Selected Financial Information
<TABLE>
<CAPTION>


SELECTED FINANCIAL INFORMATION (In thousands, except per share and stock price data)

-------------------------------------------------------------------------------------------------------------
FIVE YEARS ENDED DECEMBER 31,                             1999       1998        1997         1996       1995
-------------------------------------------------------------------------------------------------------------
<S>                                                   <C>        <C>         <C>         <C>         <C>
Statement of Income Data:
     Net sales                                        $226,108   $190,874    $134,387    $  99,329   $ 69,159
     Cost of goods sold                                190,065    160,364     111,764       84,643     58,673
-------------------------------------------------------------------------------------------------------------
     Gross profit                                       36,043     30,510      22,623       14,686     10,486
     Selling and administrative expenses                27,094     22,385      15,998       12,492      9,993
-------------------------------------------------------------------------------------------------------------
     Operating income                                    8,949      8,125       6,625        2,194        493
     Interest expense                                   (3,768)    (2,961)     (1,800)      (1,450)      (799)
     Other income, net                                   1,229        823         646          660      1,478
-------------------------------------------------------------------------------------------------------------
     Income before taxes                                 6,410      5,987       5,471        1,404      1,172
     Provision for Income taxes                          2,436      2,337       2,189          562        471
-------------------------------------------------------------------------------------------------------------
     Net income                                       $  3,974   $  3,650    $  3,282    $     842   $    701

Net income per share - basic & diluted                $   0.61   $   0.56    $   0.52    $    0.13   $   0.12
=============================================================================================================
Cash distributions for taxes*                         $      -   $      -    $      -    $       -   $    305
=============================================================================================================
Weighted average common shares outstanding
     Basic                                               6,506      6,462       6,255        6,106      5,955
     Diluted                                             6,545      6,559       6,314        6,107      6,006
=============================================================================================================


Balance Sheet Data (End of Period)                        1999       1998        1997         1996       1995
-------------------------------------------------------------------------------------------------------------
     Working capital                                  $ 32,065   $ 29,163    $ 21,643    $  15,165    $15,360
     Total assets                                      119,784    106,788      75,508       53,534     46,084
     Total long-term debt, net current maturities       30,563     30,914      22,075       13,346     15,194
     Total shareholders' investment                     33,726     29,543      23,877       20,595     17,953

</TABLE>


<PAGE>

<TABLE>
<CAPTION>


-------------------------------------------------------------------------------------------------------------------
Quarterly Financial Data (Unaudited)
                                                                      Net Income Per Share        Closing Stock Price
                                 Gross       Operating     Net       --------------------        --------------------
                   Net Sales     Profit       Income      Income     Basic        Diluted          High            Low
--------------------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>          <C>          <C>           <C>            <C>            <C>           <C>
1999
----
First Quarter     $59,422       $9,697       $3,062       $1,543        $0.24          $0.24          $6.63         $5.25
Second Quarter     56,295        8,820        2,370        1,010         0.15           0.15           7.00          5.13
Third Quarter      53,939        9,131        2,102        1,046         0.16           0.16           7.25          5.06
Fourth Quarter     56,452        8,395        1,415          375         0.06           0.06           7.00          4.91

--------------------------------------------------------------------------------------------------------------------------
1998
----
First Quarter     $41,742       $6,917       $2,256       $1,141        $0.18          $0.18          $9.00         $7.38
Second Quarter     49,294        7,389        2,113        1,005         0.16           0.15          12.50         $8.13
Third Quarter      48,895        7,529        1,630          524         0.08           0.08          12.38         $7.56
Fourth Quarter     50,943        8,675        2,126          980         0.15           0.15           7.63         $4.00

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

</TABLE>

The Company's common stock trades on The Nasdaq Stock Market under the symbol
"FTHR."
*Represent only distribution for estimated shareholders' federal and state
income tax liabilities from Company's status as S corporation prior to initial
public stock offering. No other dividends were paid. The Company is restricted
from paying dividends. See Liquidity & Capital Resources in MD&A for a
discussion of these restrictions.

<PAGE>
                     Management's Discussion and Analysis>

         The following discussion pertains to the Company's results of
operations and financial condition, including information on the Company's two
principal business segments as set forth in Note 12 to the Consolidated
Financial Statements for the years ended December 31, 1999, 1998 and 1997.

Results of Operations
1999 vs. 1998

         Sales in 1999 increased by 18.5% to $226.1 million compared to the
$190.9 million recorded in 1998, as a result of increased volume in each of the
Company's business segments and the full year effect of the acquisition of
Mitchell Motor Coach Sales, Inc. (Mitchell), which was consummated in 1998.
Trailer segment sales increased by 4% primarily due to greater sales of
car/racecar and specialty transporters and horse trailers. This increase was
offset by lower sales of livestock trailers because of economic difficulties
that began in 1998 in the farm and agricultural economy. Motorcoach segment
sales increased by 39% as the result of increased demand for both new and used
motorcoach units as well as the full year effect of the Mitchell acquisition.
There were no overall price increases on the Company's products in 1999 although
there were selective increases on certain products.

         Gross profit margin in 1999 increased by 18.1% to $36.0 million from
$30.5 million in 1998, due to increased sales levels in both business segments.
As a percentage of sales, consolidated gross profit margin was 15.9% in 1999 and
16.0% in 1998. Trailer segment gross profit margins increased by almost one
percentage point as the result of lower aluminum costs as well as improvements
realized by continuing efforts to re-engineer and improve production methods.
Motorcoach segment margins declined by .3 percentage points in 1999 from 1998
primarily due to changes in sales mix.

         Selling, delivery and administration expenses increased in total in
1999 by $4.7 million and as a percentage of sales to 12.0% from 11.7%. This
increase was primarily due to additional advertising and marketing costs and
increased personnel costs related to the expanding motorcoach segment as well as
the full year effect of the Mitchell acquisition.

         Interest expense increased by 27% in 1999 over 1998 due to increased
borrowings for working capital and capital expenditures as well as higher
average interest rates in 1999. Interest expense related to the trailer segment
decreased by $412,000 in 1999 while it increased in the motorcoach segment by
$1.3 million. Other income increased by $406,000 in 1999 primarily due to
increased gains of $303,000 on sales of aircraft and other property in 1999 over
1998.

         Income before taxes increased $423,000 or 7% in 1999 over 1998,
primarily due to the strong performance of the trailer segment. After allocation
of corporate selling and administrative expenses, trailer segment income before
taxes was up by $1.8 million while motorcoach segment income before taxes
declined by $2.0 million for the reasons discussed above. Unallocated corporate
expenses were $524,000 lower in 1999 than 1998 due to the increased gains on
aircraft sales in 1999.

         The provision for income tax rate was reduced to 38% in 1999 compared
with 40% in 1998. This reduction was due to certain job related credits realized
in 1999 as a result the Company's activities in the state of Oklahoma.

<PAGE>

1998 vs. 1997

         Sales for 1998 increased by 42% to $190.5 million from a level of
$134.4 million in 1997. This increase was the result of growth in both the
trailer and motorcoach segments as well as the acquisition of Mitchell
Motorcoach Sales, Inc. (Mitchell) in May, 1998. Trailer segment sales increased
by 13% in 1998, including increases in all product lines except livestock
trailers which declined slightly due to economic difficulties faced by family
farm owners and unfavorable livestock prices. A portion of the trailer segment
sales increase in 1998 was the result of price increases ranging from 2-5%
introduced in that year. Motorcoach segment sales in 1998 increased by $43.2
million or 124% over 1997, including sales of $23 million related to the Vogue
brand which was acquired from Mitchell.

         Gross profit in 1998 increased by 35% to $30.5 million from $22.6
million in 1997. This was primarily the result of the expanded sales volume in
both business segments. As a percentage of sales, gross profit declined to 16.0%
in 1998 compared to 16.8% in 1997. This decrease in the gross profit percentage
was due mainly to the impact of the Vogue Division operations since it was
acquired. Trailer segment gross margin percentage was reduced in 1998 from
increased labor and overhead costs not fully covered by price increases and
efficiency improvements. Motorcoach segment gross profit margin percentage
improved in 1998 due to improvements in margin percentages realized in the
Vantare Division. These improvements were partially offset by lower than
normal gross profit margins on Featherlite Vogue(TM) motorcoaches, many of which
were sold at prices established before the acquisition of Mitchell. Used
motorcoach sales also had a dampening impact on the gross profit margin
percentage as they have a lower than average gross profit.

         Selling and administrative expenses increased by $6.4 million in 1998
compared to 1997, but decreased as a percentage of sales to 11.7% in 1998 from
11.9% in 1997. This increase included $2.1 million for the trailer segment and
$4.1 million for the motorcoach segment and was due to greater personnel costs
as the organization continued to grow internally as well as through
acquisitions, and increased advertising and promotion costs to stimulate sales
and other increases consistent with the Company's sales growth.

         Interest expense increased by $1.2 million in 1998 over 1997.
Substantially all of this increase related to the motorcoach segment which
required increased borrowings to support working capital growth in this segment.
Interest expense for the trailer segment increased by less than $100,000.

         Other income was higher in 1998 than 1997 due to more fees received for
arranging retail finance contracts with finance companies. Gains on aircraft and
other property sales that are included in this caption were about the same
amounts in 1998 and 1997.

         Income before taxes increased by $516,000, or almost 9% in 1998
compared to 1997, mainly due to the improved operating results of the motorcoach
segment as discussed above. After allocation of corporate selling and
administrative costs, the trailer segment's profit contribution decreased by
$1.4 million and the motorcoach segment's profit contribution improved by $1.9
million. Unallocated corporate administrative expenses remained about the same
in 1998 as 1997.

<PAGE>

Forward-looking Information and Risks

         Certain statements in this section and elsewhere in this report and in
the Company's Form 10-K and other filings with the SEC, are forward-looking in
nature and relate to trends and events that may affect the Company's future
financial position and operating results. The words "expect," "anticipate,"
"intend," "project," and similar words and expressions are intended to identify
forward-looking statements. These statements speak only as of the date of this
annual report. The statements are based on current expectation, are inherently
uncertain, are subject to risks, and should be viewed with caution. Actual
results and experience may differ materially from the forward-looking statements
as a result of many factors, including but not limited to: product demand and
acceptance of products in each segment of the Company's markets, fluctuations in
the price of aluminum, competition, facilities utilization, the availability of
additional capital required for growth and certain other unanticipated events
and conditions. It is not possible to foresee or identify all such factors. The
Company makes no commitment to update any forward-looking statement or to
disclose any facts, events, or circumstances after the date hereof that may
affect the accuracy of any forward-looking statement.

         Sales are expected to improve in both business segments in the year
2000. The Company believes its name recognition and close affiliation with the
motorsports industry will continue to have a positive impact on its sales of
specialty trailers, transporters and luxury motorcoaches. With more than 75% of
its revenue from end users in motorsports and leisure and entertainment
categories, which also includes horse trailers, and with its strong position in
the livestock trailer market, the Company believes it is strategically
well-positioned to benefit from growth in these markets. The Company introduced
nine new models of horse and car trailers during 1999 and will continue to add
new models in 2000. New luxury coach models will also be added to the
Featherlite Vogue(TM) product line during the year. In 1999, the Company
combined the Vantare and Vogue Divisions into the Featherlite Luxury Coach
Division. In 2000 this consolidation is expected to achieve a unified sales and
marketing thrust for all motorcoach products.

         There are a number of risk factors related to the future operating
results of the Company, including the following:

1.       Aluminum is a commodity that is traded daily on the commodity markets
         and fluctuates in price. The average Midwest delivered cash price per
         pound for ingot aluminum during the three years ended December 31,
         1999, as reported to the Company by its suppliers, was $.66 in 1999,
         $.66 in 1998 and $.78 in 1997. The Company's cost of aluminum varies
         from these market prices due to vendor processing charges, timing of
         purchases, contractual commitments with suppliers for specific prices
         and other factors. The Company has obtained commitments from suppliers
         to provide, at an agreed upon fixed price, substantially all of its
         anticipated requirements for 2000, which eliminates the risk of
         aluminum cost fluctuations for next year. If the Company is unable to
         obtain such commitments from suppliers or otherwise reduce the price
         risk related to purchases of aluminum in years beyond 2000, this could
         have an adverse impact on the Company's operating results if the cost
         of aluminum increases significantly above levels "locked-in" for 2000.
         The company does not engage in hedging transactions or other use of
         derivatives in connection with its operations.

2.       There is a risk related to losing a major supplier of aluminum. In the
         past this risk has been relatively nominal as there have been alternate
         sources of supply. In recent years, the number of alternate sources of
         supply have been reduced due to mergers within the aluminum industry.
         Also, it may take a little longer to replace an extruded aluminum
         supplier due to the fact that dies are required and would have to be
         made. The Company routinely tries to keep at least three suppliers of
         each shape so it has a backup supplier if necessary.

<PAGE>

3.       There is a risk related to the loss or interruption in the supply of
         bus conversion shells from the Company's sole supplier of these shells.
         The Company purchases all of its bus conversion shells from Prevost Car
         Company located in Canada. The Company does have insurance to cover
         certain losses it may sustain due to fire or other catastrophe at
         Prevost's plant and it may be able to purchase shells from other
         manufacturers if necessary.

4.       The Company uses one subcontractor to provide paint and graphic design
         work to meet customer specifications on certain custom trailers and
         specialty transporters. There is a risk to the timely delivery of these
         trailers if there would be an unforeseen interruption in the
         subcontractor's ability to provide these services or if the customer
         delays providing the specifications to the subcontractor.

5.       The Company has made increased use of leverage and incurred greater
         interest and related expenses in each of the three years ended December
         31, 1999. Increased debt has been incurred in connection with financing
         operations and facilities expansions at the Featherlite Luxury Coach
         Division as well as financing its increased working capital
         requirements. The Company may not be able to increase its current
         borrowing limits for working capital or obtain additional funding for
         future capital expenditures without the consent of its primary lender
         due to certain loan covenants related to leverage and fixed charge
         coverage. Increased leverage and related expenses create a risk to
         future operating results of the Company.

6.       Featherlite is exposed to market risks related to changes in U.S. and
         International interest rates. Substantially all of the Company's debt
         bears interest at a variable rate. To a limited extent, the Company
         manages its interest rate risk through the use of interest rate swaps.
         As of December 31, 1999, the fair value of interest rate swaps with a
         notional amount of $4.0 million was approximately $150,000. An increase
         in interest rates by one percentage point would reduce the Company's
         future annual net income by approximately $300,000 at current debt
         levels.

Impact of Year 2000

         The Company has completed readying its hardware and software programs
in its information technology (IT) and non-IT systems for the year 2000. The
cost of making these changes was approximately $70,000. All of the Company's
hardware and software have been properly using the year 2000 dates since
December 31, 1999. The Company is not aware of any significant problems
associated with year 2000 issues that would adversely impact it and has not had
any problems related to the procurement of materials and supplies from vendors
or obtaining orders from its dealers.

<PAGE>

Liquidity and Capital Resources

         In 1999 the Company's cash flow from operations before working capital
changes increased to $6.3 million from $6.0 million in 1998. This improvement
resulted from an increase of $300,000 in net income in 1999 over 1998. This
operating cash flow was utilized to finance substantially all of the Company's
increased investment in working capital in 1999, including a $13.3 million
increase in inventories. This 21% increase in inventories is slightly higher
than the rate of increase in total sales in 1999, and substantially all of this
growth occurred in the motorcoach segment that had an overall sales increase of
39% in 1999. The Company expects this trend may continue as its total sales
continue to increase.

         The Company has two external lines of credit to supplement its
internally generated cash flow. The Company has a revolving loan agreement with
Firstar Bank, Milwaukee, WI (Firstar) which expires in September 2002 and
provides a working capital line of credit equal to the lesser of $25 million or
a defined percentage of eligible trade accounts receivable and inventory. The
borrowings under this line averaged $15.8 million in 1999. At December 31, 1999,
$25.0 million was available to borrow on this line and $17.7 million was
outstanding. The Company also has a wholesale finance agreement with a financial
services company that provides up to $23.7 million in financing for new and used
motorcoaches held in inventory. Borrowings against this line averaged $19.7
million in 1999 and at December 31, 1999, $22.9 million was outstanding. Both of
these lines of credit contain financial covenants which the Company must comply
with as discussed in Note 5 to Consolidated Financial Statements. The Company
was in compliance with these covenants at December 31, 1999.

         The Company's capital expenditures for plant and equipment totaled $6.1
million in 1999, including $4.6 million for the Sales and Service Center in
Sanford, Florida. These expenditures were primarily financed with additional
borrowings from banks as discussed in Note 5 to the Consolidated Financial
Statements. The Company also has available through Firstar various term notes
totaling $3 million to finance future real estate projects and equipment. As of
December 31, 1999, $835,000 was borrowed on these notes. In the fourth quarter
of 1999, the Company sold an aircraft for $2.9 million and paid off related debt
of a similar amount. It is expected that another aircraft of comparable cost
will be acquired in the first quarter of 2000 and will be financed with bank
borrowings. The Company has made a commitment to the City of Cresco to construct
a hanger facility at a cost of approximately $300,000 as part of an airport
expansion project expected to be completed in 2000. The Company is also
considering the addition of manufacturing and warehouse facilities at its Cresco
location at an approximate cost of $3 million, including equipment. These
projects, if commenced, would begin in the last half of the year 2000, pending
the approval of bank financing.

         The Company believes that its current cash balances, cash generated
from operations and available borrowing capacity will be sufficient to fund
operations and capital requirements for the next year. Significant growth of the
Company may necessitate additional sources of financing if such funding cannot
be arranged with the Company's current lenders. Such funding may be in the form
of debt, debt with equity features or a secondary offering of common stock. No
assurance can be given that such funding will be available to the Company.

<PAGE>

         As discussed in Note 6 to Consolidated Financial Statements, the
Company is contingently liable under certain dealer floor plan and retail
financing arrangements. These contingent liabilities total approximately $14.5
million at December 31, 1999. Also, the Company is self-insured for a portion of
certain health benefit and workers' compensation insurance claims. At December
31, 1999, the Company's maximum annual exposure under these programs was
approximately $4.0 million. The Company has obtained an irrevocable standby
letter of credit in the amount of $1.7 million in favor of the workers'
compensation claim administrator.

         In October 1997, the Company signed a joint venture agreement with GMR
Marketing to form Featherlite/GMR Sports Group, LLC. In January 2000, GMR
purchased the Company's interest in the joint venture in an amount equal to the
Company's capital contributions and terminated the joint venture relationship.

         The Company leases certain office and production facilities and
vehicles under various leases that expire at varying dates through fiscal year
2011 as described more fully in Note 6 to Consolidated Financial Statements.
Minimum lease payments for 2000 are expected to total $1.1 million. The Company
may lease a new sales and service center in North Carolina in 2000 from an
entity owned by Conrad Clement, Tracy Clement and Eric Clement, principal
shareholders of the Company. This would replace another facility now being
leased and would be used for selling new and used motorcoaches and to provide
maintenance services for motorcoaches and Featherlite trailers and transporters.
The terms and conditions of this lease have not yet been finalized but are
expected to be comparable to those of the existing facility lease. It is
expected this facility will be completed in the second half of 2000.

         The Company is the subject of an Internal Revenue Service examination
for the years ended December 31, 1995, 1996 and 1997. The IRS has proposed
adjustments related to the treatment of various incentive grants received in
connection with the Company's building expansion in prior years. The Company
believes its position is valid and intends to vigorously defend it. Any
additional tax due will result in the creation of a current tax liability and a
reduction in deferred tax liabilities.

         For the foreseeable future, the Company does not plan to pay dividends
but instead will follow the policy of reinvesting earnings in order to finance
the expansion and development of its business. As discussed in Note 5 to
Consolidated Financial Statements, the Company is a party to certain loan
agreements which prohibit the payment of dividends without the lender's consent.

<PAGE>
                                 Balance Sheets

<TABLE>
<CAPTION>

Featherlite, Inc.
Consolidated Balance Sheets
December 31, 1999 and 1998
(In thousands)                                                     1999                    1998
-----------------------------------------------------------------------------------------------
<S>                                                          <C>                     <C>
ASSETS

CURRENT ASSETS:
     Cash                                                    $      248              $     188
     Receivables                                                  8,915                 10,332
     Inventories                                                 74,632                 61,373
     Prepaid expenses                                             1,547                  1,522
     Deferred income taxes                                        1,159                  1,107
----------------------------------------------------------------------------------------------
     Total current assets                                        86,501                 74,522
----------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT:
     Land and improvements                                        4,477                  3,042
     Buildings and improvements                                  11,662                  8,887
     Machinery and equipment                                     13,256                 11,763
----------------------------------------------------------------------------------------------
                                                                 29,395                 23,692
     Less - accumulated depreciation                             (9,515)                (7,824)
----------------------------------------------------------------------------------------------
     Net property and equipment                                  19,880                 15,868
----------------------------------------------------------------------------------------------
GOODWILL AND OTHER ASSETS, net                                   13,403                 16,398
----------------------------------------------------------------------------------------------
                                                               $119,784              $ 106,788
==============================================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT

CURRENT LIABILITIES:
     Current maturities of long-term debt                     $   1,770               $  1,241
     Other notes payable                                         22,919                 17,936
     Trade accounts payable                                      18,664                 18,221
     Accrued liabilities                                          6,405                  5,720
     Customer deposits                                            4,678                  2,241
----------------------------------------------------------------------------------------------
     Total current liabilities                                   54,436                 45,359
----------------------------------------------------------------------------------------------
LONG-TERM DEBT:
     Bank line of credit                                         17,740                 17,939
     Other debt, net of current maturities                       12,823                 12,975
----------------------------------------------------------------------------------------------
     Total long-term debt                                        30,563                 30,914
----------------------------------------------------------------------------------------------
DEFERRED GRANT INCOME                                               120                    164
DEFERRED INCOME TAXES                                               939                    808
----------------------------------------------------------------------------------------------
CONTINGENCIES AND COMMITMENTS (Note 6)
SHAREHOLDERS' INVESTMENT
     Common stock - 6,510 and 6,475 shares outstanding           16,445                 16,236
     Additional paid-in capital                                   4,062                  4,062
     Retained earnings                                           13,219                  9,245
----------------------------------------------------------------------------------------------
     Total shareholders' investment                              33,726                 29,543
----------------------------------------------------------------------------------------------
                                                             $  119,784               $106,788
==============================================================================================
The accompanying notes are an integral part of these consolidated balance sheets.

</TABLE>
<PAGE>

             Statements of Operations And Shareholders' Investment

Featherlite, Inc.
Consolidated Statements of Operations
For the years ended December 31, 1999,
1998 and 1997 (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                 1999              1998           1997
---------------------------------------------------------------------------------------------------------
<S>                                                          <C>                 <C>             <C>
Net sales                                                    $   226,108         $ 190,874       $134,387
Cost of sales                                                    190,065           160,364        111,764
---------------------------------------------------------------------------------------------------------
     Gross profit                                                36,043            30,510          22,623
Selling, general and administrative expenses                     26,574            21,999          15,794
Amortization of intangibles                                         520               386             204
---------------------------------------------------------------------------------------------------------
     Income from operations                                       8,949             8,125           6,625
---------------------------------------------------------------------------------------------------------
Other income (expense):
     Interest expense                                            (3,768)           (2,961)         (1,800)
     Gain on aircraft and property sales                            434               133             264
     Other income, net                                              795               690             382
---------------------------------------------------------------------------------------------------------
         Total other expense                                     (2,539)           (2,138)         (1,154)
---------------------------------------------------------------------------------------------------------
     Income before taxes                                          6,410             5,987           5,471
     Provision for income taxes                                   2,436             2,337           2,189
---------------------------------------------------------------------------------------------------------
         Net income                                          $    3,974          $  3,650        $  3,282
=========================================================================================================
Net income per share (basic and diluted)                     $     0.61          $   0.56        $   0.52
=========================================================================================================
</TABLE>


Consolidated Statements of Shareholders' Investment
For the years ended December 31, 1999, 1998 and 1997
(In thousands)

<TABLE>
<CAPTION>

                                                   --Common Stock--
----------------------------------------------------------------------------------------------------------
                                              Outstanding                       Additional        Retained
                                                Shares            Amount    Paid in Capital       Earnings
----------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>                <C>         <C>
Balance December 31, 1996                       6,255            $14,220            $4,062      $    2,313

     Net income for the period                                                                       3,282
----------------------------------------------------------------------------------------------------------
Balance December 31, 1997                       6,255            $14,220            $4,062      $    5,595

     Net income for the period                                                                       3,650
     Issuance of common stock                     220              2,016
----------------------------------------------------------------------------------------------------------
Balance December 31, 1998                       6,475            $16,236            $4,062      $    9,245

     Net income for the period                                                                       3,974
     Issuance of common stock                      35                209
----------------------------------------------------------------------------------------------------------
Balance December 31, 1999                       6,510            $16,445            $4,062      $   13,219
==========================================================================================================
  The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>

                            Statements of Cash Flows

Featherlite, Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 1999, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>

                                                                             1999              1998            1997
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>               <C>              <C>
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES:
     Net income                                                             $3,974            $3,650           $3,282
     Adjustments to reconcile net income to net cash from (used for)
        operating activities -
         Depreciation and amortization                                       2,483             2,121            1,610
         Amortization of prepaid advertising                                   277               287              254
         Grant income                                                          (44)              (73)             (73)
         Provision for deferred taxes                                           79               152             (260)
         Gain on sales of aircraft and other property                         (434)             (133)            (264)
         Changes in current operating items, net of effect of
           business acquisitions
              Receivables                                                    1,417            (3,179)            (268)
              Inventories                                                  (13,479)          (10,698)         (15,093)
              Prepaid expenses                                                 (76)             (144)             104
              Trade accounts payable                                           443              (278)           2,208
              Accrued liabilities                                              685               616            1,400
              Customer deposits                                              2,437            (3,197)           1,428
              Income taxes payable                                               -              (870)             630
-----------------------------------------------------------------------------------------------------------------------
     Net cash used for operations                                           (2,238)          (11,746)          (5,042)
-----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES:
     Acquisition of business, net of cash acquired                               -              (374)               -
     Investment in joint venture, net of equity in earnings                    (35)                9              (11)
     Purchases of property and equipment                                    (6,071)           (3,034)          (2,973)
     Proceeds from sale of equipment and facilities                            303               487               57
     Purchase of aircraft for resale                                        (7,513)           (2,901)          (6,839)
     Proceeds from sale of aircraft                                         10,482             3,074            3,166
-----------------------------------------------------------------------------------------------------------------------
     Net cash used for investing activities                                 (2,834)           (2,739)          (6,600)
-----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES:
     Net borrowings on other notes payable                                   4,983             4,157            4,288
     Net borrowings (repayments) on bank line of credit                       (199)            8,138              700
     Proceeds from other long-term debt                                     11,965            10,857           12,641
     Repayment of other long-term debt                                     (11,588)          (10,115)          (4,611)
     Payment of loan acquisition costs                                         (88)                -                -
     Proceeds from issuance of common stock                                     59                 4                -
-----------------------------------------------------------------------------------------------------------------------
     Net cash from financing activities                                      5,132            13,041           13,018
-----------------------------------------------------------------------------------------------------------------------
     Net cash increase (decrease) for period                                    60            (1,444)           1,376
Cash, beginning of the period                                                  188             1,632              256
-----------------------------------------------------------------------------------------------------------------------
Cash, end of the period                                                     $  248            $  188           $1,632
=======================================================================================================================
Supplemental disclosures:
     Interest payments, including $111 capitalized in 1999                  $3,820            $2,810           $1,675
     Trailers exchanged for advertising                                         32               419              664
     Income tax payments                                                     2,357             3,206            1,819
-----------------------------------------------------------------------------------------------------------------------
     Acquisition of business
         Fair value of assets acquired                                           -           (18,639)               -
         Liabilities assumed                                                     -            16,253                -
         Issuance of common stock                                                -             2,012                -
-----------------------------------------------------------------------------------------------------------------------
         Cash used                                                          $    -            $ (374)          $    -
-----------------------------------------------------------------------------------------------------------------------
  The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>

                   Notes to Consolidated Financial Statements

Note 1. Nature of Business

         Featherlite, Inc. is engaged in the manufacture and distribution of
various types of specialty trailers and luxury motorcoaches as well as related
parts and accessories. Trailers are primarily sold to authorized dealers
throughout the United States and Canada. Terms and conditions for business are
defined by standard agreements with each authorized dealer. Luxury motorcoaches
are primarily sold directly to end-user customers. Featherlite Aviation Company,
a wholly-owned subsidiary, is involved in the purchase and resale of used
business class aircraft.

Note 2.  Summary of Significant Accounting Policies

         Principles of Consolidation: The consolidated financial statements
include the accounts of Featherlite, Inc. and its wholly-owned subsidiary,
Featherlite Aviation Company, which are referred to herein as the Company. All
material intercompany accounts and transactions are eliminated in consolidation.

         Fair Values of Financial Instruments: The carrying values of cash,
accounts receivable and payable, short-term debt and accrued liabilities
approximate fair value due to the short-term maturities of these assets and
liabilities. The carrying value of long-term debt, including current maturities,
approximates its fair value because the related interest rates either fluctuate
with the lending bank's current prime rate or approximate current rates of debt
of a similar nature or maturity.

         Financial Statement Estimates: 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 and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the period. The more significant estimates are used for such items as:
valuation of used trailer and motorcoach inventory, depreciable lives of
property and equipment, allowance for doubtful accounts, and reserves for excess
inventory, warranty and self insurance. As better information becomes available
or as actual amounts are determinable, the recorded estimates are revised.
Ultimate results could differ from these estimates.

         Concentrations: The Company purchases all of its conversion motorcoach
shells from one supplier. Although there are a limited number of manufacturers
of motorcoach shells, management believes that the other suppliers could provide
similar shells on comparable terms. A change in suppliers, however, could cause
a delay in manufacturing and a possible loss of sales, which would affect
operating results adversely.

         Receivables: Receivables are stated net of an allowance for doubtful
accounts of $65,000 and $143,000 at December 31, 1999 and 1998, respectively.

         Inventories: Inventories are stated at the lower of cost, as determined
on a first-in, first-out (FIFO) basis, or market and includes materials, labor
and overhead costs. Inventories were as follows at December 31, 1999 and 1998
(in thousands):

                                        1999               1998
---------------------------------------------------------------
Raw materials                        $14,195            $12,571
Work in progress                      21,476             18,817
Finished trailers/motorcoaches        38,961             29,985
---------------------------------------------------------------
     Total                           $74,632            $61,373
===============================================================

Property and Equipment: Property and equipment are stated at cost, while repair
and maintenance items are charged to expense as incurred. Depreciation is
provided for financial reporting purposes using straight-line and accelerated
methods over estimated useful lives of 31 to 39 years for buildings and
improvements, 15 years for land improvements and 5 to 7 years for machinery and
equipment.

<PAGE>

         Long-lived Assets: The Company assesses long-lived assets for
impairment under SFAS Statement No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to Be Disposed Of." Under those
rules, property and equipment, goodwill associated with assets acquired in a
purchase business combination, idle facilities held for sale and any other
long-lived assets are included in the impairment evaluations when events or
circumstances exist that indicate the carrying amount of those assets many not
be recoverable.

         Product Warranty: The Company's products are covered by product
warranties ranging from one to six years after the date sale. At the time of
sale, the Company recognizes estimated warranty costs, based on prior history
and expected future claims, by a charge to cost of sales.

         Revenue Recognition: The Company recognizes revenue from the sale of
trailers and motorcoaches when title and risks of ownership are transferred to
the customer, which generally is upon shipment or customer pick-up. A customer
may be invoiced for and receive title prior to taking physical possession when
the customer has made a fixed, written commitment to purchase, the trailer or
motorcoach has been completed and is available for pick-up or delivery, and the
customer has requested the Company to hold the trailer or motorcoach until the
customer determines the most economical means of taking physical possession.
Upon such a request, the Company has no further obligation except to segregate
the trailer or motorcoach, issue its Manufacturer's Statement of Origin, invoice
the customer under normal billing and credit terms and hold for a short period
of time as is customary in the industry, until pick-up or delivery. Products are
built to customer specification and no right of return or exchange privileges
are granted. Accordingly, no provision for sales allowances or returns is
recorded.

         Revenue from sales of parts is recognized when the part has been
shipped. Revenue from the delivery and servicing of trailers and motorcoaches is
recognized when the service is performed.

         Delivery Income (Expenses): The Company delivers completed trailers to
its customers. Delivery revenue is included in net sales in the accompanying
consolidated statements of operations and was $3.2 million, $2.6 million, and
$2.5 million for 1999, 1998, and 1997, respectively. The corresponding delivery
expense is included in selling, general and administrative expenses and was $3.7
million in 1999, $3.2 million in 1998, and $2.7 million in 1997.

         Deferred Grant Income: The Company recognizes revenue related to grants
received from various governmental units over the life of the assets to which
the funding relates or during the period in which the expense occurs for which
grants were received. Revenue recognition begins when there is reasonable
assurance that all conditions of the grants, principally job creation goals,
have been met.

         Income Taxes: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.

Note 3.  Goodwill and Other Assets

         Goodwill and other assets consist of the following at December 31, 1999
and 1998 (in thousands):

                                        1999               1998
                                        -----------------------
Goodwill, net                       $  8,955           $  9,126
Aircraft held for resale               4,088              6,676
Property held for sale                    76                231
Advertising and other                    284                365
---------------------------------------------------------------
     Total                          $13,403            $ 16,398
===============================================================

<PAGE>

         Goodwill: As discussed in Note 11, the excess of the total acquisition
cost of Vantare International, Inc. (Vantare) and Mitchell Motorcoach Sales,
Inc. (Vogue) and other prior acquisitions, over the fair value of the net assets
acquired is being amortized on a straight-line basis over periods of up to 20
years. Amortization was $510,000 in 1999, $386,000 in 1998 and $197,000 in 1997
and accumulated amortization was $1.2 million and $696,000 as of December 31,
1999 and 1998, respectively.

         Aircraft Held for Resale: The Company is a licensed aircraft dealer and
markets used business-class aircraft. Aircraft purchased for resale are stated
at cost. The Company periodically evaluates the aircraft's net realizable value
and, if necessary, adjusts the carrying value. Gain or loss on the sale of
aircraft is included in other income (expense) during the period in which the
aircraft is sold. Aircraft held by the Company for resale are classified as
noncurrent as prior history indicates the aircraft may not be sold within twelve
months.

         Property Held for Sale: The Company owns land and buildings at a site
that was previously used as its corporate headquarters and delivery/maintenance
facility. The net book value of these facilities was previously reclassified
from property and equipment to property held for sale, net of a provision to
reduce the facilities to their net realizable value. Depreciation of these
facilities ended at the time of reclassification. In 1998, a substantial part of
the property was sold on a contract for deed which was paid in full in 1999. The
remaining balance represents land and a warehouse.

         Advertising and Other: The Company exchanged trailers and coaches for
future personal service, promotional and advertising services of an equivalent
value. These contracts were capitalized and are being amortized over the period
the services will be rendered. Amortization of these agreements to advertising
expense was $277,000 in 1999; $287,000 in 1998; and $254,000 in 1997. Total
advertising expense was $2.2 million in 1999; $2.0 million in 1998; and $1.4
million in 1997.

         New Accounting Pronouncement: In June 1998, the Financial Accounting
Standards Board Released Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 established accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 also required that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains or losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting. SFAS No.133 (as amended) is effective for all quarters of
fiscal years beginning after June 15, 2000. While the Company does not expect
the adoption to materially impact its results of operations or financial
position, adoption of SFAS No. 133 could increase volatility in earnings for
periods subsequent to adoption.

Note 4:  Income Tax Matters

         The components of the income tax provision for the years ended December
31, 1999, 1998 and 1997 are as follows (in thousands):

                             1999            1998         1997
--------------------------------------------------------------
Current
     Federal               $2,107          $1,962     $ 2,145
     State                    250             223         304
-------------------------------------------------------------
     Total                 $2,357          $2,185     $ 2,449
-------------------------------------------------------------
Deferred
     Federal                  $70            $137     $  (229)
     State                      9              15         (31)
-------------------------------------------------------------
                               79             152        (260)
-------------------------------------------------------------
     Total                 $2,436          $2,337      $2,189
=============================================================

<PAGE>

         A reconciliation of the provision for income taxes at the federal
statutory rate to the provision for income taxes in the consolidated financial
statements for the years ended December 31, 1999, 1998 and 1997 is as follows
(in thousands):

                             1999            1998         1997
--------------------------------------------------------------
Provision at federal
statutory rate             $2,179          $2,036       $1,910

State income taxes, net
of Federal income tax
benefit                       171             187          253

Other                          86             114           26
--------------------------------------------------------------
     Total                 $2,436          $2,337       $2,189
==============================================================

         Deferred tax assets and liabilities consist of the following components
as of December 31, 1999 and 1998 (in thousands):

                                            1999         1998
-------------------------------------------------------------
Non-current deferred tax liabilities:
     Depreciation                        $  (939)    $   (808)
-------------------------------------------------------------
Current deferred tax assets:
     Accrued expenses                        479         480
     Accrued warranty reserve                363         289
     Inventory allowances                    253         261
     Receivable allowances                    64          77
------------------------------------------------------------
     Total current                         1,159       1,107
------------------------------------------------------------
     Net deferred tax asset              $   220     $   299
============================================================

<PAGE>

         The Company's income tax returns for the years ended December 31, 1997,
1996 and 1995 have been examined by the Internal Revenue Service (IRS). The IRS
has proposed adjustments related to the treatment of various incentive grants
received in connection with the Company's building expansion in prior years. The
Company believes its position is valid and intends to vigorously defend it. No
assurance can be given that the Company will be successful in sustaining its
treatment of these grants. Any additional tax will result the creation of a
current income tax liability and a reduction in the deferred income tax
liability.

Note 5.  Financing Arrangements

         Other Notes Payable: Other notes payable primarily includes the unpaid
balances of the Company's motorcoach wholesale financing agreement with a
financial services company. This wholesale finance agreement provides for a
$23.7 million line of credit to finance completed new and used motorcoaches held
in inventory. Amounts borrowed are limited to defined percentages of eligible
inventory. Borrowings bear interest at prime (8.50% at December 31, 1999) and
are secured by the financed motorcoaches and other assets of the Company. The
agreement includes, among other covenants, maintaining of defined levels of
tangible net worth, leverage and working capital. The Company was in compliance
with these covenants as of December 31, 1999. This agreement is subject to
cancellation by either party on thirty days written notice after October 31,
1999. Outstanding borrowings against this note were $22.9 million at December
31, 1999.

         Bank Line of Credit: In 1998, the Company entered into a Revolving Loan
and Security Agreement with Firstar Financial Services, a division of Firstar
Bank Milwaukee, WI. (Firstar), and paid off all of its borrowings under its
existing Credit Agreement with Firstar Bank of Iowa, N.A. The new agreement
provides a working capital line of credit equal to the lesser of $25 million or
a defined percentage of eligible trade accounts receivable and inventory.
Borrowings under this agreement, which bear interest at prime less .75% (7.75%
at December 31, 1999), are secured by substantially all assets of the Company.
The agreement includes, among other covenants, maintenance of defined levels of
tangible net worth and earnings before interest, taxes, depreciation and
amortization, and a fixed charge coverage ratio. The agreement also prohibits
the payment of dividends without Firstar's prior consent. The Company was in
compliance with these covenants as of December 31, 1999. Availability under this
line was $25 million at December 31, 1999, of which $17.7 million was borrowed.
These borrowings are classified as long-term debt as the agreement matures and
is subject to renewal on September 24, 2002.

<PAGE>

         Other Long-Term Debt: Other long-term debt consisted of the following
at December 31, 1999 and 1998 (in thousands):
                                               1999         1998
-------------------------------------------------------------------
Bank notes payable; interest at prime less
 .75% (7.75% at December 31, 1999)
payable in varying monthly installments
through 2008; contains same collateral
and covenant provisions as Revolving Loan
and Security Agreement                      $ 7,552       $ 7,817

Bank notes, interest at LIBOR plus 1.80
(8.28% at December 31, 1999) payable in
monthly installments through 2004;
collateralized by real estate                 4,348           765

Bank notes payable; interest at prime
plus .75% adjusted quarterly (9.25% at
December 31, 1999); payable in
varying monthly installments through
January, 2001; collateralized by aircraft     2,412         5,215

Notes and capitalized leases to banks and
others, interest at 11.5%, payable in
varying monthly installments through
2003; collateralized by real estate             281           419
-----------------------------------------------------------------
     Total                                   14,593        14,216
     Less current maturities                 (1,770)       (1,241)
-----------------------------------------------------------------
                                            $12,823       $12,975
==================================================================

         Interest Rate Swap Agreement: The Company is party to an interest rate
swap with First Union Bank. The agreement hedges a portion of its exposure to
fluctuations on one bank note. This agreement terminates in December 2003 and is
accounted for as a hedge, with any realized gains or losses recognized currently
as an adjustment to interest expense. The notional amount of the swap
transaction is $4.0 million at a fixed rate of 7.34%. At December 31, 1999, the
fair market value of the interest rate swap was approximately $150,000.

         Annual maturities of total long-term debt during the five years
subsequent to December 31, 1999 are as follows (in thousands):

                       2000          $  1,770
                       2001             1,741
                       2002            21,767
                       2003             4,596
                       2004               510
                    Thereafter      $   1,949

Note 6.  Commitments and Contingencies

         Pursuant to dealer inventory floor plan financing arrangements, the
Company may be required, in the event of default by a financed dealer, to
purchase certain repossessed products from the financial institutions or to
reimburse the institutions for unpaid balances including finance charges, plus
costs and expenses. The Company was contingently liable under these arrangements
for a maximum amount of $14.5 million at December 31, 1999.

         The Company has three separate agreements which provided approximately
$870,000 for job training purposes from the state of Iowa. The amounts are to be
repaid, together with interest, over a ten-year period from state withholding
taxes on employees at the Company's Iowa facilities. The Company may be required
to provide funds for the repayment of these training credits if sufficient
withholding and unused training funds are not available.

         The Company is partially self-insured for a portion of certain health
benefit and workers' compensation insurance claims. The Company's maximum annual
claim exposure under these programs is approximately $4.0 million, including
$1.3 million accrued for estimated unpaid claims at December 31, 1999. The
Company has obtained an irrevocable standby letter of credit in the amount of
$1.7 million in favor of the workers compensation claims administrator to
guaranty settlement of claims.

<PAGE>

         The Company leases certain office and production facilities under
various operating leases that expire at varying dates through 2011. Rental
expense under these operating leases for the years ended December 31, 1999, 1998
and 1997 was approximately $1.0 million, $774,000, and $327,000, respectively.
The approximate annual minimum future lease payments under these operating
leases for the five years after December 31, 1999 are as follows (in thousands):

                       2000              $  1,074
                       2001                   892
                       2002                   776
                       2003                   758
                       2004              $    739

         The Company, in the course of its business, has been named as a
defendant in various legal actions. These actions are primarily product
liability or workers' compensation claims in which the Company is covered by
insurance subject to applicable deductibles. Although the ultimate outcome of
such claims cannot be ascertained at this time, it is the opinion of management,
after consultation with counsel, that the resolution of such suits will not have
a material adverse effect on the financial position of the Company.

         The Company has obtained fixed price commitments from certain suppliers
for a substantial portion of its expected aluminum requirements in 2000 to
reduce the risk related to fluctuations in the cost of aluminum, the principal
commodity used in the Company's trailer segment. In certain instances there may
be a carrying charge added to the fixed price if the Company requests a deferral
of a portion of its purchase commitment to the following year.

Note 7.   Deferred Grant Income

         Deferred grant income consists of forgivable loans (grants) in an
aggregate amount of approximately $2 million provided to the Company by various
governmental units to assist with the establishment of the Company's
headquarters and production facility in Cresco, Iowa and its Nashua, Iowa
production facility. These loans are wholly or partially forgivable based on
fulfillment and retention of job creation goals through June 1999. The Company
is awaiting a forgiveness letter on the final grant. These grants are being
recognized as income as they are earned. Cumulative income recognized for these
grants was approximately $1.9 million at December 31, 1999, $1.9 million at
December 31, 1998, and $1.8 million at December 31, 1997.

Note 8.  Employee Retirement Savings Plan

         The Company sponsors a 401(k) employee retirement savings plan which
covers substantially all employees after one year of employment. The Company may
annually elect to match a portion of the each employee's contributions and has
elected to match a portion of the first 4 percent of such contributions in each
of the three years ended December 31, 1999. Its contributions to the plan were
$180,000, $128,000 and $102,000 for the years ended December 31, 1999, 1998 and
1997, respectively.

Note 9.  Related-Party Transactions

         The Company recorded sales of approximately $4.0 million, $3.3 million
and $2.3 million in 1999, 1998, and 1997, respectively, to authorized
Featherlite dealers and Featherlite Credit Corporation which are related
entities under common ownership. The Company had a $57,000 receivable from these
related parties at December 31, 1999.

         The Company has leased various equipment from certain shareholders
during current and prior periods. Payments related to these leases totaled
$24,000 in 1999, $24,000 in 1998, and $57,000 in 1997. During 1999, the Company
also leased various aircraft from certain shareholders. Payments for leased
aircraft totaled $77,000.

         In 1997, the Company entered into agreements to compensate Featherlite
Credit Corporation for various credit-related services it provided for the
Company, including the development of the Featherlite Master Lease program.
Expenses under this agreement totaled $42,000 in 1997. Featherlite Credit
Corporation reimbursed the Company $58,000, $58,000, and $96,000 for salaries
and other costs paid by the Company in 1999, 1998, and 1997, respectively.

<PAGE>
Note 10.   Shareholders' Investment

         Capitalization: The Company's authorized capital is 40 million shares
of no par common stock and 10 million shares of undesignated stock. No shares of
undesignated stock are outstanding and no rights or preferences have been
established for these shares by the Board of Directors.

         Stock Option Plan: At December 31, 1998, the Company reserved 1,100,000
shares of common stock for issuance as options under the Company's 1994 Stock
Option Plan (the Plan). These options may be granted to employees and directors
at the discretion of the Board of Directors, which may grant either incentive
stock options or non-statutory stock options.

         All incentive options must be granted at no less than 100 percent of
the fair market value of the stock on the date of grant (110 percent for
employees owning more than 10 percent of the outstanding stock on the date of
grant). The options expire at varying dates, but do not exceed ten years from
date of grant and are non-transferable.

         Grants under the Plan are accounted for using APB Opinion No. 25 and
related interpretations. No compensation cost has been recognized for grants
under the Plan. Had compensation cost for the Plan been based on the grant date
fair values of awards (the method prescribed by SFAS No. 123) reported net
income and earnings per share would have been reduced to the pro forma amounts
shown below.
                                1999         1998         1997
--------------------------------------------------------------
Net income (000's)
     As reported           $  3,974       $3,650      $ 3,282
     Pro forma                3,764        3,263        3,164
-------------------------------------------------------------
Basic earnings per share
     As reported           $    .61       $  .56      $   .52
     Pro forma                  .58          .51          .51
-------------------------------------------------------------
Diluted earnings per share
     As reported           $    .61       $  .56      $   .52
     Pro forma                  .58          .50          .50
-------------------------------------------------------------

     The fair value of each option has been estimated at the grant date using
the Black-Scholes option-pricing model with the following assumptions for grants
in 1999, 1998, and 1997:

                                    1999       1998       1997
--------------------------------------------------------------
Dividend Rate                         0%         0%         0%
Price Volatility - 5 year options  58.4%      45.2%      47.5%
Price Volatility - 10 year options 59.2%      60.8%      47.5%
Risk-free interest rate - 5 year
     options                        5.5%       5.5%       6.3%
Risk-free interest rate - 10 year
     options                        5.6%       4.7%       6.5%
Expected life - 5 year options      5 yrs.     5 yrs.     5 yrs.
Expected life - 10 year options    10 yrs.    10 yrs.    10 yrs.

<PAGE>

         A summary of the status of the Plan at December 31, 1999, 1998, and
1997 and changes during the years ended on those dates are as follows:


                                                       Average
1997                             Shares            Exercise Price
------------------------------------------------------------------
Outstanding, beginning of year   249,380               $ 6.02
Granted                           62,000                 6.77
Exercised/forfeited                    -                    -
------------------------------------------------------------------
Outstanding, end of year         311,380               $ 6.17
------------------------------------------------------------------
Exercisable at end of year       228,380
------------------------------------------------------------------
Weighted average fair value per
     share of options granted
     during the year               $3.87
-----------------------------------------------------------------

1998
------------------------------------------------------------------
Outstanding, beginning of year   311,380               $ 6.17
Granted                          218,500                 6.24
Exercised/forfeited                 (500)                6.00
------------------------------------------------------------------
Outstanding, end of year         529,380               $ 6.20
Exercisable at end of year       308,180
Weighted average fair value per
     share of options granted
     during the year               $4.28
------------------------------------------------------------------

1999
------------------------------------------------------------------
Outstanding, beginning of year   529,380               $ 6.20
Granted                           27,000                 5.99
Exercised/forfeited              (20,220)                6.96
------------------------------------------------------------------
Outstanding, end of year         536,160               $ 6.16
------------------------------------------------------------------
Exercisable at end of year       371,260
------------------------------------------------------------------
Weighted average fair value per
     share of options granted
     during the year               $3.63
------------------------------------------------------------------


<PAGE>


         At December 31, 1999, the options outstanding have exercise prices
ranging from $5.50 to $10.00 and a weighted average remaining contractual life
of 6.6 years. All but 18,668 shares are exercisable at prices ranging from $5.50
to $7.25. Substantially all of the non-vested options are expected to eventually
vest.

         Net Income Per Share: Following is a reconciliation of the weighted
average shares outstanding used to determine basic and diluted net income per
share for the years ended December 31, 1999, 1998, and 1997 ( in thousands,
except per share data):

                                1999         1998         1997
--------------------------------------------------------------
Net income available to
common shareholders         $  3,974     $  3,650      $ 3,282
--------------------------------------------------------------
Weighted average number
of shares outstanding - basic  6,506        6,462        6,255
Dilutive effect of:
     Stock Options                14           78           55
     Contingent earnout shares    25            -            -
     Warrants                      -           19            5
--------------------------------------------------------------
Weighted average number of
shares outstanding - diluted   6,545        6,559        6,315
--------------------------------------------------------------
Net income per share - basic
and diluted                 $    .61     $    .56      $   .52
--------------------------------------------------------------

Note 11.   Business Combinations

         In May 1998, the Company acquired substantially all the assets of
Vogue, a privately held manufacturer and converter of purchased bus shells into
luxury motorcoaches, in exchange for 219,551 shares of Company common stock with
an aggregate value of $2.0 million and the assumption of approximately $16.2
million of liabilities. Additional Company common stock with an aggregate value
of $4.0 million may be issued if Vogue achieves certain defined earnings levels
through December 31, 2001. As of December 31, 1999, these earnings levels have
not been achieved and no additional shares earned. This acquisition was
accounted for as a purchase and, accordingly, results of operations have been
included in the Company's operating statements since the acquisition date.

<PAGE>

         The following unaudited pro forma summary presents consolidated results
of operations of the Company for the years ended December 31, 1998, and 1997 as
if the business combination had occurred on January 1, 1997 (in thousands,
except for per share data):

                                             1998         1997
---------------------------------------------------------------
Revenue                                 $ 203,612    $ 169,040
Net earnings                                3,372        2,703
Earnings per share - diluted            $     .51    $     .41
---------------------------------------------------------------

         The purchase price was allocated on the basis of the estimated fair
value of assets acquired and liabilities assumed with the remaining excess
purchase price of $6.1 million ($10.1 million if additional shares issued) to be
amortized over 20 years.

         In 1996, the Company acquired all the assets of Vantare, a
privately-held converter of purchased bus shells into luxury motorcoaches, in
exchange for 300,000 shares of common stock. An additional 100,000 shares of the
Company's common stock may be issued if Vantare achieves certain defined net
earnings, as determined annually, through December 31, 2000. As of December 31,
1999, 50,000 additional shares have been earned and 25,000 of these shares
issued in 1999. An additional 25,000 shares will be issued in 2000. These shares
have been accounted for as additional purchase price when issued.

         The former owner of Vantare is now a shareholder and employee of the
Company. In connection with the purchase of Vantare, the Company entered into a
non-compete agreement with the former owner that prohibits competition for a
period of three years after termination as an employee. Consideration for this
agreement not to compete is in the form of the right to purchase three
motorcoaches by the former owner of Vantare, at the Company's cost to
manufacture. One such coach was purchased from the Company in 1999. The former
owner of Vogue has a similar arrangement, although no coaches have been
purchased yet.

<PAGE>

Note 12. Segment Reporting

         During fiscal 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 "Disclosure About Segments of an Enterprise and
Related Information," which requires that companies disclose segment data based
on how management makes decisions about allocating resources to segments and
measuring their performance. The Company has two principal business segments
that manufacture and sell trailers and luxury motorcoaches to many different
markets, including recreational, entertainment and agriculture. The Company's
sales are not materially dependent on a single customer or small group of
customers. Management evaluates the performance of each segment based on income
before taxes. Beginning in 1999, the Company began allocating corporate selling
and administrative expenses to each segment. Pro forma allocations have been to
each segment for the years 1998 and 1997, also, to make the segment operating
results comparable. The following table shows the Company's business segments
and related financial information for the years ended December 31, 1999, 1998
and 1997 (in thousands):
<TABLE>
<CAPTION>
                                                                                                 Corporate
                                                           Trailers         Motorcoaches         and other        Total
1999                                                       --------         ------------         ---------        -----
----
<S>                                                        <C>                 <C>               <C>              <C>
Revenues from unaffiliated customers                       $117,896            $ 108,212         $      -         $ 226,108
Interest expense                                                508                2,896              364             3,768
Depreciation and amortization                                 1,047                  898              538             2,483
Income (loss) before taxes                                    7,270                 (344)            (516)            6,410
Identifiable assets                                          36,693               72,386           10,705           119,784
Capital expenditures                                            795                4,686              590             6,071

1998
----
Revenues from unaffiliated customers                       $113,017            $  77,857         $      -         $190,874
Interest expense                                                920                1,601               440           2,961
Depreciation and amortization                                 1,072                  546               503           2,121
Income (loss) before taxes                                    5,404                1,623            (1,040)          5,987
Identifiable assets                                          41,605               54,430            10,753         106,788
Capital expenditures                                          1,120                  881             1,033           3,034

1997
----
Revenues from unaffiliated customers                       $ 99,703            $  34,684         $       -        $134,387
Interest expense                                                839                  574               387           1,800
Depreciation and amortization                                   713                  270               627           1,610
Income (loss) before taxes                                    6,769                 (303)             (995)          5,471
Identifiable assets                                          39,491               21,882            14,135          75,508
Capital expenditures                                          1,382                  588             1,003           2,973

</TABLE>

<TABLE>
<CAPTION>

Geographic information for the same years is as follows (in thousands):
                                                                         1999                  1998                1997
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                   <C>                 <C>
Revenues from unaffiliated customers
     United States                                                   $221,710              $186,197            $129,569
     Canada and other regions                                           4,398                 4,677               4,818
-----------------------------------------------------------------------------------------------------------------------
        Consolidated                                                 $226,108              $190,874            $134,387
=======================================================================================================================

Long-lived assets
     United States                                                   $ 33,283              $ 32,266            $ 25,228
     Canada and other regions                                               -                     -                   -
-----------------------------------------------------------------------------------------------------------------------
          Consolidated                                               $ 33,283              $ 32,266            $ 25,228
=======================================================================================================================
</TABLE>

     The accounting policies applied to determine segment information are the
9same as those described in the summary of significant accounting
policies.

<PAGE>

                    Report of Independent Public Accountants

To Featherlite, Inc.

         We have audited the accompanying consolidated balance sheet of
Featherlite, Inc. (a Minnesota corporation) and subsidiary as of December 31,
1999 and the related statements of operations, shareholders' investment and cash
flows for the year then ended. 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. The financial statements of
Featherlite, Inc. and subsidiary as of December 31, 1998 and 1997 were audited
by other auditors whose report dated February 8, 1999 expressed an unqualified
opinion on those statements.

         We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards 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. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Featherlite,
Inc. and subsidiary as of December 31, 1999 and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States.

                                                 ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
February 4, 2000

<PAGE>

Stock Market Information

The Nasdaq Stock Market
Symbol:  FTHR
As of February 15, 2000, there were approximately 237
shareholders of record and approximately 2,100 beneficial
shareholders.