <C>      
BALANCE, JANUARY 1, 1994 (PREDECESSOR)   $  202    $ 147,400     $ (46,879)   $     0    $  (2,354)    $  98,369
                                                                                                      
Net income                                                           8,642                                 8,642
Common stock issued in connection with                                                                
  employee benefit plan                                1,140                                               1,140
Unrealized translation loss                                                                 (2,733)       (2,733)
Dividends on common stock                                           (2,017)                               (2,017)
                                         ------    ---------     ---------    -------    ---------     ---------
BALANCE, JULY 31, 1994 (PREDECESSOR)        202      148,540       (40,254)         0       (5,087)      103,401
                                                                                                      
Effect of push-down purchase                                                                          
  accounting adjustments due to                                                                       
  Dina's acquisition of MCII               (202)     168,925        40,254                    (751)      208,226
Net income                                                           2,886                                 2,886
Unrealized translation loss                                                                 (1,701)       (1,701)
Dividends on common stock                                          (40,000)                              (40,000)
                                         ------    ---------     ---------    -------    ---------     ---------
BALANCE, DECEMBER 31, 1994                    0      317,465       (37,114)         0       (7,539)      272,812
                                                                                                      
Net income                                                          18,258                                18,258
Unrealized translation gain                                                                  3,738         3,738
                                         ------    ---------     ---------    -------    ---------     ---------
BALANCE, DECEMBER 31, 1995                    0      317,465       (18,856)         0       (3,801)      294,808
                                                                                                      
Net income                                                          16,933                                16,933
Unrealized translation loss                                                                   (618)         (618)
Unfunded pension loss                                                            (423)                      (423)
Dividends on common stock                                          (30,000)                              (30,000)
                                         ------    ---------     ---------    -------    ---------     ---------
BALANCE, DECEMBER 31, 1996               $    0    $ 317,465     $ (31,923)   $  (423)   $  (4,419)    $ 280,700
                                         ======    =========     =========    =======    =========     =========
</TABLE>                                                                        


                 See notes to consolidated financial statements.


                                      F-3
<PAGE>   25
                           MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                      STATEMENT OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                      Predecessor
                                                                                                                     --------------
                                                                      Year Ended December 31,     Five Months Ended   Seven Months
                                                                     -------------------------       December 31,    Ended July 31,
(000 omitted)                                                          1996             1995            1994             1994
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>              <C>             <C>     
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
  Net income                                                         $ 16,933        $  18,258        $  2,886        $  8,642
  Adjustments to reconcile net income to net cash
    provided (used) by operations:
    Depreciation and amortization                                      16,658           14,618           5,841           3,279
    Deferred income taxes                                              (4,610)           1,019          (1,760)          1,187
    Discontinued operations                                             5,000                                            3,500
    Extraordinary charge for early retirement of debt                     851
    Provision for relocation of Corporate office                        3,000
    Gain on sale of property and notes receivable                      (1,664)          (1,945)            180             (69)
    Loss (gain) on equity investments                                   1,200          (10,522)
    Other noncash items, net                                               85            4,335          (1,524)         (1,145)
    Change in operating assets and liabilities:
      Receivables                                                     (14,746)          (8,649)         (2,536)          3,280
      Inventories                                                     (10,794)         (24,384)        (11,662)        (16,706)
      Accounts payable                                                  6,746             (770)          4,780         (10,825)
      Accrued income taxes                                             (5,211)           6,064          (4,788)         (3,567)
      Other current liabilities                                         4,700            2,235           1,022           9,031
      Other assets and liabilities, net                                11,375           (5,484)         (3,211)          1,566
                                                                     --------        ---------        --------        --------
Net cash provided (used) by operating activities                       29,523           (5,225)        (10,772)         (1,827)
                                                                     --------        ---------        --------        --------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
  Capital expenditures                                                (12,978)         (12,559)         (4,915)         (1,936)
  Investment in assets held for lease                                 (54,538)         (45,667)           (689)         (6,846)
  Proceeds from sale of property and assets held for lease             50,880           32,466              96             345
  Investments in, or purchases of, businesses or equity investments   (12,200)         (17,742)                        (34,616)
  Proceeds from sale of equity investments                                              23,716
  Proceeds from sale of notes receivable                               26,229            8,209           3,463           1,107
  Investment in notes receivable                                      (40,344)         (26,483)        (18,090)        (19,739)
  Collections of notes receivable                                      18,844           21,095           2,029           1,050
  Assets and liabilities of discontinued operations, net                6,400           24,210          23,671             489
                                                                     --------        ---------        --------        --------
Net cash provided (used) by investing activities                      (17,707)           7,245           5,565         (60,146)
                                                                     --------        ---------        --------        --------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
  Net change in bank overdrafts                                         2,152           (5,230)           (680)           (730)
  Additional long-term borrowings                                      68,000                          125,000
  Payment of long-term borrowings                                     (68,148)             (74)        (42,000)
  Net change in bank credit facilities                                 (7,000)          22,000         (49,000)         70,533
  Termination of interest rate swap position                            4,733            4,950
  Payment of debt issuance costs                                       (3,330)
  Extraordinary charge for early retirement of debt                      (851)
  Dividends on common stock                                           (30,000)                         (34,000)         (2,017)
  Common stock issued                                                                                                    1,140
                                                                     --------        ---------        --------        --------
Net cash provided (used) by financing activities                      (34,444)          21,646            (680)         68,926
                                                                     --------        ---------        --------        --------
Net increase (decrease) in cash and cash equivalents                  (22,628)          23,666          (5,887)          6,953
Cash and cash equivalents, beginning of period                         30,607            6,941          12,828           5,875
                                                                     --------        ---------        --------        --------
Cash and cash equivalents, end of period                             $  7,979        $  30,607        $  6,941        $ 12,828
                                                                     ========        =========        ========        ========
</TABLE>


                See notes to consolidated financial statements.

                                      F-4

<PAGE>   26
                            MCII HOLDINGS (USA), INC.
                          (A WHOLLY OWNED SUBSIDIARY OF
                      CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A.   BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

     The consolidated financial statements include the accounts of MCII Holdings
(USA), Inc. and subsidiaries ("MCII Holdings" or the "Company"). Financial
statements of the Company as of and for any period prior to the August 8, 1994
acquisition described below are designated as "Predecessor."

     MCII Holdings was formed for the purpose of holding Motor Coach Industries
International, Inc. ("MCII") as its wholly owned subsidiary. On May 28, 1996,
Grupo Dina transferred to MCII Holdings all 100 shares of MCII $.01 par value
common stock, in exchange for which MCII Holdings issued to Grupo Dina all 1,000
shares of its $.01 par value common stock. As a result of this exchange between
entities under common control, the transaction was accounted for at historical
cost in a manner similar to that in a pooling of interests and, therefore, all
prior financial statements presented have been restated as if the exchange took
place at the beginning of such periods.

     On August 8, 1994, Consorcio G Grupo Dina, S.A. de C.V. ("Grupo Dina")
acquired all of the issued and outstanding common stock of MCII. As a result of
this transaction, the assets and liabilities of MCII were stated at estimated
fair value as of the acquisition date, and the excess of the consideration paid
by Grupo Dina over the estimated fair value of the net assets acquired was
recorded as goodwill. For financial reporting purposes, the Company accounted
for the transaction effective August 1, 1994. See Note R for further discussion.

     The Company is a manufacturer of coaches, and a manufacturer and
distributor of coach and transit bus replacement parts, with manufacturing
facilities in the United States and Canada. Sales are made predominately in the
United States and Canada to a diversified customer base, including independent
coach operators, national coach fleet operators, government agencies and others.

     The financial statements have been prepared in accordance with generally
accepted accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses as well as contingent assets and liabilities
disclosed in the financial statements. Actual results could differ from those
amounts reported or disclosed. However, management does not believe that such
differences, if any, would be material to the Company's financial condition or
results of operations. Intercompany accounts and transactions between the
Company and its subsidiaries have been eliminated. Certain reclassifications
have been made to the financial statements of prior periods to conform 


                                      F-5
<PAGE>   27
to 1996 classifications. Described below are those accounting policies that are
particularly significant to the Company, including those selected from
acceptable alternatives.

CASH EQUIVALENTS

     The Company considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents.

INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is generally
determined on a first-in, first-out basis.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost. Depreciation is provided
principally by use of the straight-line method at annual rates as follows:

<TABLE>
<CAPTION>
<S>                                                       <C>  
     Buildings and leasehold improvements                  3% to 25%
     Assets held for lease                                10% to 20%
     Machinery and equipment                               6% to 33%
</TABLE>

NOTES RECEIVABLE

     Notes receivable are collateralized by coaches. Substantially all contracts
carry floating rates of interest based on the creditworthiness of each
individual purchaser. The allowance for uncollectible contracts is adjusted
periodically based on an evaluation of individual contract collectibility.

INTANGIBLES

     Intangibles, which consist primarily of goodwill, are carried at cost less
accumulated amortization of $15,294,000 at December 31, 1996 and $8,991,000 at
December 31, 1995. Intangibles are amortized primarily on the straight-line
method over the periods of expected benefit, but not in excess of 40 years. The
Company evaluates the carrying value of goodwill and other intangible assets at
each reporting period for possible impairment in accordance with the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of."

WARRANTY

     At the time of sale, an accrual for warranty claims, which is based upon
management's estimate of future warranty liabilities, is recorded and charged to
operations. Actual warranty expenditures are charged to the accrual as incurred,
and periodically the accrual is reviewed for adequacy in light of actual
experience and adjustments are recorded if necessary.


                                      F-6
<PAGE>   28
RESEARCH AND DEVELOPMENT

     Research and development expenses, net of contributions, are charged to
income as incurred.

FOREIGN CURRENCY EXCHANGE

     The Company enters into foreign exchange forward contracts to hedge certain
firm and anticipated purchase commitments settled in foreign currencies as a
means of reducing exposure to fluctuations in foreign exchange rates. The
Company does not engage in foreign currency speculation. The contracts do not
subject the Company to risk due to exchange rate movements as gains and losses
on the contracts offset gains and losses on the transactions being hedged.
Foreign currency transactions which are not hedged are converted at the exchange
rate in effect at the date of the transaction. Any gain or loss resulting from
the translation is included in the income statement.

PENSIONS AND OTHER BENEFITS

     Trusteed, noncontributory pension plans cover substantially all employees.
Benefits for the noncontributory plans are based primarily on final average
salary and years of service. Net periodic pension cost for the Company is based
on the provisions of SFAS No. 87, "Employers' Accounting for Pensions." Funding
policies provide that payments to pension trusts shall be at least equal to the
minimum funding required by applicable regulations.

     The Company has defined benefit post retirement plans that provide medical 
and life insurance for eligible retirees and dependents. The net periodic
postretirement benefit cost for the Company is based upon the provisions of SFAS
No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions."


B.   PROVISION FOR THE RELOCATION OF CORPORATE HEADQUARTERS

     During December 1996, the Company provided $3,000,000 for exit costs
associated with the decision to relocate the Company's corporate headquarters
from Phoenix, Arizona to Des Plaines, Illinois. The exit costs associated with
the relocation, which is expected to occur during the first quarter of 1997,
consist of approximately $1,600,000 for abandonment cost related to the Phoenix
office lease and $1,400,000 for severance and other costs. At December 31, 1996,
severance and other costs totaling $61,000 had been paid and charged against the
reserves. The remaining $2,939,000 of reserves are included in the Consolidated
Balance Sheet under the captions, "Other current liabilities" ($1,884,000) and
"Other deferred items and insurance reserves" ($1,055,000). Substantially all of
the remaining severance and other costs will be paid in 1997 and the lease costs
will be paid through 2003.


                                      F-7

<PAGE>   29
C.   ACQUISITIONS

     In October 1996, the Company purchased certain assets of The Flxible
Corporation ("Flxible") that were being sold through bankruptcy proceedings.
Flxible was a manufacturer of transit buses and distributor of related
replacement parts. The assets were purchased for $12.2 million, funded from the
Company's bank credit facility, and will be utilized for the purpose of becoming
the OEM parts distributor for the installed fleet of Flxible transit buses. The
fair value of assets acquired was $9,774,000 in inventory and $2,426,000 in
property, plant and equipment.

     In November 1995, the Company purchased, for $2,021,000, a 70% ownership
interest in Nanjing Starley Transportation Company Limited, an intercity coach
operation which provides regularly scheduled passenger service in China. The
investment, which is being accounted for under the equity method, was made by
contributing ten refurbished used coaches valued at $1,071,000 and payment of
related fees, duties and shipping costs of $950,000.

     In April 1995, the Company acquired substantially all of the net assets of
Billingsley Parts and Equipment, Inc., a distributor of school bus parts. The
acquisition was accounted for as a purchase in which total consideration was
$2,890,000, of which $2,000,000 was paid in cash and the remainder in the form
of a note payable.

         In February 1994, the Company acquired the remaining 31% of the
outstanding stock of its then 69% owned Canadian coach manufacturing subsidiary,
Motor Coach Industries Limited ("MCIL"), for $34,290,000. The acquisition was
accounted for as a purchase and the excess of the purchase price over the
estimated fair value of net assets acquired was $11,933,000. Such excess is
being amortized over 40 years using the straight line method. As a result of
this acquisition, no additional charge to minority interests will be recorded in
the Statement of Consolidated Income subsequent to the acquisition date.

         The following table reflects the changes made in the accounts of MCIL
as a result of applying push down purchase accounting:

<TABLE>
<CAPTION>
                                                           (000 OMITTED)
         <S>                                               <C>
         Assets:
              Property, plant and equipment                   $15,500
              Intangibles                                      11,933
                                                              -------
                                                              $27,433
                                                              =======
         Liabilities and Equity:
              Deferred income taxes                           $ 6,425
              Pensions and other benefits                         235
              Stockholders' equity                             20,773
                                                              -------
                                                              $27,433
                                                              =======
</TABLE>


                                      F-8

<PAGE>   30
         The purchase accounting adjustments described above have resulted in an
increase in depreciation expense due to the step-up in the basis of property,
plant and equipment, and an increase in amortization expense due to the creation
of the intangible. As a result of these adjustments, depreciation and
amortization expenses for 1996, 1995 and 1994 increased by $1,879,000,
$1,879,000 and $1,598,000, respectively.


D.   DISCONTINUED OPERATIONS

     In November 1993, the Board of Directors of MCII approved a plan of
disposition of the transit bus manufacturing segment. This decision was based
upon management's review of market activities, business prospects, competitive
bidding, evaluation of backlogs, economic value analysis, and opportunities for
cost reduction, which indicated that the transit bus manufacturing business may
not achieve acceptable profitability in the foreseeable future. As a result of
this decision, a charge to discontinued operations of $87,202,000 ($53,629,000
after-tax) was recorded in the third quarter of 1993 to reflect the estimated
loss on disposal of the transit manufacturing segment. During 1994 and 1996,
based upon further analysis of the estimated loss to be incurred on the
disposal, additional provisions of $5,385,000 ($3,500,000 after-tax) and
$8,130,000 ($5,000,000 after-tax), respectively, were recorded resulting in
total charges relating to discontinued operations of $100,717,000 ($62,129,000
after-tax).

     In November 1994, the Company sold the fixed assets and certain of the
inventory of the transit bus manufacturing business, as well as the right to
manufacture, remanufacture and distribute transit buses previously made by the
Company, for aggregate consideration of $14,947,000. Additionally, the
purchaser, for a period of five years from the sale date, has agreed not to
distribute parts to transit buses previously made by the Company. The Company
retained all other assets and all of the remaining liabilities of the transit
manufacturing business.

     The summarized balance sheet of the transit manufacturing segment at
December 31 was as follows:

<TABLE>
<CAPTION>
                                            1996            1995
                                            ----            ----
                                                (000 OMITTED)
<S>                                       <C>             <C> 
Assets:
    Accounts receivable                   $  3,372        $18,247
    Other current assets                       815          2,548
    Deferred taxes and other assets          5,538          5,097
                                          --------        -------
                                             9,725         25,892
                                          --------        -------
Liabilities:
    Accounts payable                            --            378
    Other current liabilities                8,711         12,858
    Other liabilities                        1,103          1,345
                                          --------        -------
                                             9,814         14,581
                                          --------        -------
Assets and liabilities, net               $    (89)       $11,311
                                          ========        =======
</TABLE>


                                      F-9

<PAGE>   31
     As there were no operations in 1996, the following is a summary of the
operating results of the transit manufacturing segment for the years ended
December 31:

<TABLE>
<CAPTION>
                                                               1995             1994
                                                               ----             ----
                                                                   (000 OMITTED)
     <S>                                                     <C>             <C>      
     Revenues                                                $ 24,278        $ 166,235
     Operating costs and expenses                              24,881          177,009
                                                             --------        --------- 
                                                                 (603)         (10,774)
     Income tax benefit                                           232            4,148
                                                             --------        --------- 
     Losses charged to discontinued operations reserve       $   (371)       $  (6,626)
                                                             ========        =========
</TABLE>

     The cumulative loss on disposal of the transit manufacturing segment,
recorded in 1993, 1994 and 1996, included the following components:

<TABLE>
<CAPTION>
                                                                (000 OMITTED)
     <S>                                                        <C>      
     Write-down of assets to estimated liquidation value          $  58,454
     Provision for shut-down costs and other reserves                21,841
     Provision for operating losses during phase-out period          20,422
                                                                  ---------
                                                                    100,717
     Tax benefit                                                    (38,588)
                                                                  ---------
                                                                  $  62,129
                                                                  =========
</TABLE>

E.   INVENTORIES

     Inventories at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                       1996             1995
                                                       ----             ----
                                                           (000 OMITTED)
     <S>                                            <C>              <C>      
     Raw materials                                  $  21,065        $  26,219
     Work in process                                   32,614           36,371
     Finished goods                                   129,214           98,979
                                                    ---------        ---------
                                                      182,893          161,569
     Excess quantity and obsolescence reserve         (13,010)         (14,851)
                                                    ---------        ---------
                                                    $ 169,883        $ 146,718
                                                    =========        =========
</TABLE>


                                      F-10
<PAGE>   32
F.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                            1996            1995
                                                            ----            ----
                                                                (000 OMITTED)
     <S>                                                  <C>             <C>     
     Land                                                 $  4,935        $  3,459
     Buildings and leasehold improvements                   32,375          31,947
     Assets held for lease                                  19,368          21,361
     Machinery and equipment                                40,730          27,896
                                                          --------        --------
                                                            97,408          84,663
     Less accumulated depreciation and amortization        (16,362)         (9,642)
                                                          --------        --------
                                                          $ 81,046        $ 75,021
                                                          ========        ========
</TABLE>

     Depreciation and amortization expense for property, plant and equipment was
$9,004,000, $7,778,000, $3,263,000 and $2,839,000 for the years ended December
31, 1996 and 1995, the five month period ended December 31, 1994 and the seven
month period ended July 31, 1994 respectively.


G.   NOTES RECEIVABLE

     Notes receivable at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                            1996            1995
                                                            ----            ----
                                                                (000 OMITTED)
     <S>                                                  <C>             <C> 
     Notes receivable, net of allowance for
         uncollectible contracts of $1,285 and $890       $ 32,189        $ 35,631
     Less current portion                                   (4,615)         (4,722)
                                                          --------        --------
     Long-term notes receivable                           $ 27,574        $ 30,909
                                                          ========        ========
</TABLE>

     During the years ended December 31, 1996 and 1995, the five month period
ended December 31, 1994 and the seven month period ended July 31, 1994, the
Company sold $42,705,000, $42,366,000, $21,486,000 and $23,097,000 of its notes
receivable for $44,328,000, $44,126,000, $22,386,000 and $23,642,000,
respectively. The Company has agreed to repurchase, for the unpaid balance, any
contract for which there has been a material breach of any warranty,
representation, covenant or other obligation of the Company as specified in the
contract. In the case of default by a debtor, the purchaser, after taking
possession of the underlying collateral 


                                      F-11
<PAGE>   33
equipment, may permit the Company to remarket the equipment. The Company is
required to reimburse the purchaser for any losses as a result of defaults up to
an aggregate of $5,135,000 at December 31, 1996.

     Scheduled annual maturities of notes receivable at December 31, 1996 are
$4,615,000 (1997), $4,478,000 (1998), $4,560,000 (1999), $3,580,000 (2000),
$3,336,000 (2001), and $12,905,000 (thereafter).


H.   LONG-TERM DEBT

     Long-term debt at December 31 was as follows:

<TABLE>
<CAPTION>
                                                      1996             1995
                                                      ----             ----
                                                          (000 OMITTED)
     <S>                                            <C>              <C>       
     Borrowings under bank credit facility          $  85,000        $  92,000
     Term notes payable, due to 2002                  125,000          125,000
     Note payable at 7% due to 2001                       668              816
                                                    ---------        ---------
                                                      210,668          217,816
     Less current portion                                 148              148
                                                    ---------        ---------
     Long-term debt                                 $ 210,520        $ 217,668
                                                    =========        =========
</TABLE>

     In October 1996, the Company refinanced its bank credit facility. The new
credit facility provides up to $125,000,000 for borrowing purposes, of which up
to $35,000,000 is available for issuance of standby letters of credit, and
contains other terms which are substantially similar to the facility refinanced.
Borrowings are available under the new facility on a revolving basis through
September 30, 1999. As a result of this refinancing, the Company recorded a $1.4
million ($851,000 after-tax) extraordinary charge for the write off of related
debt issuance costs. At December 31, 1996, the Company was contingently liable
under standby letters of credit in the amount of $6,122,000.

     Canadian revolving credit loans are available to a subsidiary of the
Company which provide for loans up to the Canadian equivalent of $7,297,000 of
which no amounts were outstanding at December 31, 1996. Borrowings were
available at December 31, 1996 on a revolving basis until January 31, 1997. The
Company is in the process of extending the term of the loan. Until a final
agreement is entered into, the bank has agreed to continue to allow borrowings
under this facility on a demand basis.

     The interest rates applicable to borrowings under these agreements are, at
the Company's option, indexed to the bank prime rate or the London Interbank
Offered Rate ("LIBOR"), plus appropriate spreads over such indices during the
period of each borrowing agreement. The agreements also provide for commitment
fees. Such spreads and fees can change based upon changes in the Company's
financial ratios. Annually, with the participating banks' consent, the term of
the agreements may be extended for one year.


                                      F-12

<PAGE>   34
     The Company has $125,000,000 of term notes payable which are due in annual
installments of $25,000,000 beginning in November 1998 and extending through
November 2002. Interest on the notes is at a fixed rate of 9.02%. However, the
Company entered into an interest rate swap agreement in November 1994 which
effectively changed the interest rate on the notes to LIBOR plus 1.14%. During
1996 and 1995, the Company terminated the swap in exchange for an aggregate cash
consideration of $9,683,000 which is being amortized as a reduction of interest
expense over the remaining life of the notes. As a result, the effective
interest rate is at a fixed rate of 7.31% on the $125,000,000 borrowing.

     The Company's long-term debt agreements include various restrictive
covenants and require the maintenance of certain defined financial ratios with
which the Company is in compliance. At December 31, 1996, no stockholder's 
equity was available for the payment of dividends by the Company.

     Annual maturities of long-term debt due in the next five years will
approximate $148,000 (1997), $25,148,000 (1998), $110,148,000 (1999),
$25,148,000 (2000), $25,076,000 (2001) and $25,000,000 (thereafter).

     Interest paid in the years ended December 31, 1996 and 1995, the five
months ended December 31, 1994 and the seven months ended July 31, 1994 was
$16,520,000, $15,920,000, $3,559,000 and $5,007,000, respectively.


I.   INCOME TAXES

     Income tax expense (benefit) for the years ended December 31 was comprised
of the following:

<TABLE>
<CAPTION>
                                            YEAR ENDED
                                           DECEMBER 31,        FIVE MONTHS ENDED  SEVEN MONTHS
                                       --------------------       DECEMBER 31,    ENDED JULY 31,
                                       1996            1995           1994            1994
                                       ----            ----           ----            ----
                                                                        (000 OMITTED)
     <S>                            <C>             <C>             <C>             <C>     
     Current:
         United States:
              Federal               $ 11,098        $  3,864        $  2,267        $  3,442
              State                    1,685           1,108             537           1,699
              Foreign                 10,394          11,646           2,914           5,194
                                    --------        --------        --------        --------
                                    $ 23,177        $ 16,618        $  5,718        $ 10,335
                                    ========        ========        ========        ========
     Deferred:
         United States:
              Federal                 (2,812)            373        $   (246)       $  1,220
              State                     (236)             79             (69)            (22)
              Foreign                 (1,562)            567          (1,445)            (11)
                                    --------        --------        --------        --------
                                      (4,610)          1,019          (1,760)          1,187
                                    --------        --------        --------        --------
     Total income tax expense       $ 18,567        $ 17,637        $  3,958        $ 11,522
                                    ========        ========        ========        ========
</TABLE>


                                      F-13

<PAGE>   35
     Deferred income tax assets and liabilities included in the Consolidated
Balance Sheet at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                    1996             1995
                                                    ----             ----
                                                        (000 OMITTED)
<S>                                               <C>             <C>     
     Deferred tax assets:
         Pensions and other benefits              $  5,775        $  4,979
         Allowances and reserves for losses         10,908           8,739
         Net operating loss carryforward             5,420          12,150
         Deferred state income taxes                 1,517           1,222
         Other                                       1,236             546
                                                  --------        --------
     Total gross deferred tax assets                24,856          27,636
                                                  --------        --------
     Deferred tax liabilities:
         Property, plant and equipment              (6,847)         (8,186)
         Intangibles                                (3,282)         (2,439)
         Installment sales                            (108)           (606)
         Other                                        (176)            (98)
                                                  --------        --------
     Total gross deferred tax liabilities          (10,413)        (11,329)
                                                  --------        --------
     Net deferred tax asset                       $ 14,443        $ 16,307
                                                  ========        ========
</TABLE>

     Income taxes paid (received) in the years ended December 31, 1996 and 1995,
the five month period ended December 31, 1994 and the seven month period ended
July 31, 1994 were $12,984,000, $4,606,000, $6,783,000 and $(1,268,000)
respectively.

     At December 31, 1996, the Company had a U.S. net operating loss carry
forward of $15,485,000 which expires in 2009.

     United States and Canadian income before income taxes for the years ended
December 31 was as follows:

<TABLE>
<CAPTION>
                                 YEAR ENDED
                                DECEMBER 31,             FIVE MONTHS ENDED   SEVEN MONTHS
                           ----------------------           DECEMBER 31,     ENDED JULY 31,
                           1996              1995              1994              1994
                           ----              ----              ----              ----
                                                  (000 OMITTED)
     <S>                 <C>               <C>               <C>               <C>    
     United States       $21,874           $12,979           $ 4,649           $12,123
     Canada               19,477            22,916             2,195            11,541
                         -------           -------           -------           -------
                         $41,351           $35,895           $ 6,844           $23,664
                         =======           =======           =======           =======
</TABLE>                                                                


                                      F-14
<PAGE>   36
     A reconciliation of the provision for income taxes and the amount that
would be computed using statutory federal income tax rates on income before
income taxes for the years ended December 31 is set forth below:

<TABLE>
<CAPTION>
                                                  YEAR ENDED
                                                 DECEMBER 31,       FIVE MONTHS ENDED  SEVEN MONTHS
                                              ------------------       DECEMBER 31,    ENDED JULY 31,
                                              1996          1995           1994            1994
                                              ----          ----           ----            ----
                                                               (000 OMITTED)
     <S>                                    <C>           <C>             <C>            <C>     
     Computed income tax provision at
         statutory tax rate of 35%          $14,473       $ 12,563        $2,395         $  8,283
     State income taxes                         942            773           304            1,090
     Canadian tax differences                 1,258            637           524              775
     Intangible amortization                  1,367          1,652           543               53
     Foreign dividend received                               2,039
     Minority interests                                                                       132
     Merger related expenses                                                                1,563
     Other, net                                 527            (27)          192             (374)
                                            -------       --------        ------         --------
     Total income tax expense               $18,567       $ 17,637        $3,958         $ 11,522
                                            =======       ========        ======         ========
</TABLE>

     The Company's U.S. federal income tax returns have been examined through 
1990 and are currently being examined for 1991, 1992, 1993 and 1994.

     The Company's Canadian income tax returns for 1982 through 1992 are
currently under review by Revenue Canada. Authorities have proposed imputing
additional income relating to transactions with a U.S. based subsidiary of the
Company. A formal reassessment has been issued by Revenue Canada on the 1985
return. A notice of objection has been filed by the Company for 1985. In the
event of an adverse judgment, the additional income taxes for 1982 through 1992
could amount to up to $26,000,000 plus interest of approximately $40,000,000
and, in addition, the Company may be subject to potential reassessments for
years subsequent to 1992 on the same basis which could result in additional
income taxes and interest, all before recoveries of U.S. Federal income taxes
which may be available to offset a portion of any additional taxes paid to
Canada. Although the Company is still in the process of obtaining additional
information, based upon its review of current relevant information, including
the advice of outside counsel, the Company is of the opinion that Revenue
Canada's arguments are without merit and that any liability from this matter
will not be material to its financial condition or results of operations.


                                      F-15

<PAGE>   37
J.   PENSION BENEFITS

     Net periodic pension cost for the two years ended December 31, 1996, 1995,
and the five month period ended December 31, 1994 and the seven month period
ended July 31, 1994 included the following components:

<TABLE>
<CAPTION>
                                                                 UNITED STATES
                                                 -----------------------------------------------------
                                                     YEAR ENDED
                                                    DECEMBER 31,     FIVE MONTHS ENDED  SEVEN MONTHS
                                                 ------------------     DECEMBER 31,    ENDED JULY 31,
                                                 1996          1995          1994          1994
                                                 ----          ----          ----          ----
                                                                 (000 OMITTED)
     <S>                                       <C>            <C>            <C>           <C>  
     Service cost benefits earned              $   996        $   797        $ 389         $ 545
         during the period                         
     Interest cost on projected                    896            827          269           377
         benefit obligation                       
     Actual return on plan assets               (1,019)        (1,592)        (135)         (189)
     Net amortization and deferral                 726          1,127          (78)         (109)
     Other items, primarily defined
         contribution plans, curtailment
         gains and settlement cost
                                                   618            842          162           227
                                               -------        -------        -----         -----
     Net pension cost                          $ 2,217        $ 2,001        $ 607         $ 851
                                               =======        =======        =====         =====
</TABLE>

<TABLE>
<CAPTION>
                                                                       CANADA
                                                 ----------------------------------------------------------
                                                      YEAR ENDED
                                                     DECEMBER 31,         FIVE MONTHS ENDED  SEVEN MONTHS
                                                 --------------------        DECEMBER 31,    ENDED JULY 31,
                                                 1996            1995            1994            1994
                                                 ----            ----            ----            ----
                                                                     (000 OMITTED)
     <S>                                       <C>               <C>            <C>             <C>
     Service cost benefits earned
         during the period                     $   452           $ 375          $ 134           $ 188
     Interest cost on projected                                                                
         benefit obligation                        415             401            143             200
     Actual return on plan assets                 (559)           (494)          (187)           (261)
     Net amortization and deferral                                                             
                                                     3               1             (3)             (4)
     Other items, primarily defined                                                            
         contribution plans, curtailment                                                       
         gains and settlement cost                 846             610            223             313
                                               -------           -----          -----           -----
     Net pension cost                          $ 1,157           $ 893          $ 310           $ 436
                                               =======           =====          =====           =====
</TABLE>                                                  


                                      F-16

<PAGE>   38
     The following tables indicate the plans' funded status and amounts
recognized in the Consolidated Balance Sheet at December 31:

<TABLE>
<CAPTION>
                                                                        UNITED STATES
                                                ---------------------------------------------------------------
                                                              1996                           1995
                                                              ----                           ----
                                                ASSETS EXCEED  ACCUMULATED      ASSETS EXCEED    ACCUMULATED
                                                 ACCUMULATED     BENEFITS        ACCUMULATED   BENEFITS EXCEED
                                                  BENEFITS     EXCEED ASSETS      BENEFITS         ASSETS
                                                  --------     -------------      --------         ------
                                                                        (000 OMITTED)
     <S>                                        <C>            <C>              <C>            <C>    
     Actuarial present value of benefit obligations:
         Vested benefit obligation                $  6,839         $ 2,757         $ 5,035         $ 1,450
                                                  ========         =======         =======         =======

         Accumulated benefit obligation           $  7,934         $ 2,961         $ 6,422         $ 1,572
                                                  ========         =======         =======         =======

         Projected benefit obligation             $ 10,121         $ 3,422         $ 8,048         $ 1,809
      Market value of plan assets,
         primarily equity and fixed income
         securities                                 10,025             209           8,935             162
                                                  --------         -------         -------         -------
     Plan assets over (under)
         projected benefit obligation                  (96)         (3,213)            887          (1,647)
     Unrecognized transition asset                     (54)                           (63)
     Unrecognized prior service cost (credit)          (5)          1,716             (12)          1,260
     Unrecognized net (gain) loss                   (1,089)          1,111          (1,531)            190
     Additional minimum liability                       --          (2,367)             --          (1,233)
                                                  --------         -------         -------         -------
     Accrued pension cost                         $ (1,244)        $(2,753)        $  (719)        $(1,430)
                                                  ========         =======         =======         =======
</TABLE>

<TABLE>
<CAPTION>
                                                                    CANADA
                                                      ----------------------------------
                                                      ASSETS EXCEED ACCUMULATED BENEFITS
                                                      ----------------------------------
                                                             1996            1995
                                                             ----            ----
<S>                                                        <C>             <C>    
     Actuarial present value of benefit obligations:
         Vested benefit obligation                         $ 4,355         $ 3,711
                                                           =======         =======

         Accumulated benefit obligation                    $ 4,378         $ 3,713
                                                           =======         =======

         Projected benefit obligation                      $ 5,582         $ 4,794
     Market value of plan assets,  primarily equity
         and fixed income securities                         5,810           5,030
                                                           -------         -------
     Plan assets over projected  benefit obligation            228             236
     Unrecognized transition asset
                                                                (4)             (6)
     Unrecognized prior service cost                            47              51
     Unrecognized net loss                                     382             201
                                                           -------         -------
     Prepaid pension cost                                  $   653         $   482
                                                           =======         =======
</TABLE>


                                      F-17
<PAGE>   39

Weighted average assumptions used were:

<TABLE>
<CAPTION>
                                                          UNITED STATES                        CANADA
                                                          -------------                        ------
                                                    1996       1995       1994       1996       1995       1994
                                                    ----       ----       ----       ----       ----       ----
     <S>                                            <C>        <C>        <C>        <C>        <C>        <C> 
     Discount rate for obligation                   7.5%       7.5%       7.5%       7.5%       8.5%       8.5%
     Rate of increase in compensation               5.0%       4.5%       4.5%       4.5%       5.0%       5.0%
     Long-term rate of return on assets             9.5%       9.5%       9.5%       9.5%       9.0%       9.0%
</TABLE>

K.   POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

     The net periodic postretirement benefit cost for the years ended December
31, 1996, 1995, and the five month period ended December 31, 1994 and the seven
month period ended July 31, 1994 included the following components:

<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                                       DECEMBER 31,               FIVE MONTHS ENDED     SEVEN MONTHS
                                                    ------------------               DECEMBER 31,       ENDED JULY 31,
                                                    1996          1995                   1994               1994
                                                    ----          ----                   ----               ----
                                                                         (000 OMITTED)
     <S>                                           <C>           <C>                     <C>                <C>  
     Service cost benefits attributed              $ 538         $  416                  $ 188              $ 262
         to service during the  period
     Interest cost on the accumulated                451            401                    162                227
         postretirement  benefit obligation
     Net amortization and deferral                   (71)           (45)                    (5)                (6)
     Curtailment gain                               (665)    
                                                   -----         ------                  -----              -----
     Net periodic postretirement benefit cost      $ 253         $  772                  $ 345              $ 483
                                                   =====         ======                  =====              =====
</TABLE>


     As a result of a workforce reduction in the Company's New Mexico
engineering facility, a curtailment gain of $665,000 was realized during 1996.

     The status of the plans at December 31 was as follows:

<TABLE>
<CAPTION>
                                                      1996          1995
                                                      ----          ----
                                                         (000 OMITTED)
<S>                                                  <C>           <C>   
Retirees                                             $  709        $1,173
Fully eligible active plan participants               1,737         1,425
Other active plan participants                        3,910         3,686
                                                     ------        ------
Accumulated postretirement benefit obligation         6,356         6,284
Unrecognized prior service cost                          21            34
Unrecognized net gain                                   505           329
                                                     ------        ------
Accrued postretirement benefit cost                  $6,882        $6,647
                                                     ======        ======
</TABLE>


                                      F-18

<PAGE>   40
     The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation ("APBO") was 11.0% in 1996, gradually
declining to 5.0% by the year 2002 and remaining at that level thereafter for
retirees below age 65, and 8.0% in 1996, gradually declining to 5.0% by the year
2002 and remaining at that level thereafter for retirees above age 65. A
one-percentage-point increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit obligation as of
December 31, 1996 by approximately 20%, and the net periodic postretirement
benefit cost by approximately 23%.

     The assumed discount rate used in determining the APBO was 7.5% in 1996 and
1995.


L.   LEASE OBLIGATIONS

     Certain warehouses, offices and equipment are leased under leases expiring
through the year 2007 with some of the leases providing for renewal options.
Leases which expire are generally renewed or replaced by similar leases.

     At December 31, 1996, future minimum rental payments with respect to
noncancellable operating leases with terms in excess of one year were as
follows: $2,273,000 (1997), $1,465,000 (1998), $1,293,000 (1999), $1,043,000
(2000), $631,000 (2001) and $1,039,000 (thereafter).

     Total rental expense for the years ended December 31, 1996 and 1995, the
five month period ended December 31, 1994 and the seven month period ended July
31, 1994 was $3,440,000, $3,106,000, $1,211,000 and $1,829,000, respectively.


M.   LITIGATION

     Certain entities of the Company are plaintiffs or defendants to various
actions, proceedings and pending claims. Some of the foregoing involve or may
involve claims for compensatory, punitive or other damages in material amounts.
Litigation is subject to many uncertainties and it is possible that some of
these legal actions, proceedings and pending claims could be decided against the
Company. Although the amount of liability at December 31, 1996 with respect to
these matters is not ascertainable, the Company believes that any resulting
liability would not materially affect the Company's financial condition or
results of operations.


N.   COMMITMENTS AND CONTINGENT OBLIGATIONS

     As a part of the Company's marketing strategy for the 1997 introduction of
the new EL model intercity coach, the "Renaissance", The Company has entered
into trade-in agreements whereby certain customers may trade-in, at
predetermined values, their recently purchased D or DL model coaches when
purchasing a new EL model. Under the terms of the agreements, the 


                                      F-19
<PAGE>   41
Company has committed to trade-in values ranging from 91% of the original
invoice price for an 18 month old coach to 73% for a 36 month old coach; the
trade-in values are estimated by management to approximate fair value for the
coaches at the time of the trade-in. At December 31, 1996, the Company's
commitments under this program ranged from a high of $16,152,000 to a low of
$14,525,000.

     During 1996, the Company completed a research and development project which
had been undertaken with the cooperation of the Government of Canada and the
Province of Manitoba. Agreements entered into between the parties for this
project provided for payment of matching contributions and specified that the
contributions may be repayable if, during the first five years following project
completion, the ratio of Canadian employees to total employees of the Company
falls below 40%. During 1996, 1995 and 1994, the Company recorded $1,479,000,
$3,305,000 and $698,000, respectively, from the contribution programs, which has
been applied against research and development expenses. As of December 31, 1996,
the total amount of such contributions totaled $7,373,000.


O.   FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND FAIR
     VALUE OF FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

     The Company enters into foreign exchange forward contracts to hedge certain
firm and anticipated purchase commitments which are settled in Canadian dollars.
These contracts are purchased to reduce the impact of Canadian dollar currency
fluctuations on operating results. The Company does not engage in Canadian
dollar currency speculation. The contracts do not subject the Company to risk
due to exchange rate movements as gains and losses on the contracts offset gains
and losses on the materials being purchased. At December 31, 1996 and 1995, the
Company had approximately $17,855,000 and $52,902,000, respectively, of Canadian
dollar exchange forward contracts outstanding. The Company's theoretical risk in
these transactions is the cost of replacing, at current market rates, these
contracts in the event of default by the other party. Management believes the
risk of incurring such losses is remote as the contracts are entered into with
major financial institutions.

     At December 31, 1995, the Company had an interest rate swap outstanding
with a commercial bank which had a notional principal amount of $62,500,000 on
which the Company paid interest at LIBOR and received interest at 7.88%. The
swap was entered into to effectively change the interest rate on $62,500,000 of
the Company's $125,000,000 of term notes payable to LIBOR plus 1.14%. During
1996, the Company settled the entire notional principal amount of the swap,
resulting in proceeds to the Company of $4,733,000 which is being amortized as
an adjustment to interest expense over the remaining life of the notes.

     As an adjunct to its new and used coach business, the Company has entered
into repurchase and first loss agreements with certain companies which provide
financing for coaches sold by the Company, pursuant to which the Company agrees
to either repurchase coaches from such 


                                      F-20
<PAGE>   42
companies or guarantees the payment of certain obligations of coach owners or
operators. The amount of such agreements as of December 31, 1996 and 1995 was
approximately $26,678,000 and $3,462,000, respectively. Additionally, as a
result of certain sales of notes receivable and leases during 1996 and 1995, the
Company is obligated to reimburse the purchaser of such notes and leases for any
losses as a result of defaults up to $6,272,000 as of December 31, 1996 and
$9,526,000 as of December 31, 1995. The Company has experienced no material
losses in respect of such obligation, and losses under existing agreements are
not expected to exceed amounts reserved for such losses.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following disclosures of the estimated fair value of financial
instruments have been determined by the Company using available market
information and valuation methodologies described below. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein may not be indicative of
the amounts that the Company could realize in a current market exchange. The use
of different market assumptions or valuation methodologies may have a material
effect on the estimated fair value amounts.

     The carrying values of cash and cash equivalents, receivables, bank
overdrafts and accounts payable approximate fair values due to the short-term
maturities of these instruments. The carrying amounts and estimated fair values
of the Company's other financial instruments at December 31 were as follows:

<TABLE>
<CAPTION>
                                                           1996                                1995
                                                           ----                                ----
                                               CARRYING            FAIR             CARRYING           FAIR
                                                AMOUNT             VALUE             AMOUNT            VALUE
                                                ------             -----             ------            -----
                                                                        (000 OMITTED)
     <S>                                       <C>               <C>               <C>               <C>      
     Notes receivable                          $  32,189         $  32,184         $  35,631         $  35,658
     Investment in equity security                    --                --             1,200             1,200
     Debt                                       (210,668)         (209,710)         (217,816)         (229,678)
     Foreign exchange forward contracts               --                22                --                84
     Interest rate swap                               --                --                --             5,891
</TABLE>

     The methods and assumptions used to estimate the fair values of the
financial instruments are summarized as follows:

     Notes receivable - Estimated by discounting the future cash flows using
rates currently used for notes of similar terms and maturities.

     Investment in equity security - Estimated at its carrying value.


                                      F-21

<PAGE>   43
     Debt - Estimated by discounting the future cash flows, using rates
currently available for debt of similar terms and maturity.

     Foreign exchange forward contracts (used for hedging purposes) - Estimated
using quoted exchange rates.

     Interest rate swap - Estimated by discounting future cash flows using rates
currently available. The swap agreement specifically hedged portions of the
Company's term notes payable.


P.   RELATED PARTY TRANSACTIONS

     In 1993, the Company purchased a 10% ownership interest in Mexicana de
Autobuses, S.A. de C.V. ("MASA"), a coach manufacturing company in Mexico, for
$6,000,000. In December 1994, the Company distributed the MASA shares to MCII as
a dividend. MCII in turn distributed the shares to Grupo Dina as a dividend. In
December 1995, the Company repurchased the MASA shares directly from Grupo Dina
for $1,200,000.

     Amounts due from (to) Grupo Dina were $353,000, included in other current
assets, and $(880,000), included in other current liabilities, as of December
31, 1996 and $(367,000), included in other current liabilities, as of December
31, 1995. Notes receivable at December 31, 1996 included a $116,000 note from
Nanjing Starley Transportation Company Limited.

     Additional related party transactions for the years ended December 31 were
as follows:

<TABLE>
<CAPTION>
                                                              1996          1995
                                                              ----          ----
                                                                (000 OMITTED)
     <S>                                                    <C>            <C>    
     Purchases from Grupo Dina:
         Coaches for resale                                 $58,215        $27,289
         Production materials and tooling                     3,422          1,423
                                                            -------        -------
                                                            $61,637        $28,712
                                                            =======        =======

     Quantity of coaches purchased for resale                   270            129

     Sales to Grupo Dina:
         Production materials and after-market parts        $ 1,691        $ 2,279
                                                            =======        =======

     Payments to Grupo Dina for management services         $ 1,000
                                                            =======
</TABLE>

Q.   LOSS OR GAIN ON EQUITY INVESTMENTS

     In 1996, the Company evaluated the realizability of its investment in MASA
and, due to the continuing operating losses of MASA and prolonged weaknesses in
the Mexican economy, wrote off the investment resulting in a pre-tax loss of
$1,200,000.


                                      F-22
<PAGE>   44
         In January 1995, the Company purchased 6,004,144 shares of Greyhound
Lines, Inc. ("GLI") through a rights offering of GLI's Common Stock. In October
1995, the investment was sold, resulting in a pre-tax gain of $10,522,000.


R.       ACQUISITION BY GRUPO DINA

         PURCHASE ACCOUNTING ADJUSTMENTS

         On August 8, 1994, Grupo Dina acquired all of the issued and
outstanding common stock of MCII. The acquisition was accounted for as a
purchase and "push down accounting" was applied, with the result that purchase
accounting adjustments were reflected in the accounting of MCII and its
subsidiaries.

         Application of push down purchase accounting resulted in a preliminary
adjustment of all outstanding assets and liabilities of the Company to their
estimated fair value on the date of the acquisition. The Company is also in the
process of obtaining additional information to quantify the potential liability
related to certain preacquisition U.S. and Canadian tax contingencies. Once
those amounts have been quantified, the contingencies may be recorded as an
additional purchase accounting adjustment. The excess of the consideration paid
by Grupo Dina over the estimated fair value of the net assets acquired, based
upon the preliminary purchase accounting adjustment, was $236,064,000 and is
being amortized over 40 years using the straight line method. The following
table reflects the changes made in the accounts of MCII Holdings and its
subsidiaries as a result of applying push down accounting:

<TABLE>
<CAPTION>
                                                    (000 OMITTED)
              <S>                                   <C>       
              Assets:
                 Inventories                          $  (1,200)
                 Property, plant and equipment            7,383
                 Deferred income taxes                  (34,021)
                 Intangibles                            236,064
                                                      ---------
                                                      $ 208,226
                                                      =========
              Liabilities and Equity:
                 Stockholders' equity                 $ 208,226
                                                      =========
</TABLE>

         The purchase accounting adjustments described above have resulted in an
increase in depreciation expense due to the step-up in the basis of property,
plant and equipment, and an increase in amortization expense due to the creation
of the intangible. As a result of these adjustments, the increase in
depreciation and amortization expense for 1996, 1995 and 1994 was $6,429,000,
$6,450,000 and $2,655,000, respectively.


                                      F-23
<PAGE>   45
         MERGER RELATED EXPENSES

         In connection with the 1994 acquisition of MCII by Grupo Dina, the
Company incurred $11,294,000 of merger related expenses. These expenses were for
the cash settlement of all outstanding stock options and the acceleration of
vesting on all unvested restricted stock ($6,831,000) and for professional fees,
printing, travel and other costs related to the transaction ($4,463,000).


S.       GUARANTEE OF PARENT COMPANY DEBT AND PLEDGE OF ASSETS

         On June 3, 1996 the Company became contingently liable for payments of
principal and interest on Senior Secured Discount Notes of Grupo Dina due 2002
with an aggregate principal amount of $206,499,680 ("Discount Notes"). It is
intended that all payments with respect to the Discount Notes be paid by Grupo
Dina, and that payments be made by the Company only in the event of a failure to
pay by Grupo Dina.

         The Company's obligation under the Discount Notes is secured by a
pledge of the common stock of its wholly owned subsidiary, Motor Coach
Industries International, Inc. The indenture governing the Discount Notes
provides for certain restrictive covenants with which the Company is currently
in compliance.

         The Discount Notes bear interest at an annual rate of 12% through
maturity, on a zero coupon basis through November 15, 1998 and, thereafter,
payable in cash. If, however, the Discount Notes do not achieve minimum debt
ratings by November 15, 1999, the interest rate increases to 15% from such date
through maturity. As of December 31, 1996, the book value of the Discount Notes
was $166.7 million and the fair value was $169.3 million.


T.       SUBSEQUENT EVENTS (UNAUDITED)

        On January 31, 1997, MCII Holdings acquired from its parent company,
Grupo Dina, 99.99% of the shares of Dina Autobuses, S.A. de C.V. ("Autobuses").
This change in structure was accomplished by Grupo Dina contributing 99.99% of
the capital stock of Autobuses ($50.3 million in net assets as of December 31,
1996) to MCII Holdings, thereby making Autobuses and its two subsidiaries,
Autopartes Hidalguenses, S.A. de C.V. and Carrocera Sahagun, S.A. de C.V.,
subsidiaries of MCII Holdings.

         The acquisition will be accounted for as a pooling of interests.
Accordingly, the financial statements which include periods after January 31,
1997 will reflect the financial condition, results of operations, changes in
stockholders' equity and cash flows of MCII Holdings and Autobuses as if the
companies had been consolidated for all periods presented. Pro forma revenues
and net income of the combined companies (which will become the historical
revenues and net income for financial statements which include periods after
January 31, 1997) were $656,046,000 and $30,947,000, for the year ended December
31, 1996 and $522,174,000 and $2,953,000 for the year ended December 31, 1995.


                                      F-24
<PAGE>   46
U.   BUSINESS SEGMENT AND GEOGRAPHIC DATA

     BUSINESS SEGMENT DATA

     The Company's principal business activities are categorized into two
business segments for financial reporting purposes -- coach manufacturing and
support and distribution of replacement parts.

<TABLE>
<CAPTION>
                                                          YEAR ENDED
                                                         DECEMBER 31,           FIVE MONTHS ENDED   SEVEN MONTHS
                                                    ----------------------         DECEMBER 31,     ENDED JULY 31,
                                                    1996              1995             1994             1994
                                                    ----              ----             ----             ----
                                                                          (000 OMITTED)
     <S>                                         <C>                <C>              <C>              <C>     
    Revenues:
         Coach manufacturing and support         $ 502,092          $375,837         $137,942         $194,873
         Replacement parts                         159,201           140,500           56,431           78,221
                                                 ---------          --------         --------         -------- 
                                                 $ 661,293          $516,337         $194,373         $273,094
                                                 =========          ========         ========         ========
     Operating income:
         Coach manufacturing and support         $  40,092          $ 23,326         $  2,118         $ 24,715
         Replacement parts                          14,561            15,013            7,001           12,208
                                                 ---------          --------         --------         -------- 
         Non recurring merger
              expenses                                                                                 (11,294)
                                                 =========          ========         ========         -------- 
                                                 $  54,653          $ 38,339         $  9,119         $ 25,629
                                                 =========          ========         ========         ========
     Depreciation and amortization:
         Coach manufacturing and support         $  12,417          $ 10,710         $  4,268         $  2,644
         Replacement parts                           4,241             3,908            1,573              635
                                                 ---------          --------         --------         -------- 
                                                 $  16,658          $ 14,618         $  5,841         $  3,279
                                                 =========          ========         ========         ========
     Capital expenditures:
         Coach manufacturing and support         $  11,749          $ 10,595         $  4,052         $  1,158
         Replacement parts                           1,229             1,964              863              778
                                                 ---------          --------         --------         -------- 
                                                 $  12,978          $ 12,559         $  4,915         $  1,936
                                                 =========          ========         ========         ========
</TABLE>

<TABLE>
<CAPTION>

                                                  YEAR ENDED DECEMBER 31,
                                                   1996             1995
                                                   ----             ----
                                                       (000 OMITTED)
<S>                                              <C>              <C>     
     Assets:
         Coach manufacturing and support         $410,419         $411,493
         Replacement parts                        198,750          191,238
         Discontinued operations                                    11,311
                                                 --------         --------
                                                 $609,169         $614,042
                                                 ========         ========
</TABLE>


                                      F-25
<PAGE>   47
     Major customers are defined as those which individually accounted for more
than 10% of the Company's revenue. The Company's only major customer was
Greyhound Lines, Inc. which, during the year ended 1996 and the seven months
ended July 31, 1994 accounted for 14% and 21%, respectively, of the Company's
consolidated revenues.

     GEOGRAPHIC DATA

<TABLE>
<CAPTION>
                                              YEAR ENDED
                                              DECEMBER 31,           FIVE MONTHS ENDED  SEVEN MONTHS
                                         ----------------------         DECEMBER 31,    ENDED JULY 31,
                                         1996              1995             1994            1994
                                         ----              ----             ----            ----
                                                            (000 OMITTED)
     <S>                              <C>                <C>              <C>              <C>     
     Revenues:
         United States                $ 579,136          $445,732         $180,478         $247,974
         Canada                          82,157            70,605           13,895           25,120
                                      ---------          --------         --------         --------  
                                      $ 661,293          $516,337         $194,373         $273,094
                                      =========          ========         ========         ========
     Operating Income:
         United States                $  45,005          $ 31,496         $  7,736         $ 34,060
         Canada                           9,648             6,843            1,383            2,863
         Non recurring merger
              expenses                                                                      (11,294)
                                      ---------          --------         --------         --------
                                      $  54,653          $ 38,339         $  9,119         $ 25,629
                                      =========          ========         ========         ========
</TABLE>

<TABLE>
<CAPTION>
                                YEAR ENDED DECEMBER 31,
                                 1996             1995
                                 ----             ----
                                     (000 OMITTED)
<S>                            <C>              <C>     
     Assets:
         United States         $449,765         $430,087
         Canada                 159,404          183,955
                               --------         --------
                               $609,169         $614,042
                               ========         ========
</TABLE>


                                      F-26

<PAGE>   48



REPORT OF INDEPENDENT ACCOUNTANTS ON THE FINANCIAL STATEMENT SCHEDULE



To the Stockholder of
 MCII Holdings (USA), Inc.:

        Our audits of the consolidated financial statements referred to in our
report dated February 28, 1997 appearing in this Form 10-K also included an
audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K.  In our opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.


PRICE WATERHOUSE LLP


Chicago, Illinois
March 28, 1997


<PAGE>   49
                                   SCHEDULE I

                           MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                                 BALANCE SHEET



<TABLE>
<CAPTION>
                                                                        December 31,       December 31,
(000 omitted, except share data)                                            1996               1995
-------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                <C>    
                                     ASSETS
Investment in subsidiary                                                 $ 280,700          $ 294,808
                                                                         =========          =========


                              STOCKHOLDER'S EQUITY

Common stock, $.01 par value, 1,000 shares authorized and issued
Additional capital                                                         317,465            317,465
Deficit                                                                    (31,923)           (18,856)
Unfunded pension loss, net of taxes                                           (423)
Cumulative translation adjustments                                          (4,419)            (3,801)
                                                                         ---------          ---------
  Total stockholder's equity                                               280,700            294,808
                                                                         ---------          ---------
                                                                         $ 280,700          $ 294,808
                                                                         =========          =========
</TABLE>


                                      F-27
<PAGE>   50
                           MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                              STATEMENT OF INCOME


<TABLE>
<CAPTION>
                                                                                    Predecessor
                                                                                    -----------
                                        Year Ended December 31,  Five Months Ended  Seven Months
                                       -------------------------    December 31,   Ended July 31,
(000 omitted)                            1996            1995          1994            1994
-------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>       <C>               <C>   
Equity in income of subsidiary         $16,933         $18,258         $2,886         $8,642

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

Net income                             $16,933         $18,258         $2,886         $8,642
                                       =======         =======         ======         ======
</TABLE>


                                      F-28
<PAGE>   51
                           MCII HOLDINGS (USA), INC.
      (A WHOLLY OWNED SUBSIDIARY OF CONSORCIO G GRUPO DINA, S.A. DE C.V.)

                            STATEMENT OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                                                Predecessor
                                                                                                                -----------
                                                               Year Ended December 31,      Five Months Ended   Seven Months
                                                               -----------------------         December 31,   Ended July 31,
(000 omitted)                                                  1996              1995              1994            1994
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>               <C>               <C>              <C>    
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
  Net income                                                 $ 16,933          $ 18,258          $ 2,886          $ 8,642
  Adjustments to reconcile net income to net cash
    provided by operations:
    Equity in income of subsidiary                            (16,933)          (18,258)          (2,886)          (8,642)
                                                             --------          --------          -------          -------
Net cash provided (used) by operating activities                    0                 0                0                0
                                                             --------          --------          -------          -------

CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
  Dividends received from subsidiary                           30,000                             34,000              877
  Dividends paid on common stock                              (30,000)                           (34,000)          (2,017)
  Common stock issued                                                                                               1,140
                                                             --------          --------          -------          -------
Net cash provided (used) by financing activities                    0                 0                0                0
                                                             --------          --------          -------          -------
Net increase (decrease) in cash and cash equivalents                0                 0                0                0
Cash and cash equivalents, beginning of period                      0                 0                0                0
                                                             --------          --------          -------          -------
Cash and cash equivalents, end of period                     $      0          $      0          $     0          $     0
                                                             ========          ========          =======          =======
</TABLE>


                                      F-29
<PAGE>   52
                                  EXHIBIT INDEX

      EXHIBIT NO.                         DESCRIPTION
      -----------                         -----------

         3.1*    Restated Certificate of Incorporation of MCII Holdings

         3.2*    Bylaws of MCII Holdings

         4.1*    $125,000,000 Credit Agreement, dated as of September 30, 1996,
                 among Transportation Manufacturing Operations, Inc. as the
                 Borrower, the Lenders Parties thereto and NBD Bank as
                 Administrative Agent.

         4.2     Amendment No. 1 dated December 17, 1996 to $125,000,000 Credit
                 Agreement dated as of September 30, 1996.

         4.3**   $125,000,000 9.02% Senior Notes Due November 15, 2002 Note
                 Agreement, as amended by letter agreement, dated April 1995.

         4.4*    Form of Amendment to $125,000,000 9.02% Senior Notes Due
                 November 15, 2002 Note Agreement as executed by the requisite
                 holders of the Notes.

         4.5*    Intercreditor Agreement, dated as of September 30, 1996, by and
                 among the Lenders under the $125,000,000 Credit Agreement dated
                 as of September 30, 1996, NBD Bank, and the holders of the
                 9.02% Senior Notes due 2002 issued by Transportation
                 Manufacturing Operations, Inc.

   
         4.6     Indenture, dated as of April 30, 1996, between Grupo Dina and
                 IBJ Schroder Bank & Trust Company, as Trustee, relating to the
                 Notes, including the form of Old Note and New Note, filed as
                 Exhibit 2.4 to Grupo Dina's Annual Report on Form 20-F for the
                 year ended December 31, 1995 and incorporated by reference
                 herein.
    
        10.1**   Bus Purchase Requirements Agreement by and among GLI Operating
                 Company, Greyhound Lines, Inc., Transportation Manufacturing
                 Corporation and Motor Coach Industries, Inc., as amended by: a
                 letter agreement dated June 15, 1987 from GLI Holding Company
                 to The Greyhound Corporation; Amendment to Bus Purchase
                 Requirements Agreement; entered into as of June 30, 1988 by and
                 among GLI Operating Company, Transportation Leasing Co.,
                 Transportation Manufacturing Corporation and Motor Coach
                 Industries, Inc.; Term Sheet/Agreement in Principle dated July
                 13, 1988 among GLI Holding Company and The Greyhound
                 Corporation; Claims Treatment Agreement made and entered into
                 as of August, 1991 among Greyhound Lines, Inc., the other
                 Debtors signatory thereto and The Greyhound Corporation; and
                 Amendment Number 2 to Bus Purchase Requirements Agreement
                 executed as of December 21, 1994 by Greyhound Lines, Inc.,
                 Transportation Leasing Co., Motor Coach Industries, Inc. and
                 Transportation Manufacturing Corporation.

        10.2*    In Re: The Flxible Corporation, United State Bankruptcy Court,
                 Southern District of Ohio, Eastern Division, Order Authorizing
                 and Approving Sale of Debtor's Assets Pursuant to Sections 363
                 and 365 of the Bankruptcy Code.

        10.3**   Parts Purchase and Supply Agreement entered into as of May 1,
                 1994 by and between Greyhound Lines, Inc. and Universal Coach
                 Parts, Inc., as amended by Amendment No. 1 entered into as of
                 May 1, 1994.

        10.4**   Limited Recourse Chattel Paper Purchase Agreement dated as of
                 March 31, 1994 between MCI Acceptance Corp. and The CIT
                 Group/Equipment Financing, Inc. and related Guaranty dated as
                 of March 31, 1994; and Amendment No. 1 dated May 15, 1995 and
                 related Guaranty dated as of May 15, 1995.
<PAGE>   53
        10.5***  Registration Agreement, dated June 3, 1996, among Grupo Dina,
                 MCII Holdings and Salomon Brothers, Inc., Alliance Capital
                 Management Corporation and John Hancock Mutual Life Insurance
                 Company.

        10.6*    Coach Purchase Agreement, dated August 1, 1995, between Dina
                 Autobuses, S.A. de C.V. and Hausman Bus Sales, Inc.

   
        10.7*    Employment Agreement, dated as of September 30, 1996, between
                 Universal Coach Parts, Inc. and Jerry W. Bost.
    
   
        10.8*    Employment Agreement, dated as of September 30, 1996, between
                 Transportation Manufacturing Operations, Inc. and James P.
                 Bernacchi.
    

        12       Computation of ratio of earnings to fixed charges.

        21       List of Subsidiaries of MCII Holdings.

        27       EDGAR Financial Data Schedule.

      * Previously filed on Form F-1/S-1, Registration No. 333-08843, and
incorporated herein by reference.

      ** Previously filed on Form 20F for the year ended December 31, 1994 and
incorporated herein by reference.

      *** Previously filed on Form 20F for the year ended December 31, 1995 and
incorporated herein by reference.