NATIONAL RV HOLDINGS INC, 10-K, 1997-03-28

NATIONAL RV HOLDINGS INC
10-K, 1997-03-28
MOTOR HOMES

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the year ended December 31, 1996
Commission file number 0-22268
NATIONAL R.V. HOLDINGS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware No. 33-0371079
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(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)

3411 N. Perris Blvd., Perris, California 92571
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 943-6007
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share NASDAQ
- -------------------------------------- ----------------------------------------
(Title of class) (Name of each Exchange on which registered)

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. [ ]

Aggregate market value (based upon the closing sale price) of the voting stock
held by nonaffiliated stockholders of Registrant as of March 27, 1997 was
approximately $50,108,799.

The number of shares outstanding of the Registrant's common stock, as of March
27, 1997, was 6,243,280.

Documents Incorporated by Reference: None
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PART I

Item 1. Business of the Registrant

General

National R.V. Holdings, Inc. (the "Company") is one of the nation's leading
manufacturers of Class A motorhomes. Through its National R.V., Inc (NRV)
subsidiary, the Company designs, manufactures and markets Class A motorhomes
and fifth-wheel travel trailers under brand names including Dolphin, Sea Breeze
and Tropi-Cal. Through its Country Coach, Inc. (CCI) subsidiary, the Company
designs, manufactures and markets high-end (Highline) Class A motorhomes and
bus conversions under brand names including Concept, Affinity, Magna, Intrigue
and Allure. The Company, which began manufacturing recreational vehicles
(RVs) in 1964, is the fifth largest domestic manufacturer of Class A motorhomes
and sells its motorhomes through a network of 152 dealer locations in 42
states, Canada and Europe.

National R.V. Holdings, Inc. was incorporated in Delaware in 1988. NRV was
incorporated in California in 1970 and its predecessor was organized in 1964.
In May 1989, affiliates of Siegler, Collery & Co., a New York-based investment
firm ("Siegler Collery"), through National R.V. Holdings, Inc., acquired all of
the common stock of NRV. CCI was incorporated in Oregon in 1973. In November
1996, the Company acquired all the common stock of CCI. As used herein, the
term "Company" refers to National R.V. Holdings, Inc., NRV and CCI unless the
context otherwise requires. In 1995, the Company announced the changing of its
year end to December 31 (see Note 1 of Notes to Consolidated Financial
Statements)

Recreational Vehicle Industry Overview

Products

Based upon standards established by the Recreational Vehicle Industry
Association (the "RVIA,"), RVs are commonly classified into three main
categories: (i) motorhomes, composed of Class A, B and C types; (ii) towables,
composed of fifth-wheel travel trailers, conventional travel trailers, truck
campers and folding camping trailers, and (iii) van conversions.

Motorhomes. Motorhomes are self-powered RVs built on a motor vehicle chassis.
The interior typically includes a driver's area and kitchen, bathroom, dining
and sleeping areas. Motorhomes are self-contained, with their own power
generation, heating, cooking, refrigeration, sewage holding and water storage
facilities, so that they can be lived in without being attached to utilities.
Motorhomes are generally categorized into A, B and C classes. Class A
motorhomes are constructed on a medium-duty truck chassis, which includes the
engine, drive train and other operating components. Retail prices for Class A
motorhomes generally range from $40,000 to $130,000. Highline motorhomes,
which are a subset of Class A motorhomes, generally range in retail price from
$130,000 to $800,000. Class C motorhomes are built on a van or pick-up truck
chassis, which includes an engine, drive-train components and a finished cab
section, and generally range in retail price from $40,000 to $70,000. Class B
motorhomes are van campers, which generally contain fewer features than Class A
or Class C motorhomes.

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Towables. Towables are non-motorized RVs. Fifth-wheel travel trailers,
similar to motorhomes in features and use, are constructed with a raised
forward section that attaches to the bed of a pick-up truck. This allows a bi-
level floor plan and generally more living space than conventional travel
trailers. Fifth-wheel travel trailers are typically less expensive than
motorhomes and range in retail price from $15,000 to $80,000. Conventional
travel trailers are similar to fifth-wheel travel trailers but do not have the
raised forward section. Truck campers have many of the amenities found on
travel trailers and slide into the bed of a pickup truck. Folding camping
trailers contain fewer features than other towables and are constructed with
collapsible "tent" sidewalls which fold for easy towing.

Van Conversions. Van conversions are automotive vans converted by van up-
fitters to include such features as entertainment centers, comfortable seating,
window treatments and lighting.

Trends and Demographics

According to the RVIA's wholesale statistics, RV unit sales (excluding van
conversions) increased 0.2% to 247,500 from 247,000 in 1995. The aggregate
wholesale value of these 1996 shipments was $5.0 billion, with Class A
motorhomes comprising $2.3 billion or 45.7% of the total and fifth-wheel travel
trailers comprising $0.9 billion or 17.4% of the total. Unit shipments of
Class A motorhomes increased 10.6% to 36,500 from 33,000 in 1995. The average
wholesale price of Class A motorhomes decreased to $63,172 from $66,361 in
1995. Unit shipments of fifth-wheel travel trailers increased 5.7% to 48,500
from 45,900 in 1995. The average wholesale price of fifth-wheel travel
trailers increased 9.6% to $18,138 from $16,555 in 1995.

While overall unit shipments have increased over the past five years, the RV
industry's manufacturing base has undergone a consolidation. Between 1992 and
1996, the number of Class A motorhome manufacturers declined from 45 to 27. In
addition, during this period, the aggregate retail market share of the ten
largest Class A motorhome manufacturers increased from 82.5% to 92.6%.

RVs are purchased for a variety of purposes, including camping, visiting family
and friends, sightseeing, vacationing and enjoying outdoor activities and
sporting events. According to a University of Michigan study, approximately
8.2 million households (or 9.6% of all households) in the United States owned
RVs in 1993, up from 7.7 million households in 1988 and 5.8 million households
in 1980. In addition, the study indicated that 68% of all current RV owners
and 43% of all former RV owners plan to purchase another RV in the future.
This study further indicated that 75% of RVs purchased are used (RVIA and
market share statistics reflect new product sales only) with more than 29% of
these used RVs older than 15 years. The eventual scrappage of these older
units is expected to result in an increasing proportion of new product sales
over the next ten years.

Ownership of RVs reaches its highest level among those Americans aged 55 to 64,
with 16.0% of households in this category owning RVs. The number of Americans
in this group, which constitutes the Company's primary target market, is
projected to grow 38.7% from 1996 to 2005 as compared to 7.8% for the overall
population. Baby Boomers are defined as those born between the years 1946 and
1964, and thus the leading edge of the Baby Boomer generation began turning 50
in 1996. This generation is expected to be more affluent and retire earlier

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than past generations. As Baby Boomers enter and travel through the important
50 to 65 age group for RV sales, they represent the potential for a secular
uptrend in the RV industry.

As motorhomes have increased in popularity due, in part, to the entry of the
Baby Boomer generation into the target market, the purchasers of these products
have grown more sophisticated in their tastes. As a result, customers have
demanded more value for their money, and brand recognition and loyalty have
become increasingly important. These trends have favored companies that can
deliver quality, value and reliability on a sustained basis.

Business Development and Strategy

The Company's business development and operating strategy is to deliver high
quality, innovative products that offer superior value to enhance the Company's
position as one of the nation's leading manufacturers of RVs. This strategy
focuses on the following key elements: (i) building upon and exploiting
recognition of the Company's brand names; (ii) offering the highest value
products at multiple price points to appeal to first time and repeat buyers;
(iii) expanding its manufacturing capacity and continuing to utilize vertically
integrated manufacturing processes; (iv) capitalizing on the Company's
reputation to expand its presence in the Highline market; and (v) identifying
and acquiring related businesses serving niche markets.

- - Building upon and Exploiting Recognition of the Company's Brand Names.
The Company believes that its brand names and reputation for manufacturing
quality products with excellent value have fostered strong consumer awareness
of the Company's products and have contributed to the growth of its net sales
and market share. The Company intends to capitalize on its brand name
recognition in order to increase its sales and market share, facilitate the
introduction of new products and enhance its dealer network.

- - Offering the Highest Value Products at Multiple Price Points to Appeal to
First Time and Repeat Buyers.
The Company currently offers ten distinct lines of RVs, which are available in
a variety of lengths, floorplans, color schemes and interior designs and range
in suggested retail price from $40,000 to $800,000. Each model is intended to
attract customers seeking an RV within their price range by offering value
superior to competitive products from other manufacturers. RVIA data indicates
that most motorhome purchasers have previously owned a recreational vehicle,
and the Company's models are positioned to address the demands of these repeat
customers as well as first time buyers.

- - Expanding Manufacturing Capacity and Continuing to Utilize Vertically
Integrated Manufacturing Processes.
The Company is currently expanding its manufacturing facilities in order to
increase its production flexibility and substantially increase overall
production volume to meet demand and anticipated growth. The Company designs
and manufactures a significant number of the components used in the assembly of
its products, rather than purchasing them from third parties. The Company
believes that its vertically integrated manufacturing processes allow it to
achieve cost savings and better quality control. In addition, the Company's
in-house research and development staff and on-site component manufacturing

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departments enable the Company to ensure a timely supply of necessary products
and to respond rapidly to market changes.

- - Capitalizing on the Company's Reputation to Expand its Presence in the
Highline Market.
The Company's Country Coach product offerings focus exclusively on the Highline
segment of the Class A motorhome market. The Company has a strong market share
in the Highline segment. For the twelve months ended December 31, 1996, the
Company was the fourth largest manufacturer of Highline motorhomes, with
approximately 9.3% of this market. The Company is actively seeking to expand
its share of this market by capitalizing on its established reputation,
continuing to offer superior products and expanding its production capacity in
order to target the market's growing population and satisfy the desire of many
current RV owners to purchase more upscale vehicles.

- - Identifying and Acquiring Related Businesses Serving Niche Markets.
As illustrated by the Company's recent acquisition of Country Coach, the
Company plans to expand its business through the strategic acquisition of
targeted businesses in the RV industry and related areas. The Company will
target acquisitions which it believes will result in expansion of the Company's
product lines and/or enhancement of operating efficiencies.

Business

Products

The Company's product strategy is to offer the highest value RVs across a wide
range of retail prices to appeal to a broad range of potential customers and to
capture the business of brand-loyal repeat purchasers who tend to trade up with
each new purchase. The Company's National RV subsidiary currently manufactures
Class A motorhomes under its Dolphin, Sea Breeze and Tropi-Cal brand names and
a line of fifth-wheel travel trailers under the Sea Breeze brand name. The
Company's Country Coach subsidiary currently manufactures Highline motorhomes
under the Concept, Affinity, Magna, Intrigue and Allure brand names and bus
conversions under the Country Coach Prevost Conversion brand name.

The Company's products are offered with a wide range of accessories and options
and manufactured with high-quality materials and components. Certain of the
Company's Highline motorhomes can be customized to a particular purchaser's
specifications. Each vehicle is equipped with a wide range of kitchen and
bathroom appliances, audio and video electronics, communication devices,
furniture, climate control systems and storage spaces.

Country Coach Prevost Conversion
The Country Coach Prevost Conversion is a completely customized home on wheels,
built on a diesel-powered bus chassis and produced in 40 and 45 foot lengths.
The Country Coach Prevost Conversion is available in customized floorplans
including a model featuring an expansive slide-out room that adds 35 square
feet of living area. Suggested retail prices range from approximately $650,000
to $800,000. The Country Coach Prevost Conversion was introduced in 1979.

Concept
The Concept is a wide-body bus-style motorhome, offering virtually all the
features and amenities of a bus conversion, including customization and a
diesel-powered chassis. Among its many features, the Concept has a Pentium

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computer-driven digital dash featuring a Global Positioning System (GPS). The
Concept is available in three floorplans and is produced in 40 and 45 foot
lengths. The Concept, as with all the Company's Highline motorhomes, provides
substantial under coach ("basement') storage in insulated, carpeted storage
bays. Suggested retail prices range from approximately $523,000 to $552,000.
The Concept was introduced in 1988.

Affinity
The Affinity is a wide-body bus-style motorhome, built on a diesel powered
chassis. The Affinity is a luxury model specially engineered for a longer
wheel base, shorter front and rear overhang and a lower center of gravity. The
Affinity is available in more than 35 floorplans and is produced in 38 and 40
foot lengths. Suggested retail prices range from approximately $375,000 to
$403,000. The Affinity was introduced in 1991.

Magna
The Magna is a wide-body, bus-style motorhome, built on a diesel powered
chassis. The Magna is available with a Great Room feature in which a slide-out
section expands living space by 32 square feet. The Magna is available in 36
floorplan combinations and is produced in 36, 38 and 40 foot lengths.
Suggested retail prices range from approximately $263,900 to $290,000. The
Magna was introduced in 1991.

Intrigue
The Intrigue is a wide-body bus-style motorhome built on the DynoMax diesel-
powered chassis built by CCI. The Intrigue is available in 17 floorplan
combinations and is produced in 32, 36 and 40 foot lengths. One model features
an expansive slide-out room that adds 32 square feet of living area. Suggested
retail prices range from approximately $183,000 to $211,000. The Intrigue was
introduced in 1994.

Allure
The Allure is a wide-body bus-style motorhome built on the DynoMax diesel-
powered chassis built by CCI. The Allure is available in 13 floorplan
combinations and is produced in 32, 36, and 40 foot lengths. One model
features an expansive slide-out room that adds 32 square feet of living area.
The Allure is positioned as the Company's entry-level Highline motorhome.
Suggested retail prices range from approximately $157,000 to $180,000. The
Allure was introduced in 1995.

Dolphin
The Dolphin is available in five floorplans on a gas-powered chassis. These
models are full-basement wide-body, bus-style motorhomes. Three models have
automatic slide-out features that expand the interior of the motorhome and add
approximately 36 square feet of additional living space. The Dolphin models
are produced in 33 to 36 foot lengths and have suggested retail prices that
range from $74,000 to $89,000.

Tropi-Cal
The Tropi-Cal is a wide-body bus-style motorhome outfitted similar to the
Dolphin with certain distinct features, exterior styling and floorplans. The
Tropi-Cal is available in three floorplans on a gas-powered chassis and is
produced in lengths of 34, 35, and 36 feet. One model has an automatic slide-
out feature that expands the interior of the motorbome and adds approximately
36 square feet of additional living space. Suggested retail prices range from
approximately $78,000 to $91,000.
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Sea Breeze
The Sea Breeze is a moderately-priced, bus-style motorhome, built on a gas-
powered chassis. The Sea Breeze has lower exterior height, offering partial
basement storage. A premium model is produced under the "Limited" name and has
as standard features Corian countertops, power heated side-view mirrors, deluxe
trim and heated water and waste holding tanks. The Sea Breeze is produced in
29, 31 and 33 foot lengths. Suggested retail prices range from approximately
$60,000 to $69,000. The Sea Breeze was introduced in May 1992.

Sea Breeze Fifth-Wheel Travel Trailer
The Sea Breeze fifth-wheel travel trailer comes in six floorplans equipped
similar to a Sea Breeze motorhome. All floorplans feature standard living room
and bedroom slide-out sections and are produced in 29, 30, 33, and 36 foot
lengths. Suggested retail prices range from $37,000 to $42,000.

Planned Product Introductions

During 1997, NRV will offer two new lines of Class A motorhomes. The first is
the diesel-powered Tradewinds, which will retail for $135,000 to $145,000. One
floorplan for the Tradewinds was introduced at the Recreation Vehicle Industry
Association's National RV Trade Show in Louisville, KY, in December 1996;
another will be introduced later this year. The second new line is the
gasoline-powered Sea View, 33 to 36 feet long, which offers a choice of three
floor plans at a retail price of $55,000 to $65,000.

During 1997, CCI plans to introduce a Class C motorhome, Max, in 26 or 30 foot
lengths and 21 floor plan combinations that retail from $80,000 to $88,700.

Distribution and Marketing

The Company markets NRV products through a network of 132 dealer locations in
42 states, Canada and Europe. These dealers generally carry all or a portion
of NRV's product lines along with competitors' products. The Company markets
CCI products through 20 dealer locations. CCI utilizes a limited dealer
network for its Highline motorhomes due to the selling expertise required and
the tendency of Highline customers to make destination-type purchases. The
Company believes that each of the CCI dealers has significant experience with
top-of-the-line products and has demonstrated high standards for service.

The Company generally promotes its products through visits to dealers,
attendance at industry shows, direct mail promotions, corporate newsletters,
press releases, trade and consumer magazine advertising and RV owner rallies.
From time to time, the Company also offers dealer or consumer incentives. In
addition, to help promote customer satisfaction and brand loyalty, the Company
sponsors Dolphin and Country Coach international clubs for owners of the
Company's products. The clubs publish news-letters and magazines on a monthly
or quarterly basis and organize RV rallies and other activities. The Company
continually seeks consumer preference input from several sources, including
dealers, RV owners and the Company's sales representatives and, in response,
the Company implements changes in the design, decor and features of its
products.

Substantially all of the Company's motorhome sales are made on terms requiring
payment within 15 days or less of the dealer's receipt of the unit. Most
dealers finance all, or substantially all, of the purchase price of their

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inventory under "floor plan" arrangements with banks or finance companies under
which the lender pays the Company directly. Dealers typically are not required
to commence loan repayments to such lenders for a period of at least six
months. The loan is collateralized by a lien on the vehicle. Consistent with
industry practice, the Company has entered into repurchase agreements with
these lenders. In general, the repurchase agreements provide that the Company
is required to repurchase a unit after the unit is financed and if the "floor
plan" lender has repossessed the unit. Certain of these agreements limit the
Company's liability to 12 to 18 months after the date of invoice of the unit.
At December 31, 1996, the Company's contingent liability under these agreements
was approximately $41.0 million. The risk of loss under such agreements is
spread over numerous dealers and lenders and is further reduced by the resale
value of the motorhomes the Company would be required to repurchase. The
Company's losses under these agreements have not been significant in the past.

Many finance companies and banks provide retail financing to purchasers of RVs.
Certain provisions of the U.S. tax laws applicable to second residences,
including the deductibility of mortgage interest and the deferral of gain on a
qualifying sale, currently apply to motorhomes and travel trailers used as
qualifying residences.

Manufacturing Facilities and Production

NRV owns and operates a 200,000 square foot manufacturing facility located on
approximately 30 acres in Perris, California. The Company is currently in the
process of expanding its manufacturing facilities at this site by constructing
a contiguous 154,000 square foot facility which is expected to be operational
by April 1997. The Company expects this additional facility to nearly double
National RV's peak capacity to approximately 22 units per day from the current
peak capacity of 12 units per day.

CCI leases and operates manufacturing facilities totaling 275,000 square feet
located on approximately 40 acres in Junction City, Oregon. CCI is currently
increasing its production capacity at its Junction City, Oregon site by
refurbishing and utilizing more fully a 111,000 square foot manufacturing
facility located on approximately ten acres of the Junction City property.

The Company's vehicles are built by integrating manufacturing and assembly line
processes. The Company has designed and built its own fabricating and assembly
equipment and molds for a substantial portion of its manufacturing processes.
The Company believes that its vertically integrated manufacturing systems and
processes which it has developed enable it to efficiently produce high-quality
products. Among other items, the Company fabricates, molds and finishes
fiberglass to produce its front and rear-end components, manufactures its own
walls and roofs, assembles sub-floors, molds plastic components and
manufactures certain of the installed amenities such as cabinetry, draperies,
showers and bathtubs on some models of its motorhomes. The Company believes
that by manufacturing these components on site, rather than purchasing them
from third parties, the Company achieves cost savings, better quality control
and timely supply of necessary components and is able to respond rapidly to
ongoing market changes.

The Company's headquarters are located at 3411 N. Perris Blvd., Perris,
California 92571, and its telephone number is (909) 943-6007.

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Product Development

The Company utilizes a combined research and development staff of 39 employees
who concentrate on product development and enhancements. New ideas are
presented to the staff from management and are derived from a variety of
sources, including sales representatives, dealers and consumers. The staff
utilizes computer-aided design equipment and techniques to assist in the
development of new products and floor plans and to analyze suggested
modifications of existing products and features. After the initial step of
development, prototype models for new products are constructed and refined. In
the case of modifications to certain features, new molds for various parts,
such as front-end caps and storage doors, are produced and tested. Upon
completion and acceptance of the prototypes, the new products or components are
integrated into the production process. The Company believes that the
maintenance of an in-house research and development staff enables the Company
to respond rapidly to ongoing shifts in consumer tastes and demands. Research
and development expenses were $1,077,000 for the year ended December 31, 1996,
$423,000 for the seven months ended December 31, 1995, and $780,000, and
$441,000 for the fiscal years ended May 31, 1995, and 1994, respectively.

Production

The Company's vehicles are built by integrating manufacturing and assembly-line
processes. The Company has designed and built its own fabricating and assembly
equipment and molds for a substantial portion of its manufacturing processes.
The Company believes that the manufacturing systems and processes which it has
developed enable it to produce high-quality products on an efficient basis.

Among other items, the Company fabricates, molds and finishes fiberglass to
produce its front and rear-end components, manufactures its own walls and
roofs, assembles sub-floors and molds plastic components. In addition to
assembling its vehicles and installing various options and accessories, the
Company manufactures the majority of the installed amenities such as cabinetry,
draperies, showers and bathtubs. After purchasing the basic chair and sofa
frames, the Company also manufactures most of the furniture used in its
motorhomes. The Company believes that by manufacturing these components on
site, rather than purchasing them from third parties, the Company achieves cost
savings, better quality control and timely supply of necessary components.
Chassis, plumbing fixtures, floor coverings, hardware and appliances are
purchased in finished form from various suppliers. Due to California
environmental emission restrictions on the amount of fiberglass that the
Company can fabricate, third parties manufacture certain fiberglass parts using
the Company's molds.

The Company currently operates one production shift. Capacity increases can be
achieved by adding a second shift. The Company is currently constructing a
154,000 square foot facility that will be principally used to produce fifth-
wheels and slide-out motorhomes in the near future. The new facility is
expected to be complete by April 1997.

The Company purchases the principal raw materials and certain other components
used in the production of its RVs from third parties. Other than the chassis,
these components and raw materials typically have short delivery lead times.
With the exception of the chassis, these materials, including plywood, lumber

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and plastic, are generally available from numerous sources, and the Company has
not experienced any significant shortages of raw materials or components.

Arrangements with Chassis Suppliers

NRV purchases chassis which are manufactured by Ford Motor Company and the
Chevrolet Motor Division of General Motors Corporation pursuant to agreements
with finance companies affiliated with such suppliers. The Company has a
finance agreement with Freightliner Custom Chassis Corporation for the purchase
of diesel pusher chassis. The chassis supplied by Freightliner Custom Chassis
Corporation is the only rear engine diesel-powered chassis used by NRV in its
motorhomes, although other manufacturers of rear engine diesel-powered chassis
exist. CCI purchases chasses from Gillig and Ford Motor Company (for Class C).
CCI also manufactures its own chassis, the DynoMax, which is used as the base
upon which the Allure and Intrigue motorhomes are built. The Company takes
advantage of cash discounts, for payment upon delivery, that is provided for in
the agreements. Such financing agreements generally provide that the Company
must pay for a chassis in full prior to making any alterations or additions to
the chassis. The agreements further provide that either party may terminate
the agreement at any time. In the event of such termination, the Company may
incur certain financing and other costs in order to maintain an adequate supply
of chassis. The Company generally maintains a one to two month production
supply of a chassis in inventory. If any of the Company's present chassis
manufacturers were to cease manufacturing or otherwise reduce the availability
of their chassis, the business of the Company could be adversely affected. The
industry, as a whole, from time to time experiences short-term shortages of
chassis.

Backlog

The Company's backlog of motorhome orders was $59.9 million as of February 28,
1997 and $23.2 million as of February 29, 1996. All backlog orders are subject
to cancellation. To the extent not canceled, the Company expects that its
backlog as of February 28, 1997 will be filled within 60 days of such date.

Competition

The motorhome market is intensely competitive, with a number of other
manufacturers selling products which compete with those of the Company.
According to Statistical Surveys, Inc., the two leading manufacturers accounted
for approximately 44.3% and 45.1% of total retail units sold in the Class A
motorhome market during 1996 and 1995, respectively. These companies and
certain other competitors have substantially greater financial and other
resources than the Company. Sales of used motorhomes also compete with the
Company's products. The Company competes on the basis of value, quality, price
and design. The Company's Class A retail market share of new product sales has
increased from 1.9% in 1992 to 3.4% in 1993, 4.0% in 1994, 4.2% in 1995, and
6.1% in 1996.

Regulation

The Company is subject to the provisions of the National Traffic and Motor
Vehicle Safety Act (the "Motor Vehicle Act") and the safety standards for RVs
and components which have been promulgated thereunder by the Department of

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Transportation. The regulations that have been promulgated under the Motor
Vehicle Act permit the National Highway Traffic Safety Administration (the
"NHTSA") to require a manufacturer to remedy vehicles containing defects
related to motor vehicle safety or vehicles which fail to conform to all
applicable federal motor vehicle safety standards. The Motor Vehicle Act also
provides for the recall and repair of vehicles which contain certain hazards or
defects. In addition, the Company has from time to time instituted voluntary
recalls of certain motorhome units, none of which have had a material adverse
effect on the Company.

The Company relies upon certifications from chassis manufacturers with respect
to compliance of the Company's vehicles with all applicable emission control
standards. The RVIA, of which the Company is a member, has promulgated
stringent standards for quality and safety. Each of the units manufactured by
the Company has a RVIA seal placed upon it to certify that such standards have
been met.

Federal and state authorities have various environmental control standards
relating to air, water, noise pollution and hazardous waste generation and
disposal which affect the business and operations of the Company. California
environmental emission regulations limit the amount of fiberglass which the
Company may fabricate. The Company believes that its facilities and products
comply in all material respects with applicable environmental regulations and
standards. The Company is also subject to the regulations promulgated by the
Occupational Safety and Health Administration ("OSHA"), which regulates
workplace health and safety. The Company's plant is periodically inspected by
representatives of OSHA and the RVIA.

Product Warranty

The Company provides retail purchasers of its motorhomes with a limited
warranty against defects in materials and workmanship, excluding the chassis
and certain specified components which are separately warranted by the
Company's suppliers. Service covered by warranty must be performed at either
the Company's in-house service facility or any of its dealers or other
authorized service centers. The warranty period covers the lesser of one year
or 18,000 miles. The Company's warranty reserve was $1.8 million at December
31, 1996, which the Company believes sufficient to cover warranty claims.

Trademarks

NRV's Dolphin, Tropi-Cal and Sea Breeze, and CCI's Affinity, Intrigue and
Allure trademarks are registered with the United States Patent and Trademark
Office and are material to the Company's business. The Company does not rely
upon any material patents or licenses in the conduct of its business.

Legal Proceedings and Insurance

From time to time, the Company is involved in certain litigation arising out of
its operations in the normal course of business. Accidents involving personal
injuries and property damage occur from time to time in the use of RVs. The
Company maintains product liability insurance in amounts deemed adequate by
management. To date, aggregate costs to the Company for product liability
actions have not been material. The Company believes that there are no claims
or litigation pending, the outcome of which could have a material adverse
effect on the financial position of the Company.
- 11 -
<PAGE>
Employees

As of February 28, 1997, the Company employed a total of 1,387 people, of which
1,260 were involved in manufacturing, 50 in administration, 39 in research and
development and 38 in sales and marketing. None of the Company's personnel are
represented by labor unions. The Company considers its relations with its
personnel to be good.

Item 2. Properties

CCI leases and operates manufacturing facilities totaling 275,000 square feet
located on approximately 40 acres in Junction City, Oregon. CCI is currently
increasing the production capacity at its Junction City, Oregon site by
refurbishing and utilizing more fully a 111,000 square foot manufacturing
facility located on approximately ten acres of the Junction City property.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

- 12 -
<PAGE>
PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's Common Stock, par value $.01 per share (the "Common Stock"), has
been quoted on the Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol NRVH since September 30, 1993. Prior to that time,
there was no public market for the Common Stock. In April 1996, the Company
declared a 3-for-2 stock split in the form of a 50% stock dividend on the
Common Stock, paid on May 16, 1996. The following table sets forth, for the
calendar quarters indicated, the low and high sale prices for the Common Stock
as furnished by the Nasdaq National Market after giving retroactive effect to
such 3-for-2 stock dividend.

<TABLE>
<CAPTION>
1995 Low High
------------- ------------ ------------
<S> <C> <C>
First Quarter $ 4 13/16 $ 6
Second Quarter 5 6 1/2
Third Quarter 4 1/2 5 15/16
Fourth Quarter 5 5/16 8 11/16

1996 Low High
------------- ------------ ------------
First Quarter $ 6 11/16 $ 10 9/16
Second Quarter 10 5/16 14 13/16
Third Quarter 8 5/8 15
Fourth Quarter 13 1/4 17 1/8
</TABLE>

On March 27, 1997, the last reported sales price for the Common Stock quoted on
the Nasdaq National Market was $13.00 per share. As of March 27, 1997, there
were 73 record holders of Common Stock. Such number does not include persons
whose shares are held of record by a bank, brokerage house or clearing agency,
but does include such banks, brokerage houses and clearing agencies.

Dividends

The Company has not paid any cash dividends or distributions on its Common
Stock and has no intention to do so in the foreseeable future. The Company
presently intends to retain earnings for general corporate purposes, including
business expansion, capital expenditures and possible acquisitions. The
declaration and payment of future dividends will be at the sole discretion of
the Board of Directors and will depend on the Company's profitability,
financial condition, capital needs, future prospects and other factors deemed
relevant by the Board of Directors.

Recent Sales of Unregistered Securities

On November 6, 1996, the Company acquired all the shares of capital stock of
CCI through the issuance of 543,806 shares of Common Stock valued at $9.0
million. Such shares were issued in reliance upon the exemption provided by
Section 4(2) of the Securities Act of 1933, as amended (the "Act").

In December 1996, the Company completed a private placement of 900,000 shares
of Common Stock at the price of $13.25 per share, for an aggregate purchase
price of $11,925,000. Allen & Company Incorporated and Oppenheimer & Co., Inc.

- 13 -
<PAGE>
acted as placement agents for such private placement and received a commission
equal to 7.8% of the gross proceeds of the offering and warrants to purchase
50,000 shares of Common Stock. Such shares were issued in reliance on the
exemption provided by Section 4(2) of the Act.

- 14 -

<PAGE>
Item 6. Selected Financial Data
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share and unit amounts)

Statement of Operations Data:
- -----------------------------
<TABLE>
<CAPTION>
Seven
Months
Years Ended Ended
December 31, Dec. 31, Fiscal Years Ended May 31,
---------------- ------- ----------------------------------
1996 1995 1995 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales 137,101 89,397 53,062 81,379 71,749 45,772 31,672
Cost of sales 118,643 78,089 46,864 70,459 62,115 40,514 27,778
------- ------- ------- ------- ------- ------- -------
Gross profit 18,458 11,308 6,198 10,920 9,634 5,258 3,894
Selling expenses 4,209 2,643 1,586 2,399 2,019 1,543 1,387
General and
administrative
expenses 2,899 2,455 1,233 2,243 1,706 1,504 1,387
Amortization of
intangibles (1) 80 - - - 278 278 1,444
------- ------- ------- ------- ------- ------- -------
Operating
income (loss) 11,270 6,210 3,379 6,278 5,631 1,933 ( 324)
Interest expense,
Net 111 3 ( 15) ( 8) 281 545 877
Other financing
related costs 149 178 136 132 233 267 86
Gain on early
extinguishment
of debt - - - - ( 226) - -
(Gain) loss on
sale of land
and equipment - - - ( 23) ( 1) 1 ( 415)
------- ------- ------- ------- ------- ------- -------
Income (loss)
before income
taxes and ext-
raordinary
item 11,010 6,029 3,258 6,177 5,344 1,120 ( 872)
Provision (ben-
efit) for
income taxes 4,405 2,387 1,324 2,443 2,212 207 ( 17)
Net income (loss)
before extra-
ordinary items 6,605 3,642 1,934 3,734 3,132 913 ( 855)
Loss on invest-
ment in market-
able equity
securities - ( 958) - ( 958) - - -

</TABLE>

- 15 -
<PAGE>
Statement of Operations Data (Continued):
- -----------------------------------------
<TABLE>
<CAPTION>
Seven
Months
Years Ended Ended
December 31, Dec. 31, Fiscal Years Ended May 31,
---------------- ------- ----------------------------------
1996 1995 1995 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Gain on early
extinguishment
of debt - 342 342 - - - -
------- ------- ------- ------- ------- ------- -------
Net income
(loss) 6,605 3,026 2,276 2,776 3,132 913 ( 855)

Earnings per common share and common equivalent share:
Income before
extraordinary
items $ 1.26 $ 0.75 $ 0.40 $ 0.75 $ 0.77 $ 0.41 $ (0.65)
Extraordinary
Items - ( 0.13) 0.07 ( 0.19) - - -
------- ------- ------- ------- ------- ------- -------
Net income $ 1.26 $ 0.62 $ 0.47 $ 0.56 $ 0.77 $ 0.41 $( 0.65)

Earnings per common share - assuming full dilution:
Income before
extraordinary
items $ 1.24 $ 0.75 $ 0.40 $ 0.74 $ 0.73 $ 0.36 $( 0.65)
Extraordinary
Items - ( 0.13) 0.07 ( 0.19) - - -
------- ------- ------- ------- ------- ------- -------
Net income $ 1.24 $ 0.62 $ 0.47 $ 0.55 $ 0.73 $ 0.36 $( 0.65)

Weighted average number of common shares outstanding:
Primary 5,260 4,845 4,812 4,984 4,052 2,252 1,314
Fully diluted 5,333 4,857 4,867 5,041 4,292 2,502 1,314

Other Data:
- -----------
Class A units
sold 2,042 1,504 905 1,476 1,413 851 418
Class C units
sold (2) - - - - 143 335 574
Fifth-Wheel
Travel Trailers
Sold 210 299 132 217 - - -

</TABLE>

- 16 -
<PAGE>
Balance Sheet Data:
- -------------------
<TABLE>
<CAPTION>
Seven
Months
Years Ended Ended
December 31, Dec. 31, Fiscal Years Ended May 31,
---------------- ------- ----------------------------------
1996 1995 1995 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets(3)$68,050 $34,308 $34,308 $41,592 $45,972 $37,416 $33,410
Working capital 29,553 15,080 15,080 15,482 17,695 8,368 6,744
Long-term
debt (4) 7,272 7,034 7,034 16,282 16,629 24,367 24,461
Stockholders'
Equity 45,532 18,625 18,625 18,389 19,585 2,338 1,425

</TABLE>

(1) Reflects the amortization of the costs relating to the acquisition of NRV
by National R.V. Holdings, Inc., on May 26, 1989 (the "Acquisition"),
goodwill related to the acquisition of CCI on November 6, 1996 and
covenants not to compete on a straight-line basis over five, twenty and
three years, respectively, from May 26, 1989. The Acquisition was
accounted for as a purchase transaction.
(2) The Company ceased manufacturing Class C motorhomes in January 1994
(3) Includes a $13.8 million restricted cash account funded by the Company at
the time of the Acquisition, which was reduced to $13.5 million at the time
of a restructuring effected in 1991, to secure $13.5 million of notes (the
"Secured Sellers' Notes") issued by the Company to the sellers of NRV. The
restricted cash was used to pay the notes in full on September 1, 1995.
(4) Includes the Secured Sellers' Notes.

- 17 -
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

This analysis of the Company's financial condition and operating results should
be viewed in conjunction with the accompanying financial statements including
the notes thereto.

General

The Company consummated its initial public offering (the "IPO") in October 1993
of 805,000 shares of Common Stock and a private placement (the "Private
Placement") in December 1993 of 385,613 units consisting of a total of
1,156,839 shares of Common Stock and warrants to purchase an additional 385,613
shares of Common Stock.

On November 6, 1996, the Company acquired all shares of capital stock of CCI
through the issuance of 543,806 shares of Common Stock valued at $9.0 million.
Net assets acquired included the assumption of $10.1 million of debt. The
purchase price exceeded the fair value of net assets acquired by $8,191,000,
recorded as goodwill and is being amortized over 20 years.

In December 1996, the Company completed a private placement of 900,000 shares
of Common Stock.

In 1995, the Company announced the changing of its fiscal year end from May 31
to December 31.

Sales to consumers of RVs tend to be higher during spring and summer months
than in other periods. As a result, the Company's net sales generally have been
highest during the first and second calendar quarter.

Prepayment of Subordinated Notes

On May 2, 1994, the Company retired the unsecured subordinated notes, including
interest, resulting in a gain of $226,000. Approximately $91,000 of
convertible notes were converted into 68,121 shares of Common Stock. The
holder of the convertible notes also agreed to convert the remainder of such
notes, with a balance of $168,000, into Common Stock by January 1995.

During the fiscal year ended May 31, 1995, the holder of the convertible notes
converted the remaining notes, with a balance of $157,000 at the time of
conversion, into an aggregate of 98,694 shares of Common Stock.

- 18 -
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations. (Continued)

Results of Operations

The following table sets forth for the periods indicated the percentage of net
sales represented by certain items reflected in the Company's Consolidated
Statement of Income:

<TABLE>
<CAPTION>
Percentage of Net Sales
-----------------------
Seven
Years Ended Months Fiscal Years
December 31, Ended Ended May 31,
--------------- Dec. 31, ---------------
1996 1995 1995 1995 1994
------ ------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 86.5 87.4 88.3 86.6 86.6
------ ------ ------ ------ ------
Gross profit 13.5 12.6 11.7 13.4 13.4
Selling 3.1 3.0 3.0 2.9 2.8
General and administrative 2.1 2.7 2.3 2.8 2.4
Amortization of intangibles 0.1 - - - 0.4
------ ------ ------ ------ ------
Operating income 8.2 6.9 6.4 7.7 7.8
Interest expense, net 0.1 - - - 0.4
Other financing related costs 0.1 0.2 0.3 0.1 0.3
Gain on early extinguishment of debt - - - - (0.3)
------ ------ ------ ------ ------
Income before income taxes and
extraordinary item 8.0 6.7 6.1 7.6 7.4
Provision for income taxes 3.2 2.7 2.5 3.0 3.0
------ ------ ------ ------ ------
Income before extraordinary item 4.8 4.0 3.6 4.6 4.4
Extraordinary loss on sale of
marketable equity securities - (1.1) - (1.2) -
Extraordinary gain on early
extinguishment of debt - 0.4 0.7 - -
------ ------ ------ ------ ------
Net income 4.8% 3.3% 4.3% 3.4% 4.4%
====== ====== ====== ====== ======
</TABLE>

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
(Unaudited)
- ---------------------------------------------------------------------

Net sales in 1996 increased by $47.7 million, or 53.4% from 1995. This
increase resulted primarily from a 538 unit increase in the sales of the
Company's Class A motorhomes, offset somewhat by an 89 unit decrease in Fifth-
Wheel Travel Trailers. In addition, the net sales increase was due partially
to new model year unit price increases implemented in 1996. The remaining
increase resulted from a change in the product mix of its Class A motorhomes,
with the Company selling 587 more of its more expensive units with the slide-
out feature in 1996 than in 1995.
- 19 -
<PAGE>
Cost of goods sold in 1996 increased by $40.6 million or 51.9% from 1995
resulting primarily from increased net sales. Gross profit margin was 13.5% in
1996 compared to 12.6% in 1995. The increase resulted primarily from
manufacturing efficiencies realized from operating at a higher production
level.

Selling expenses in 1996 increased by $1.6 million or 59.3% from 1995 primarily
due to commissions resulting from the increase in net sales and increases in
promotional costs. As a percentage of net sales, selling expenses increased to
3.1% in 1996 from 3.0% in 1995.

General and administrative expenses in 1996 increased by $0.4 million or 18.1%
from 1995. As a percentage of net sales, general and administrative expenses
decreased to 2.1% in 1996 from 2.7% in 1995.

Amortization of intangibles increased $80,000 in 1996 due to the CCI
acquisition.

As a result of the foregoing, operating income in 1996 increased by $5.1
million, or 81.5%, to $11.3 million. As a percentage of net sales, operating
income increased to 8.2% in 1996 from 6.9% in 1995.

Other expenses, which includes net interest expense and other financing related
costs, increased by $79,000, or 43.6%, to $260,000 from $181,000 in 1995.

As a result of the foregoing, income before income taxes and extraordinary
items in 1996 increased $5.0 million, or 82.6% from 1995 to $11.0 million. As
a percentage of net sales, income before income taxes and extraordinary items
increased to 8.0% from 6.7% in 1995.

Provision for income taxes in 1995 and 1996 was $2.4 million and $4.4 million,
respectively, representing a $2.0 million increase. The effective tax rate in
1996 was 40.0% compared to 39.6% in 1995.

As a result, income before extraordinary items increased $3.0 million, or
81.4%, to $6.6 million from $3.6 million in 1995. As a percentage of net
sales, income before extraordinary items increased to 4.8% from 4.0% in 1995.

The Company incurred a $958,000 extraordinary loss on its investment in
marketable equity securities in 1995. In September 1995, the Company redeemed
$13,500,000 of outstanding promissory notes due January 15, 1998, resulting in
an after-tax gain of $342,000.

As a result, net income increased $3.6 million, or 118.3% to $6.6 million from
$3.0 million in 1995. As a percentage of net sales, net income increased to
4.8% from 3.3% in 1995.

Seven Months Ended December 31, 1995 Compared to Seven Months Ended December
31, 1994 (Unaudited)
- ------------------------------------------------------------------------------

On December 26, 1995, the Company changed its year end from May 31 to December
31. Results of operations for the seven month periods ended December 31, 1995
and 1994 are not necessarily indicative of operating results expected for a
full (12 month) year.

- 20 -
<PAGE>
Net sales for the seven months ended December 31, 1995 increased by $8.0
million or 17.8% from the seven months ended December 31, 1994. This increase
resulted primarily from a 28 and 82 unit increase in the sales of the Company's
Class A motorhomes and fifth-wheel travel trailers, respectively. In addition,
the net sales increase was due partially to August 1995 unit price increases on
the Company's Class A motorhomes. The remaining increase resulted from a
change in the product mix of its Class A motorhomes, with the Company selling a
substantially higher proportion of its more expensive Dolphin motorhome for the
seven months ended December 31, 1995 than for the same period last year.

Cost of goods sold for the seven months ended December 31, 1995 increased by
$7.5 million or 19.1% from the seven months ended December 31, 1994 resulting
primarily from increased net sales. Gross profit margin for the seven months
ended December 31, 1995 was 11.7% compared to 12.7% for the same period last
year. The decrease was due mainly to fiberglass rework that resulted from
overuse of molds when increasing the rate of production to handle the strong
demand for 1996 models. New molds have been made to handle the increased
production rate.

Selling expenses for the seven months ended December 31, 1995 increased by
$243,000 or 18.1% from the seven months ended December 31, 1994 primarily due
to commissions resulting from the increase in net sales and increases in
promotional costs. As a percentage of net sales, selling expenses were 3.0%
unchanged from the comparable period last year.

General and administrative expenses for the seven months ended December 31,
1995 increased by $313,000 or 34.0% from the seven months ended December 31,
1994 primarily due to the annual management bonuses falling in the month of
December, the end of the short period, rather than the normal month of May, the
last month in the fiscal year. As a percentage of net sales, general and
administrative expenses increased to 2.3% from 2.0% during the comparable
period last year.

As a result of the foregoing, operating income for the seven months ended
December 31, 1995 decreased by $67,000 or 1.9% from the seven months ended
December 31, 1994. As a percentage of net sales, operating income decreased to
6.4% from 7.7% during the comparable period last year.

Other expenses, which includes net interest expense and other financing related
costs, increased by $81,000, to $121,000 from $40,000 last year. The increase
was due mainly to lower earnings on invested funds as the $13.5 million of
restricted funds was used to retire the related obligations to previous owners.

As a result of the foregoing, income before income taxes and extraordinary item
for the seven months ended December 31, 1995 decreased by $148,000 or 4.3% from
the seven months ended December 31, 1994. As a percentage of net sales, income
before income taxes and extraordinary item decreased to 6.1% from 7.6% during
the comparable period last year.

Provision for income taxes for the seven months ended December 31, 1995 and
1994 was $1.3 million and $1.4 million, respectively. The effective tax rate
for the seven months ended December 31, 1995 and 1994 was 40.7% and 40.5%,
respectively.

As a result, income before extraordinary item decreased $92,000, or 4.5%, to

- 21 -
<PAGE>
$1.9 million for the seven months ended December 31, 1995 from $2.0 million for
the comparable period last year. As a percentage of net sales, income before
extraordinary item decreased to 3.6% from 4.5% during the comparable period
last year.

On September 1, 1995, the Company redeemed $13,500,000 of outstanding
promissory notes due January 15, 1998, resulting in an after-tax gain of
$342,000. The promissory notes were issued to the previous owners of the
Company's wholly-owned operating subsidiary in connection with its acquisition
in 1989, and were collateralized by a $13,500,000 restricted cash account of
the Company. Funds from such restricted cash account were used for the
redemption.

As a result, net income increased $250,000, or 12.3%, to $2.3 million for the
seven months ended December 31, 1995 from $2.0 million for the comparable
period last year. As a percentage of net sales, net income decreased to 4.3%
from 4.5% during the comparable period last year.

Fiscal Year Ended May 31, 1995 ("Fiscal 1995") Compared to Fiscal Year Ended
May 31, 1994 ("Fiscal 1994")
- --------------------------------------------------------------------------------

Net sales in fiscal 1995 increased by $9.6 million or 13.4% from fiscal 1994.
This increase resulted primarily from a 63 unit increase in the sales of the
Company's Class A motorhomes and the shipment of 217 fifth-wheel travel
trailers, a new product introduced in fiscal 1995. These increases were
partially offset by a 143 unit decline in sales of the Company's Class C
motorhomes. In January 1994, the Company discontinued the production of Class
C vehicles. In addition, the net sales increase was due partially to unit
price increases implemented at the beginning of fiscal 1995. The remaining
increase resulted from a change in the product mix of its Class A motorhomes,
with the Company selling a substantially higher proportion of its more
expensive Dolphin Gas Bus units in fiscal 1995 than in fiscal 1994.

Cost of goods sold in fiscal 1995 increased by $8.3 million or 13.4% from
fiscal 1994 resulting primarily from increased net sales. Gross profit margin
for fiscal 1995 was unchanged from 13.4% in fiscal 1994.

Selling expenses in fiscal 1995 increased by $380,000 or 18.8% from fiscal 1994
primarily due to commissions resulting from the increase in net sales and
increases in promotional costs. As a percentage of net sales, selling expenses
increased to 2.9% in fiscal 1995 from 2.8% in fiscal 1994.

General and administrative expenses in fiscal 1995 increased by $537,000 or
31.5% from fiscal 1994, primarily due to a $233,000 one-time charge relating to
expenses incurred during fiscal 1995 in connection with a proposed public
offering of the Company's common stock and a one-time charge of $233,000
reflecting a judgment of a trial court, which was upheld on appeal, finding the
Company liable to the purchaser of an allegedly defective 1990 Dolphin
motorhome. As a result of these one-time charges, as a percentage of net
sales, general and administrative expenses increased to 2.8% from 2.4% during
the comparable period last year.

Amortization of intangibles decreased $278,000 as the cost of the Acquisition
was fully amortized at the end of fiscal 1994.
- 22 -
<PAGE>
As a result of the foregoing, operating income in fiscal 1995 increased by $0.6
million, or 11.5%, to $6.3 million. As a percentage of net sales, operating
income decreased to 7.7% in fiscal 1995 from 7.8% in fiscal 1994.

Other expenses, which includes net interest expense and other financing related
costs, decreased by $186,000, or 64.8%, to $101,000 from $287,000 in fiscal
1994. Included in fiscal 1994 was a gain on early extinguishment of debt of
$226,000. The decrease was due mainly to lower borrowing fees under a new
credit facility and an increase in dividend income from the marketable equity
securities.

As a result of the foregoing, income before income taxes and extraordinary item
in fiscal 1995 increased $0.8 million, or 15.6% from fiscal 1994 to $6.2
million. As a percentage of net sales, income before income taxes and
extraordinary item increased from 7.4% to 7.6% in fiscal 1995.

Provision for income taxes in fiscal 1994 and 1995 was $2.2 million and $2.4
million, respectively, representing a $0.2 million increase. The effective tax
rate in fiscal 1995 decreased to 39.5% from 41.4% in fiscal 1994 due mainly to
apportioning sales, for the first time, out of California into states with
lower tax rates.

As a result, income before extraordinary item increased $0.6 million, or 19.2%,
from $3.1 million in fiscal 1994 to $3.7 million in fiscal 1995. As a
percentage of net sales, income before extraordinary item increased from 4.4%
in fiscal 1994 to 4.6% in fiscal 1995.

The Company incurred a $958,000 extraordinary loss on its investment in
marketable equity securities that occurred subsequent to the end of fiscal
1995.

As a result, net income decreased $0.3 million from $3.1 million in fiscal 1994
to $2.8 million in fiscal 1995. As a percentage of net sales, net income
decreased from 4.4% in fiscal 1994 to 3.4% in fiscal 1995.

Liquidity and Capital Resources

During 1996, the Company financed its operations primarily through its existing
cash, income from operations and its credit facility. At December 31, 1996,
the Company had working capital of $29.6 million compared to $15.1 million at
December 31, 1995. This increase of $14.5 million was primarily due to the
$20.0 million increase in inventory, partially offset by a $4.3 million
increase in accounts payable and $2.3 million increase in accrued expenses.
Net cash provided by operating activities was $1.5 million for the twelve
months ended December 31, 1996.

During the twelve months ended December 31, 1996, net cash used in investing
activities was $5.6 million and includes $5.1 million of capital expenditures,
related primarily to the new building construction at NRV, and $0.4 million of
expenditures related to the acquisition of CCI.

During the twelve months ended December 31, 1996, net cash used in financing
activities was $4.8 million. Net proceeds of $10.9 million from a private
placement of common stock, $1.4 million proceeds from the issuance of common
stock in connection with the exercise of warrants and options, and $3.6 million

- 23 -
<PAGE>
proceeds from restricted funds used for the construction of the new building at
NRV, were offset by a $10.0 million decrease in the line of credit related to
the acquisition of CCI, and a $1.0 million purchase of treasury stock.

As of December 31, 1996, the Company had short-term debt of $0.5 million and
long-term debt of $7.3 million. Short-term debt consisted of current
maturities of the Company's long-term debt. At December 31, 1996, long-term
debt consisted primarily of the Company's two industrial development revenue
bond issues. The first issue ($2.0 million principal amount) was for the
construction of the existing NRV facility. The second issue ($5.0 million
principal amount) is for the construction of a new 154,000 square foot facility
at NRV to be completed in 1997.

The Company has $21.0 million in working capital revolving lines of credit with
two financial institutions. At December 31, 1996, the Company had $1.4 million
of outstanding borrowings under these credit facilities. These facilities are
secured by the Company's equipment, trademarks, contract rights, accounts
receivable and inventory and expire in 1998. There are no borrowing
availability restrictions under these facilities.

During the twelve months ended December 31, 1996, the Company incurred capital
expenditures of $5.1 million. The Company anticipates that it will incur
capital expenditures of approximately $3.1 million in 1997. Approximately $1.5
million of that amount will be used to complete construction of the new NRV
manufacturing facility and the purchase of related equipment.

The Company believes that the combination of internally generated funds,
existing capital and funds available from its existing credit facility, will be
sufficient to meet the Company's planned capital and operational requirements
for at least the next 24 months.

Effects of Inflation

Management does not believe that inflation has had a significant impact on the
Company's results of operations for the periods presented.

Forward Looking Statements

This Form 10-K contains certain forward-looking statements which may involve
certain risks and uncertainties. The actual results may differ materially from
the results anticipated in these forward-looking statements as a result of
various risks and uncertainties. Potential risks and uncertainties include but
are not limited to such factors as the strength and competitive pricing of the
RV industry, changes in the availability and pricing of credit, demand for and
acceptance of the Company's products, the success of planned marketing and
promotional campaigns, and other risks identified in documents filed by the
Company with the Securities and Exchange Commission.

Item 8. Financial Statements and Supplementary Data
Financial information required by this item is attached to this report
beginning on page F-1 and is incorporated herein by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not applicable

- 24 -
<PAGE>
PART III

Item 10. Directors and Officers of the Registrant.

The executive officers, directors and other key employees of the Company are as
follows:

Name Age Position
- ------------------- --- -------------------------------------
<S> <C> <C>
Gary N. Siegler 35 Chairman of the Board
Wayne M. Mertes 60 President, Chief Executive Officer
and Director
Robert L. Lee 58 Director
Stephen M. Davis 42 Director and Secretary(1)(2)
Gary L. Fuhrman 35 Director(1)(2)
Neil H. Koffler 30 Director and Assistant Secretary(1)
Kenneth W. Ashley 51 Chief Financial Officer and Treasurer

Other Key Employees
- -------------------
Jack L. Courtemanche 62 President of CCI
Lewis E. Howard 63 General Manager of NRV
Edward Read 46 Vice President of Manufacturing of CCI
J. Raul Gimenez 42 Director of Engineering of NRV
Michael K. Woods 57 National Sales Director of NRV
</TABLE>
_____________________

(1) Member of the Audit Committee.
(2) Member of Compensation Committee.

Executive Officers and Directors

GARY N. SIEGLER. Mr. Siegler has served as Chairman of the Board of Directors
of the Company since April 1989 and as Vice President and Secretary from April
1989 to August 1993. Mr. Siegler is a Class I director whose term expires in
1999. Mr. Siegler is a co-founder and, since January 1989, has been President
of Siegler Collery. Mr. Siegler is an executive officer of the general partner
of The SC Fundamental Value Fund, L.P., a fund investing in marketable
securities, and an executive officer of SC Fundamental Value BVI, Inc., the
investment advisor to an off-shore fund investing in marketable securities.
Mr. Siegler serves as the Chairman of the Board of Directors of Medical
Resources, Inc., a provider of diagnostic imaging services.

WAYNE M. MERTES. Mr. Mertes has been a director of the Company since October
1991 and President and Chief Executive Officer of the Company since August
1993. Mr. Mertes is a Class I director whose term expires in 1999. Mr. Mertes
co-founded NRV in 1963 under the name Dolphin Trailer Company and has
continuously served as an executive officer of such predecessor and,
subsequently, NRV since such time.

ROBERT L. LEE. Mr. Lee has been a director of the Company since November 1996.
Mr. Lee is a Class II director whose term expires in 1998. Mr. Lee founded CCI
in 1973 and has continuously served as Chairman and Chief Executive Officer of
CCI since such time.

- 25 -
<PAGE>
STEPHEN M. DAVIS. Mr. Davis has been a director and Secretary of the Company
since August 1993 and Assistant Secretary and Assistant Treasurer from May 1989
to August 1993. Mr. Davis is a Class II director whose term expires in 1998.
For more than the last five years, Mr. Davis has been a partner of the law firm
Werbel & Carnelutti, A Professional Corporation. Mr. Davis is a director of
Medical Resources, Inc.

GARY L. FUHRMAN. Mr. Fuhrman has been a director of the Company since August
1993. He is a Class III director whose term expires in 1997. Mr. Fuhrman has
been a Director and a Senior Vice President of Arnhold and S. Bleichroeder,
Inc. since March 1995 and January 1993, respectively, and a vice president of
such firm for more than five years prior thereto. Mr. Fuhrman is a director of
Medical Resources, Inc.

NEIL H. KOFFLER. Mr. Koffler has been a director of the Company since August
1993 and Assistant Secretary since September 1993. He is a Class III director
whose term expires in 1997. For more than the past five years, Mr. Koffler has
been employed by Siegler Collery. Mr. Koffler is a director of Medical
Resources, Inc.

KENNETH W. ASHLEY. Mr. Ashley has been Chief Financial Officer and Treasurer
of the Company since August 1993. Mr. Ashley has served as NRV's Chief
Financial Officer since 1989 and served as its Controller from 1987 to 1989.
Mr. Ashley is a certified public accountant.

Other Key Employees

JACK L. COURTEMANCHE. Mr. Courtemanche is the President of CCI and has served
in such capacity since 1990. From 1982 to 1989, Mr. Courtemanche served as
Assistant to the President of the United States in the Reagan Administration.
Prior to 1982, Mr. Courtemanche was owner and President of Crown Coach
Corporation, a California manufacturer of school and transit buses and fire
trucks.

LEWIS E. HOWARD. Mr. Howard is General Manager of the Company and has served
as General Manager of NRV since 1976.

EDWARD READ. Mr. Read is the Vice President of Manufacturing of CCI and has
served in such capacity since 1989.

J. RAUL GIMENEZ. Mr. Gimenez has been Director of Engineering for NRV since
October 1996 and was employed by Fleetwood Enterprises for four years prior
thereto.

MICHAEL K. WOODS. Mr. Woods is National Sales Director of the Company and has
served as National Sales Director of NRV since 1990. From 1987 to 1990, Mr.
Woods served as a sales executive of NRV.

The Board of Directors has designated a Stock Option Committee, consisting of
Stephen M. Davis and Gary L. Fuhrman, which makes all decisions with respect to
the grant of stock options and administration of the Company's 1993 Stock
Option Plan, 1995 Stock Option Plan, and 1996 Stock Option Plan. See
"Executive Compensation -- Stock Option Plans." The Board of Directors has also
established an Audit Committee, consisting of Messrs. Davis, Fuhrman and
Koffler, and a Compensation Committee, consisting of Messrs. Davis and Fuhrman.

- 26 -
<PAGE>
The Audit Committee reviews the performance of the independent accountants as
auditors for the Company, discusses and reviews the scope and the fees of the
prospective annual audit and reviews the results with the auditors. The
Compensation Committee reviews and makes recommendations to the Board regarding
salaries, compensation and benefits of executive officers and key employees of
the Company.

Pursuant to the Company's Bylaws, the Company's Board of Directors is divided
into three classes of Directors serving three-year terms. One class of
directors is elected by stockholders at each annual meeting to serve until the
third annual meeting following such annual meeting or until their successors
are elected and qualified. In the case of a vacancy, a director will be
appointed by a majority of the remaining directors then in office to serve the
remainder of the term left vacant. Directors do not receive any fees for
attending Board meetings. Directors are entitled to receive reimbursement for
traveling costs and other out-of-pocket expenses incurred in attending Board
meetings.

Pursuant to the Company's Bylaws, officers of the Company hold office until the
first meeting of directors following the next annual meeting of stockholders
and until their successors are chosen and qualified.

Based solely upon a review of the copies of the forms furnished to the Company,
or written representations from certain reporting persons, the Company believes
that during the twelve months ended December 31, 1996, all filing requirements
applicable to its officers and directors were complied with by such
individuals.

Item 11. Executive Compensation

Compensation of Executive Officers

The following table sets forth all compensation awarded to, earned by or paid
to each of the Company's executive officers for the Company's fiscal years as
specified below:
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Other Annual
Name and Compen-
Principal Position Year Salary Bonus sation (1)
- ---------------------- -------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Wayne M. Mertes Twelve months ended
President and December 31, 1996 $223,073 $200,000 -
Chief Executive Seven months ended
Officer December 31, 1995 128,333 87,500 -
Twelve months ended
May 31, 1995 220,000 150,000 -

Kenneth W. Ashley Twelve months ended
Chief Financial December 31, 1996 $ 89,362 $ 61,816 -
Officer Seven months ended
December 31, 1995 43,888 41,805 -
Twelve months ended
May 31, 1995 73,249 53,924 -
</TABLE>

- 27 -
<PAGE>
(1) The aggregate amount of all perquisites and other personal benefits paid to
each named executive is not greater than either $50,000 or 10% of the total
of the annual salary and bonus reported for either such executive.

Compensation Committee Interlock and Insider Participation

Compensation decisions during the year ended December 31, 1996 were made by the
Company's Board of Directors, which included Wayne M. Mertes, President of the
Company. Mr. Mertes did not participate in Board deliberations or voting
concerning his compensation, which has been established by his employment
agreement. The Board of Directors acted upon the recommendations of the
Compensation Committee which was established in May 1994 in order to review and
make recommendations to the Board regarding remuneration arrangements for
executive officers and key employees of the Company. Messers. Davis and
Fuhrman, non-employee directors of the Company, serve on the Compensation
Committee. Mr. Davis, also Secretary of the Company, is a member of Werbel &
Carnelutti, A Professional Corporation, which renders legal services to the
Company.

Employment Agreements

The Company is a party to an employment agreement with Mr. Mertes (the
"Employment Agreement") which expires on October 31, 1998. Pursuant to the
Employment Agreement, Mr. Mertes acts as President and Chief Executive Officer
of the Company, for which he currently receives an annual salary of $220,000
and is prohibited from competing with the Company for a period of 18 months
following the term of the agreement. Mr. Mertes is entitled to receive a bonus
equal to 20% of the Company's annual "Defined Income" (defined as the Company's
net income, after eliminating all extraordinary or non-recurring items of
income and expense, before deduction of taxes and interest) in excess of
$5,392,000, with a maximum annual bonus limit of $200,000.

In November 1996, CCI entered into three year employment agreements with Robert
L. Lee, CCI Chairman and CEO, and Jack L. Courtemanche, CCI President, for
which they receive an annual salary of $200,000 and $175,000, respectively, and
bonus potential, based on CCI operating profits, of $75,000 and $50,000,
respectively.

Stock Option Plans

1993 Stock Option Plan
- ----------------------
In August 1993, the Company adopted and approved the 1993 Stock Option Plan
(the "Plan"). The Plan is designed to serve as an incentive for retaining
qualified and competent directors, employees and consultants. The Plan
provides for the award of options to purchase up to 300,000 shares of Common
Stock, of which 234,703 were subject to outstanding options as of December 31,
1996. The Plan is administered by the Stock Option Committee of the Board of
Directors. The Stock Option Committee has, subject to the provisions of the
Plan, full authority to select Company individuals eligible to participate in
the Plan, including officers, directors (whether or not employees) and
consultants (the "Plan Participants"). The Plan provides for the awarding of
incentive stock options (as defined in Section 422 of the Internal Revenue Code
of 1986) and non-incentive stock options. Options granted pursuant to the Plan
will have such vesting schedules and expiration dates as the Stock Option

- 28 -
<PAGE>
Committee shall establish in connection with each Plan Participant, which terms
shall be reflected in an option agreement executed in connection with the
granting of the option. For the twelve months ended December 31, 1996, no
options were granted under the Plan.

1993 Option Plan
- ----------------
In November 1993, the Company adopted and approved the 1993 Option Plan (the
"Option Plan"). The Option Plan is designed to serve as an incentive for
retaining qualified and competent directors, employees and consultants. The
Option Plan provides for the award of options to purchase up to 232,500 shares
of the Company's Common Stock, of which 228,150 were subject to outstanding
options as of December 31, 1996. The Option Plan is administered by the
Company's Board of Directors, which has, subject to the provisions of the
Option Plan, full authority to select Company individuals eligible to
participate in the Option Plan, including officers, directors (whether or not
employees) and consultants (the "Option Plan Participants"). The Option Plan
provides for the awarding of incentive stock options (as defined in Section 422
of the Internal Revenue Code of 1986) and non-qualified stock options. Options
granted pursuant to the Option Plan have such vesting schedules and expiration
dates as the Board of Directors established in connection with each Option Plan
Participant, which terms are reflected in an option agreement executed in
connection with the granting of the option. For the twelve months ended
December 31, 1996, no options were granted under the Option Plan.

1995 Stock Option Plan
- ----------------------
In September 1995, the Company adopted and approved the 1995 Stock Option Plan
(the "1995 Option Plan"). The plan is designed to serve as an incentive for
retaining qualified and competent directors, employees and consultants. The
1995 Option Plan provides for the award of options to purchase up to 150,000
shares of Common Stock, of which 138,000 shares were awarded in September 1995
and were subject to outstanding options as of December 31, 1996. The 1995
Option Plan is administered by the Stock Option Committee of the Board of
Directors. The Stock Option Committee has, subject to the provisions of such
Plan, full authority to select Company individuals eligible to participate in
such Plan, including officers, directors (whether or not employees) and
consultants. The 1995 Option Plan provides for the awarding of incentive stock
options (as defined in Section 422 of the Internal Revenue Code of 1986) and
non-incentive stock options. Options granted pursuant to the 1995 Option Plan
will have such venting schedules and expiration dates as the Stock Option
Committee shall establish in connection with each participant in the 1995
Option Plan, which terms shall be reflected in an option agreement executed in
connection with the granting of the option.

1996 Stock Option Plan
- ----------------------
In October 1996, the Company adopted and approved the 1996 Stock Option Plan
(the "1996 Stock Option Plan"). The plan is designed to serve as an incentive
for retaining qualified and competent directors, employees and consultants.
The 1996 Stock Plan provides for the award of options to purchase up to 450,000
shares of Common Stock, of which 222,000 shares were awarded in October 1996
and 200,000 shares in November 1996 and were subject to outstanding options as
of December 31, 1996. The 1996 Stock Option Plan is administered by the Stock
Option Committee of the Board of Directors. The Stock Option Committee has,

- 29 -
<PAGE>
subject to the provisions of such Plan, full authority to select Company
individuals eligible to participate in such Plan, including officers, directors
(whether or not employees) and consultants. The 1996 Stock Option Plan
provides for the awarding of incentive stock options (as defined in Section 422
of the Internal Revenue Code of 1986) and non-incentive stock options. Options
granted pursuant to the 1996 Stock Option Plan will have such venting schedules
and expiration dates as the Stock Option Committee shall establish in
connection with each participant in the 1996 Stock Option Plan, which terms
shall be reflected in an option agreement executed in connection with the
granting of the option.

Other Grants of Stock Options

In May 1996, options were granted to a key employee of the Company with respect
to 15,000 shares at an exercise price of $13.67 per share. Options granted to
the key employee vest in three equal annual installments and expire five years
from the date of grant.

In October 1996, the Company granted to two directors of the Company outside of
the 1996 Stock Option Plan options to purchase 5,000 shares each at $14.00 per
share.

Options Granted During the Twelve Months Ended December 31, 1996

The following table sets forth certain information concerning options granted
during the twelve months ended December 31, 1996 to the executive officers
named in the summary compensation table above.

<TABLE>
<CAPTION>
Potential realizable value
at assumed annual rates
of stock price appreciation
Individual Grants for option term (1)
--------------------- ---------------------------
Exercise Expir-
Options or base ration
Granted (2) price Date 5%($) 10%($)
------- ----- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Wayne M. Mertes 50,000 11.2% $ 14.00 10/02/06 $440,230 $1,115,590
Kenneth Ashley 10,000 2.3 14.00 10/02/01 38.682 85,470
15,000 3.4 13.67 05/10/01 56,655 125,183
</TABLE>

(1) The 5% and 10% assumed annual rates of appreciation are mandated by rules
of the Securities and Exchange Commission and do not reflect estimates or
projections of future Common Stock prices. There can be no assurance that
the amounts reflected in this table will be achieved.

(2) Percent of total options/SARs granted to employees in fiscal year.

- 30 -
<PAGE>
Option Values

The following table sets forth, as of December 31, 1996, the number of options
and the value of unexercised options held by the executive officers of the
Company named in the summary compensation table above.

<TABLE>
<CAPTION>
Number of unexercised Value of unexercised
options at December in-the-money options
31, 1996 (1) at December 31, 1996(1)
-------------------- -----------------------
Shares
Acquired in Value Unexer- Unexer-
Name Exercise Realized Exercisable cisable Exercisable cisable
(#) ($)
- --------------- ------- -------- --------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Wayne M. Mertes ___ ___ 222,500 ____ $1,661,548 ___
Kenneth W. Ashley ___ ___ 26,500 40,875 $ 244,038 $ 159,202

(1) On December 31, 1996, the last reported sales price for the Common Stock
on the Nasdaq National Market was $14.625.
</TABLE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table set forth as of March 27, 1997 the number and percentage of
shares of Common Stock held by (i) each of the executive officers and directors
of the Company, (ii) all persons who are known by the Company to be the
beneficial owners of, or who otherwise exercise voting or dispositive control
over, five percent or more of the Company's outstanding Common Stock and (iii)
all of the Company's present executive officers and directors as a group:

<TABLE>
<CAPTION>
Name and Address Common Stock Percentage of
of Beneficial Owner Owned(1) Outstanding
- -------------------------- --------------- ------------
<S> <C> <C>
Gary N. Siegler (2)(3)
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019 1,783,606 27.2%

Wayne M. Mertes (4)
c/o National R.V., Inc.
3411 N. Perris Blvd.
Perris, CA 92571 526,407 8.1%

Robert L. Lee (5)
c/o National R.V., Inc.
3411 N. Perris Blvd.
Perris, CA 92571 407,441 6.5%

Stephen M. Davis (6)
c/o Werbel & Carnelutti
711 Fifth Avenue
New York, NY 10022 24,500 *
</TABLE>

- 31 -
<PAGE>
<TABLE>
<CAPTION>
Name and Address Common Stock Percentage of
of Beneficial Owner Owned(1) Outstanding
- -------------------------- --------------- ------------
<S> <C> <C>
Neil H. Koffler (7)
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019 60,028 *

Gary L. Fuhrman (8)
c/o Arnhold and S. Bleich., Inc.
45 Broadway
New York, NY 10006 279,566 4.4%

Kenneth W. Ashley (9)
c/o National R.V., Inc.
3411 N. Perris Blvd.
Perris, CA 92571 33,022 *

Peter M. Collery (2)(10)
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019 1,376,838 21.7%

The SC Fundamental Value Fund, L.P. (2)
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019 598,893 9.6%

The SC Fundamental Value BVI, Ltd. (2)
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019 313,750 5.0%

All officers and directors
As a group (7 in number)
(2)(3)(4)(5)(6)(7)(8)(9) 3,114,570 44.2%
</TABLE>

* Less than one percent.
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by them.
(2) Messrs. Siegler and Collery, due to their joint ownership of Siegler
Collery and other affiliates which control each of The SC Fundamental Value
Fund, L.P. and SC Fundamental Value BVI, Ltd. (each listed in the table)
and certain other entities which beneficially own an aggregate of 383,695
shares of Common Stock, are each deemed to beneficially own all of the
shares of Common Stock owned of record by all such entities.
(3) Includes 313,750 shares underlying outstanding options.
(4) Includes 222,500 shares underlying outstanding options.
(5) Includes 50,000 shares underlying outstanding options.
(6) Includes 20,750 shares underlying outstanding options.
(7) Includes 56,250 shares underlying outstanding options.
(8) Includes 114,500 shares underlying outstanding options.
(9) Includes 21,500 shares underlying outstanding options exercisable within 60
days.
(10)Includes 82,500 shares underlying outstanding options.
- 32 -
<PAGE>
Item 13. Certain Relationships and Related Party Transactions.

NRV has management consulting agreements with affiliates of the principal
shareholders of the Company for services rendered. Fees paid under the
agreements totaled $330,000 for the year ended December 31, 1996, $75,000 for
the seven months ended December 31, 1995, and $150,000 in each of the 1995, and
1994 fiscal years. The agreements call for $280,000 annually to be paid
through 1998, and then $130,000 annually through 2001. During 1996, $385,000
was paid to an affiliate of the principal shareholders for financial advisory
services rendered in connection with the acquisition of CCI.

In connection with the CCI Acquisition, the Company issued 357,441 shares of
Common Stock to Mr. Robert B. Lee, a director of the company and the Chief
Executive Officer of the CCI, in exchange for his shares of common stock of
CCI. Mr. Lee is also a partner in two joint ventures, which are parties to
lease agreements with CCI. Pursuant to these agreements, CCI leases from the
joint ventures two parcels of property constituting CCI's entire manufacturing
facilities. The aggregate monthly rental payments made by CCI under such
leases are $118,389.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a) List of Documents filed as part of this Report

1. Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Operations for the twelve months ended
December 31, 1996, seven months ended December 31, 1995, and the
fiscal years ended May 31, 1995 and 1994
Consolidated Statements of Cash Flows for the twelve months ended
December 31, 1996, seven months ended December 31, 1995, and the
fiscal years ended May 31, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the twelve
months ended December 31, 1996 and seven months ended December
31, 1995
Notes to Consolidated Financial Statements

2. Financial Statement Schedules
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings

3. Exhibits

(b) Reports on Form 8-K:

On November 6, 1996, the Company announced that pursuant to a Share Exchange
Agreement, dated as of October 22, 1996, with CCI and the stockholders of CCI,
all of the outstanding shares of common stock of CCI were exchanged for an
aggregate of 543,806 shares of the Company's common stock.

- 33 -
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Description of Exhibit
- ------------ ------------------------------------------------------
<S> <C>
3.1 The Company's Restated Certificate of Incorporation. (2)
3.2 The Company's By-laws. (2)
4.1 Specimen-Certificate of Common Stock. (1)
10.1 Loan Agreement, dated as of December 1, 1985, between NRV
and The Industrial Development Authority of the County
of Riverside (the "Authority"). (1)
10.2 Security Agreement, dated as of December 1, 1985, by and
among NRV, the Authority and Union Bank. (1)
10.3 Pledge and Security Agreement, dated as of December 1,
1985, between NRV and Union Bank. (1)
10.4 Employment Agreement, dated as of October 29, 1991,
between NRV and Wayne Mertes. (1)
10.5 Amendment to Employment Agreement, dated as of July 1,
1993, between NRV and Wayne Mertes. (1)
10.6 Letter Agreement, dated May 26, 1989, between NRV and
Siegler, Collery & Co. (1)
10.7 Letter Agreement, dated July 1, 1993, between NRV and
Siegler, Collery & Co. (1)
10.9 Agreement, dated October 4, 1988, between NRV and Ford
Motor Company. (1)
10.10 Pool Company Wholesale Finance Plan Application for Wholesale
Financing and Security Agreement, dated June 26, 1990,
between NRV and Ford Motor Credit Company("Ford Credit").(1)
10.11 Continuing Guaranty of the Company for the benefit of Ford
Credit. (1)
10.12 Inventory Loan and Security Agreement, dated October 14, 1988,
between NRV and General Motors Acceptance Corporation
("GMAC"). (1)
10.13 Amendment to Inventory Loan and Security Agreement, effective
as of November 19, 1991, between NRV and GMAC. (1)
10.14 Agreement, effective September 27, 1991, between NRV and
Chevrolet Motor Division, General Motors Corporation. (1)
10.15 Agreement for Wholesale Financing, dated as of July 8, 1993,
between NRV and ITT Commercial Finance Corp. (1)
10.16 National R.V. Holdings, Inc. 1993 Stock Option Plan. (1)
10.17 Stock Purchase Agreement, dated as of October 29, 1991, by and
among the Company, Wayne Mertes and Michael Butler. (1)
10.18 Agreement, dated as of October 11, 1991, by and among the
Company, Siegler, Collery & Co., Wayne Mertes and Michael
Butler. (1)
10.20 Assignment Agreement, dated as of September 29, 1993, between
National R.V. Holdings, Inc. and National R.V., Inc. (2)
10.21 National R.V. Holdings, Inc. 1993 Option Plan. (2)
10.22 Second Amendment to Employment Agreement, dated May 23, 1993,
between the Company and Wayne Mertes. (3)
10.23 Agreement, dated January 18, 1994, between the Company and
Ladenburg, Thalmann & Co. Inc. (including the form of
warrant). (3)
10.24 First Amendment to Loan Agreement between Industrial
Development Authority of the County of Riverside and the
Operating Company dated February 1, 1995. (4)
</TABLE>

- 34 -
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Description of Exhibit
- ------------ ------------------------------------------------------
<S> <C>
10.25 First Amendment to Letter of Credit and Reimbursement
Agreement between the Operating Company and Union Bank dated
as of December 1, 1993. (4)
10.26 Loan Agreement and First Amendment dated as of October 28,
1994 between the Operating Company and Union Bank. (4)
10.27 Security Agreement dated October 17, 1994, between the
Operating Company and Union Bank. (4)
10.19 Security Agreement dated October 17, 1994, between National
R.V. Holdings, Inc. and Union Bank. (4)
10.20 Ford Authorized Converter Pool Agreement dated June 12, 1990,
between the Operating Company and Ford Motor Company. (4)
10.21 First Amendment to Ford Authorized Converter Pool Agreement
between the Operating Company and Ford Motor Company
effective July 1, 1990. (4)
10.22 Second Amendment to Ford Authorized Converter Pool Agreement
between the Operating Company and Ford Motor Company dated
June 30, 1994. (4)
10.32 Motor Home Manufacturers Incentive Agreement dated June 30,
1994, between the Operating Company and Chevrolet Motor
Division, General Motors Corporation. (4)
10.33 Addendum to Agreement for Wholesale Financing between the
Operating Company and ITT Commercial Finance Corp. dated
July 8, 1993. (4)
10.34 Loan Agreement, dated as of December 1, 1995, between NRV
and California Economic Development Financing Authority. (5)
10.35 Reimbursement Agreement, dated as of December 1, 1995, between
NRV and Union Bank. (5)
10.36 Remarketing agreement, dated as of December 1, 1995, between
NRV and Rauscher Pierce Refsnes, Inc. (5)
10.37 Tax Regulator Agreement, dated as of December 1, 1995, between
NRV, the California Economic Development Financing
Authority, and First Trust of California. (5)
10.38 Pledge and Security Agreement, dated as of December 1, 1995,
between NRV and Union Bank. (5)
10.39 Security Agreement, dated as of December 1, 1995, between NRV
and Union Bank. (5)
10.40 Second Construction Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing, dated as of December
1, 1995, between NRV and Chicago Title Insurance Company.(5)
10.41 Second Amendment to Ford Authorized Converter Pool Agreement,
effective August 14, 1995 between the NRV and Ford Motor
Company. (5)
10.42 1995 Stock Option Plan. (5)
10.43 Payment terms with Freightliner Custom Chassis Corporation.(5)
10.44 Amendment to Wayne Mertes Employment Agreement.
10.45 Rights Plan Agreement with Continental Stock Transfer & Trust
Company. (6)
10.46 Robert L. Lee Employment Agreement.
10.47 1996 Stock Option Plan.
21.1 List of Subsidiaries. (1)
99 Forward Looking Statements - Incorporated by reference from
Form 10-Q for the Quarter ended September 30, 1996.
____________________________
</TABLE>
- 35 -
<PAGE>
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 filed on August 16, 1993 (File No. 33-67414) as amended by
Amendment No. 1 thereto filed on September 22, 1993 and Amendment No. 2
thereto filed on September 29, 1993.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 filed on December 15, 1993 (File No. 33-72954).
(3) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 filed on June 7, 1994 (File No. 33-79900).
(4) Previously filed as an exhibit to the Company's Form 10-K for the year
ended May 31, 1995 filed on August 28, 1995.
(5) Previously file as an exhibit to the Company's Form 10-K for the seven
months ended December 31, 1995 filed on March 27, 1996.
(6) Incorporated by reference from Form 8-A declared effective on August 26,
1996.

- 36 -
<PAGE>
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.

NATIONAL R.V. HOLDINGS, INC.

Dated: March 27, 1997 By /s/ Wayne M. Mertes
----------------------------
Wayne M. Mertes,
President and
Chief Executive Officer

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 Capacity in Which Signed Date
- ---------------- ------------------------------ --------------
<S> <C> <C>
/s/ Gary N. Siegler Chairman of the Board March 27, 1997
- ----------------------
Gary N. Siegler

/s/ Wayne M. Mertes Chief Executive Officer March 27, 1997
- ---------------------- and Director (Principal -
Wayne M. Mertes Executive Officer)

/s/ Robert L. Lee Director March 27, 1997
- ----------------------
Robert L. Lee

/s/ Kenneth W. Ashley Chief Financial Officer March 27, 1997
- ---------------------- (Principal Accounting and
Kenneth W. Ashley Financial Officer)

/s/ Stephen M. Davis Director and Secretary March 27, 1997
- ----------------------
Stephen M. Davis

/s/ Gary L. Fuhrman Director March 27, 1997
- ----------------------
Gary L. Fuhrman

/s/ Neil H. Koffler Director and Assistant March 27, 1997
- ---------------------- Secretary
Neil H. Koffler

</TABLE>

- 37 -
<PAGE>
575 Anton Boulevard Telephone 714 435 8600
Suite 1100 Facsimile 714 557 7022
P.O. Box 5041
Costa Mesa, CA 92628-5041

Price Waterhouse LLP

REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------

February 13, 1997

To the Board of Directors
and Shareholders of
National R.V. Holdings, Inc.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of National
R.V. Holdings, Inc. and its subsidiaries at December 31, 1996 and 1995, and the
results of their operations and their cash flows for the year ended December
31, 1996, the seven months ended December 31, 1995 and each of the two years in
the period ended May 31, 1995, 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 audits. We conducted our audits 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 audits provide a reasonable basis
for the opinion expressed above.

PRICE WATERHOUSE LLP

F - 1
<PAGE>
<TABLE>
<CAPTION>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET

December 31,
1996 1995
------------- ------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 819,000 $ 73,000
Receivables, less allowance for doubtful
accounts($177,000 and $40,000, respectively) 5,522,000 6,683,000
Inventories 34,015,000 14,347,000
Deferred income taxes 1,384,000 483,000
Prepaid expenses 1,232,000 393,000
------------ ------------
Total current assets 42,972,000 21,979,000

Goodwill - net 8,191,000 -
Restricted funds 1,210,000 4,847,000
Property, plant and equipment, net 15,542,000 7,482,000
Other 135,000 -
------------ ------------
$ 68,050,000 $ 34,308,000
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Line of credit $ 1,400,000 $ 1,900,000
Current portion of long-term debt 545,000 146,000
Accounts payable 7,736,000 3,405,000
Accrued expenses 3,738,000 1,448,000
------------ ------------
Total current liabilities 13,419,000 6,899,000

Deferred income taxes 1,827,000 1,750,000
Long-term debt 7,272,000 7,034,000
Commitments and contingencies

Stockholders' equity:
Preferred Stock, $.01 par value, 5,000 shares
authorized 4,000 issued and outstanding - -
Common Stock, $.01 par value, 10,000,000
shares authorized 62,000 56,000
Additional paid-in capital 34,344,000 21,043,000
Retained earnings 11,126,000 4,521,000
Less - cost of treasury stock - ( 6,995,000)
------------ ------------
Total stockholders' equity 45,532,000 18,625,000
------------ ------------
$ 68,050,000 $ 34,308,000
============ ============
</TABLE>

See Notes to Consolidated Financial Statements

F - 2
<PAGE>
<TABLE>
<CAPTION>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per-share data)

Seven
Year Months
Ended Ended Year Ended
December 31, May 31,
1996 1995 1995 1994
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 137,101 $ 53,062 $ 81,379 $ 71,749
Cost of goods sold 118,643 46,864 70,459 62,115
--------- -------- -------- --------
Gross profit 18,458 6,198 10,920 9,634
Selling expenses 4,209 1,586 2,399 2,019
General and administrative expenses 2,899 1,233 2,243 1,706
Amortization of intangibles 80 - - 278
--------- -------- -------- --------
Total operating expenses 7,188 2,819 4,642 4,003
--------- -------- -------- --------
Operating income 11,270 3,379 6,278 5,631
Other expenses (income):
Investment income ( 246) ( 248) ( 669) ( 482)
Interest expense 357 233 661 763
Other financing related costs 149 136 132 233
Gain on early extinguishment of debt - - - ( 226)
Gain on sales of land and equipment - - ( 23) ( 1)
--------- -------- -------- --------
Total other expenses 260 121 101 287
--------- -------- -------- --------
Income before income taxes and
extraordinary item 11,010 3,258 6,177 5,344
Provision for income taxes 4,405 1,324 2,443 2,212
--------- -------- -------- --------
Income before extraordinary items 6,605 1,934 3,734 3,132
Extraordinary loss on investment in
marketable equity securities,
no tax effect - - ( 958) -
Extraordinary gain on early exting-
uishment of debt, net of
income taxes of $234,000 - 342 - -
--------- -------- -------- --------
Net income $ 6,605 $ 2,276 $ 2,776 $ 3,132
========= ======== ======== ========
Earnings per common share and common equivalent share:
Income before extraordinary item $ 1.26 $ 0.40 $ 0.75 $ 0.77
Extraordinary item - 0.07 ( 0.19) -
--------- -------- -------- --------
Net income $ 1.26 $ 0.47 $ 0.56 $ 0.77

Earnings per common share - Assuming full dilution
Income before extraordinary item $ 1.24 $ 0.40 $ 0.74 $ 0.73
Extraordinary item - 0.07 ( 0.19) -
--------- -------- -------- --------
Net income $ 1.24 $ 0.47 $ 0.55 $ 0.73

Weighted average number of shares (in thousands):
Primary 5,260 4,812 4,984 4,052
Fully diluted 5,333 4,867 5,041 4,282
</TABLE>

See Notes to Consolidated Financial Statements
F - 3
<PAGE>
<TABLE>
<CAPTION>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Seven
Year Months
Ended Ended Year Ended
December 31, May 31,
1996 1995 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 6,605 $ 2,276 $ 2,776 $ 3,132
Adjustments to reconcile net income to
net cash provided by operating activities,
net of effect of acquisition:
Depreciation 516 283 382 437
Amortization of intangibles 80 - - 278
Amortization of deferred financial income - ( 62) ( 247) ( 247)
Loss on investment in marketable
equity securities - - 958 -
Gain on early extinguishment of debt - ( 576) - ( 226)
Decrease (increase) in receivables 2,567 (2,148) ( 39) (1,053)
(Increase) decrease in inventories (6,249) 688 (2,909) 825
(Increase) decrease in prepaid expenses ( 251) 128 ( 175) 25
(Decrease) increase in accounts payable (1,421) 631 (3,669) 1,107
Increase (decrease) in accrued expenses 13 ( 116) ( 116) 149
(Decrease) increase in deferred income
taxes ( 350) 305 373 502
------- ------- ------- -------
Net cash provided (used) by
operating activities 1,510 1,409 (2,666) 4,929
Cash flows from investing activities:
Proceeds from (investment in)
marketable equity securities - 134 ( 382) ( 710)
Payment for CCI acquisition costs ( 437) - - -
Capital expenditures (5,141) ( 727) (1,721) ( 480)
------- ------- ------- -------
Net cash used by investing activities (5,578) ( 593) (2,103) (1,190)
Cash flows from financing activities:
(Decrease) increase in line of credit (9,965) 900 1,000 (2,446)
Net proceeds from restricted funds 3,637 8,653 - -
Proceeds from revenue bonds - 5,000 - -
Repayments of notes to previous owners - 13,500 - -
Principal payments on long-term debt ( 160) ( 64) ( 77) ( 120)
Proceeds from issuance of common stock 12,255 811 15 14,000
Purchase of treasury stock ( 953) (2,851) (4,144) -
Decrease in unsecured subordinated notes - - ( 11) (7,088)
------- ------- ------- -------
Net cash provided (used) by
financing activities 4,814 (1,051) (3,217) 4,346
------- ------- ------- -------
Net increase (decrease) in cash 746 ( 235) (7,986) 8,085
Cash, beginning of year 73 308 8,294 209
------- ------- ------- -------
Cash, end of year $ 819 $ 73 $ 308 $ 8,294
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
F - 4
<PAGE>
<TABLE>
<CAPTION>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)

Pre- Common Stock Retained Treasury Stock
ferred ------------- Paid-In Earnings ---------------
Stock Shares Amount Capital(Deficit) Shares Amount Total
--- ----- ---- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, May 31,
1995 $ - 5,449 $ 55 $20,233 $ 2,245 ( 672) $(4,144) $18,389
Common stock
issued under
option plan 1 - 4 - 4
Common stock
issued upon
exercise of
warrants 105 1 806 - 807
Purchase of
treasury stock ( 411) (2,851) (2,851)
Net income 2,276 2,276
--- ----- ---- ------- ------- ------ ------- -------
Balance, December
31, 1995 $ - 5,555 $ 56 $21,043 $ 4,521 (1,083) $(6,995) $18,625
Common stock
issued under
option plan 21 - 83 83
Common stock
issued upon
exercise of
warrants 353 3 1,282 1,285 Purchase of
treasury stock ( 95) ( 953) ( 953)
Acquisition
of CCI 5,643 544 3,357 9,000
Private place-
ment of stock 265 3 6,293 634 4,591 10,887
Net income 6,605 6,605
--- ----- ---- ------- ------- ------ ------- -------
Balance, December
31, 1996 $ - 6,194 $ 62 $34,344 $11,126 - $ - $45,532
=== ===== ==== ======= ======= ====== ======= =======
</TABLE>

See Notes to Consolidated Financial Statements
F - 5
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

National R.V. Holdings, Inc. (the Company) manufactures recreational vehicles
("RVs") through its wholly-owned subsidiaries, National R.V., Inc. (NRV) and
Country Coach, Inc. (CCI). The RVs are marketed primarily in the United States
by NRV under the Dolphin, Sea Breeze, and Tropi-Cal brand names and by CCI
under brand names including Concept, Affinity, Magna, Intrigue, and Allure.

In 1995, the Company changed its year end from May 31 to December 31. Results
of operations for the seven month period ended December 31, 1995 are not
necessarily indicative of operating results expected for a full year.

The preparation of financial statements in accordance with generally acceptable
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Management believes that the
estimates included in the financial statements are reasonable based on the
facts and circumstances known to them at the time of preparation.

CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
National R.V Holdings, Inc., NRV, and CCI. All significant intercompany
transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents include deposits in banks and short-term investments
with original maturities of three months or less.

INVENTORIES
Inventories are stated at the lower of cost or market, with cost generally
determined by the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets ranging from 31 to 39 years for buildings and 5 to 7
years for machinery and equipment.

AMORTIZATION OF INTANGIBLE ASSETS
Goodwill related to the acquisition of CCI is being amortized on the straight-
line basis over a twenty-year period.

RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses are charged to operations as incurred and are
included in cost of goods sold. Research and development expenses were
$1,077,000 for the year ended December 31, 1996, $423,000 for the seven months
ended December 31, 1995, and $780,000, and $441,000 for the fiscal years ended
May 31, 1995, and 1994, respectively.

F - 6
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (Continued)

INCOME TAXES
The Company provides for income taxes using an asset and liability approach.
Under this method deferred tax assets and liabilities are computed using
statutory rates for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax returns.

INCOME PER SHARE
Net income per share is based on the weighted average number of Common Stock
and equivalent shares outstanding during the year, including Common Stock
equivalents resulting from dilutive stock options. Fully diluted computations,
where appropriate, assume full conversion of the convertible notes into Common
Stock shares and the elimination of the related interest requirements, net of
taxes.

STOCK SPLIT
In April 1996 the Board of Directors declared a 3-for-2 stock split in the form
of a 50% stock dividend on the Company's Common Stock, payable May 16, 1996.
The amount of $19,000 was transferred retroactively from the additional paid-in
capital account to the common stock account to record this distribution. All
share and per share data, as appropriate, reflect this split.

2. Acquisition

On November 6, 1996, the Company acquired all shares of Capital Stock of CCI
through the issuance of 543,806 shares of Common Stock valued at $9.0 million.
Net assets acquired included the assumption of $10.1 million of debt. The
acquisition of CCI was accounted for as a purchase and the results of
operations of CCI have been included since the acquisition date. The purchase
price exceeded the fair value of net assets acquired by $8,191,000, recorded as
goodwill and is being amortized over 20 years.

The following unaudited pro forma information has been prepared assuming CCI
had been acquired as of January 1, 1995. The pro forma information is
presented for information purposes only and is not necessarily indicative of
what would have occurred if the acquisition had been made as of those dates.
In addition, the pro forma information is not intended to be a projection of
future results.

<TABLE>
<CAPTION>
Pro Forma Information (Unaudited) 12 Months ended December 31,
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
Sales $ 188,958,000 $ 157,230,000
Net income $ 7,834,000 $ 3,899,000
Earnings per common share:
Primary $ 1.37 $ 0.72
Fully diluted $ 1.35 $ 0.72
</TABLE>

F - 7
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Inventories

Inventories consisted of the following:

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C>
Finished goods $ 8,116,000 $ 5,289,000
Work-in-process 11,000,000 3,211,000
Raw materials 7,987,000 5,125,000
Chassis 6,912,000 722,000
------------ ------------
$ 34,015,000 $ 14,347,000
============ ============
</TABLE>

4. Property, Plant and Equipment

Major classes of property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C>
Land $ 2,387,000 $ 2,387,000
Construction in progress 4,955,000 664,000
Buildings 5,853,000 3,813,000
Equipment 4,852,000 2,226,000
Office, furniture, fixtures and equipment 2,074,000 736,000
------------ ------------
Property, plant and equipment, gross 20,121,000 9,826,000
Less accumulated depreciation ( 4,579,000) ( 2,344,000)
------------ ------------
Property, plant and equipment, net $ 15,542,000 $ 7,482,000
============ ============
</TABLE>

5. Accrued Expenses

Accrued expenses consists of the following:

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C>
Workers' compensation self-insurance reserve $ 347,000 $ 317,000
Motorhome warranty reserve 1,840,000 445,000
Payroll and other related expenses 1,551,000 686,000
------------ ------------
$ 3,738,000 $ 1,448,000
============ ============
</TABLE>

F - 8
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Debt and Credit Agreements

Debt consists of the following:

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C>
Revolving credit agreements
8.25% at December 31, 1996, expires 1998 $ 1,400,000 $ 1,900,000
Industrial revenue bonds
4.95% due 1997-2003 2,034,000 2,180,000
4.40% at December 31, 1996,
variable, due 1997-2020 5,000,000 5,000,000
Other borrowings 783,000 -
------------ ------------
9,217,000 9,080,000
Less payments due within one year 1,945,000 2,046,000
------------ ------------
$ 7,272,000 $ 7,034,000
============ ============
</TABLE>

The Company has $19.6 million of short-term unused committed credit lines
available with U.S. Banks at the prime interest rate. The Company's borrowing
agreements impose certain financial restrictions on the Company. The Company
was in compliance with these restrictions at December 31, 1996. The agreements
expire in 1998 and contain a security interest in equipment, receivables and
inventory.

The Company's buildings and property are pledged as collateral for the
industrial revenue bonds. Substantially all of the proceeds from the $5.0
million bond have been restricted for the construction of a new manufacturing
facility.

Debt maturities over the next five years are $1,945,000 in 1997, $553,000 in
1998, $561,000 in 1999, $570,000 in 2000, and $580,000 in 2001.

F - 9
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Income Taxes

The components of the provision for income tax were as follows:

<TABLE>
<CAPTION>
December 31, May 31,
------------------------- -------------------------
1996 1995 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Currently Payable:
Federal $ 3,686,000 $ 886,000 $ 1,829,000 $ 1,313,000
State 1,048,000 372,000 519,000 310,000
----------- ----------- ----------- -----------
4,734,000 1,258,000 2,348,000 1,623,000
Deferred:
Federal ( 305,000) 63,000 63,000 435,000
State ( 24,000) 3,000 32,000 154,000
----------- ----------- ----------- -----------
( 329,000) 66,000 95,000 589,000
----------- ----------- ----------- -----------
Total provision for
income taxes $ 4,405,000 $ 1,324,000 $ 2,443,000 $ 2,212,000
=========== =========== =========== ===========
</TABLE>

Deferred income taxes are recorded based upon differences between the financial
statement and tax basis of assets and liabilities and available carryforwards.
Temporary differences and carryforwards which give rise to deferred income tax
assets and liabilities at December 31, 1996 and 1995 were as follows:

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C>
Accrued expenses $ 1,138,000 $ 417,000
State income taxes 246,000 66,000
------------ ------------
Deferred income tax assets $ 1,384,000 $ 483,000

Basis difference in fixed assets $ 512,000 $ 606,000
Depreciation 763,000 532,000
Interest on debt forgiven 587,000 612,000
Amortization of non-compete agreement ( 35,000) -
------------ ------------
Deferred income tax liabilities $ 1,827,000 $ 1,750,000
============ ============
</TABLE>

F - 10
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Income Taxes (Continued)

A reconciliation of the statutory U.S. federal income tax rate to the Company's
effective income tax rate is as follows:

<TABLE>
<CAPTION>
December 31, May 31,
------------------------- -------------------------
1996 1995 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Tax provision computed
at statutory rate 34.0 % 34.0 % 34.0 % 34.0 %
State taxes, net of
federal benefit 6.1 6.2 5.9 6.0
Amortization of intang-
ibles not deductible
for income tax
purposes 0.6 2.2
Utilization of net
operating loss
carryforwards (3.7)
Other (0.7) 0.5 (0.4) 2.9
----------- ----------- ----------- -----------
40.0 % 40.7 % 39.5 % 41.4 %
=========== =========== =========== ===========
</TABLE>

Cash paid for income taxes was $4,971,000 for the year ended December 31, 1996,
$1,285,000 for the seven months ended December 31, 1995, and $2,031,000 and
$1,412,000 for the fiscal years ended May 31, 1995 and 1994, respectively.

8. Recourse on Dealer Financing

As is customary in the industry, the Company generally agrees with its dealers'
lenders to repurchase any unsold RVs if the dealers become insolvent within one
year of the purchase of such RVs. Although the total contingent liability
under these agreements approximates $41,000,000 at December 31, 1996, as with
accounts receivable, the risk of loss is spread over numerous dealers and
lenders and is further reduced by the resale value of the coaches which the
Company would be required to repurchase. Losses under these agreements have
not been significant in the past and management believes that any future losses
under such agreements will not have a significant effect on the consolidated
financial position or results of operations of the Company.

9. Commitments and Contingencies

The Company is involved in litigation arising in the ordinary course of
business. In the opinion of management, based in part on the advice of outside
counsel, these matters will not have a material adverse effect on the Company's
financial position or results of operations.

F - 11
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Commitments and Contingencies (Continued)

The Company has commitments under certain non-cancelable operating leases as
follows:

10. Stockholders' Equity

On August 20, 1996, the Company's Board of Directors adopted a Shareholder
Rights Plan. Pursuant to the Plan, the Company declared a dividend to be made
to stockholders of record on September 4, 1996 of one Series B Participating
Preferred Share Purchase right for each outstanding share of the Company's
Common Stock. No rights will be distributed until a purchaser acquires, or
announces its intent or attempts to acquire, at least 15 percent of the
Company's Common Stock.

At December 31, 1996, there were 156,251 warrants outstanding to financial
advisors and consultants at prices ranging from $9.33 to $16.09. Expiration
dates range from April 4, 1997 to December 1, 2001.

11. Stock Options

The Company has four fixed option plans which reserve shares of common stock
for issuance to executives, key employees and directors. The Company has also
issued fixed options outside of such plans pursuant to individual stock option
agreements. Options granted to non-employee directors and one employee
director vested immediately upon grant and expire ten years from the date of
grant. Options granted to employees vest in three equal annual installments
and expire five years from the date of grant. The price of the options granted
pursuant to these plans will not be less than 100 percent of the market value
of the shares on the date of grant.

No compensation cost has been recognized for the stock option plans in the
financial statements. Had compensation cost for the Company's stock option
plans and individual option agreements been determined based on the fair value
rather than market value at the grant date for awards under those plans and
agreements during 1995 and 1996, the Company's net income and earnings per
share would have been reduced to the pro forma amounts indicated below:

F - 12
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Stock Options (Continued)

<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C> <C>
Net income As reported $ 6,605,000 $ 2,276,000
Pro forma $ 4,672,000 $ 1,938,000

Primary earnings per share As reported $ 1.26 $ 0.47
Pro forma $ 0.89 $ 0.40

Fully diluted earnings per share As reported $ 1.24 $ 0.47
Pro forma $ 0.88 $ 0.40
</TABLE>

The fair value of each option granted is estimated on the date of grant using
the Cox Rubinstein binomial option-pricing model with the following weighted-
average assumptions used for grants: 1996 and 1995 dividend yield of 0.0%;
expected volatility of 51.1% in 1996 and 52.9% in 1995; risk-free interest rate
ranging from 5.875% to 6.5% in 1996 and 5.75% to 6.5% in 1995; and expected
lives ranging from 5 to 10 years.

Information regarding these option plans and option agreements for 1996 and
1995 is as follows:
<TABLE>
<CAPTION>
Weighted
Average
1996 Exercise 1995
Shares Price Shares
------------- -------- ------------
<S> <C> <C> <C>
Outstanding, beginning of year 805,625 $ 5.330 647,776
Exercised ( 20,397) 4.061 ( 1,402)
Forfeited - - ( 5,749)
Granted 447,000 14.718 165,000
------------- -------- ------------
Outstanding, end of year 1,232,228 $ 8.757 805,625
------------- -------- ------------
Option price range at end of year $4.00 to 15.63 $4.00 to 6.92
Option price range for exercised
shares $4.00 to 5.00 $4.00 to 4.00
Options available for grant at end
of year 79,349 61,349
------------- ------------
Weighted-average fair value of
options granted during year $ 6.359 $ 2.812
============= ============
</TABLE>

F - 13
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Stock Options (Continued)

The following table summarizes information about fixed-price stock options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>
Average Weighted
Grant Options Options Exercise Remaining
Date Authorized Outstanding Exercisable Price Life(Years)
----------------- ---------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
9/20/93 300,000 234,703 234,703 4.000 6.0
12/3/93 232,500 228,150 228,150 6.920 6.5
12/30/94 133,125 128,125 118,750 5.000 6.9
9/28/95 150,000 138,000 125,500 5.625 7.5
10/2/1996-11/06/96 450,000 432,000 175,000 14.760 6.9
All others 71,250 71,250 46,250 6.767 5.5
</TABLE>

12. Related Party Transactions

NRV has management consulting agreements with affiliates of the principal
shareholders of the Company for services rendered. Fees paid under the
agreements totaled $330,000 for the year ended December 31, 1996, $75,000
for the seven months ended December 31, 1995, and $150,000 in each of the 1995,
and 1994 fiscal years. The agreements call for $280,000 annually to be paid
through 1998, and then $130,000 annually through 2001. During 1996, $385,000
was paid to an affiliate of the principal shareholders for financial advisory
services rendered in connection with the acquisition of CCI.

The Company leases its CCI buildings from affiliates of one of its officers and
major shareholders. Lease payments made in 1996, since the date of acquisition
of CCI, totaled $237,000. The lease agreements call for future payments of
$1,400,000 annually, adjusted 3% annually for inflation, through 2001.

F - 14
<PAGE>
<TABLE>
<CAPTION>
NATIONAL R.V. HOLDINGS, INC.
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1996 and 1995 and May 31, 1995

Additions
Balance at charged to Balance at
Beginning costs and end of
of period expenses Deductions Period
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Twelve months ended December 31, 1996
Allowance for doubtful
accounts $ 40,000 $ 206,520 $ 69,520 $ 177,000
Workers' compensation self-
insurance reserve 317,000 793,300 763,300 347,000
Motorhome warranty reserve 445,000 2,062,084 667,084 1,840,000
--------- ---------- ---------- ----------
$ 802,000 $3,061,904 $1,499,904 $2,364,000

Seven months ended December 31, 1995
Allowance for doubtful
Accounts $ 40,000 $ - $ - $ 40,000
Workers' compensation self-
insurance reserve 314,000 333,448 330,448 317,000
Motorhome warranty reserve 342,000 763,629 660,629 445,000
--------- ---------- ---------- ----------
$ 696,000 $1,097,077 $ 991,077 $ 802,000

Fiscal year ended May 31, 1995
Allowance for doubtful
Accounts $ 40,000 $ - $ - $ 40,000
Workers' compensation self-
insurance reserve 368,522 446,864 501,386 314,000
Motorhome warranty reserve 255,000 840,760 753,760 342,000
--------- ---------- ---------- ----------
$ 663,522 $1,287,624 $1,255,146 $ 696,000
</TABLE>

F - 15
<PAGE>
<TABLE>
<CAPTION>
NATIONAL R.V. HOLDINGS, INC.
SHORT-TERM BORROWINGS

Weighted
Maximum Average average
Amount amount interest
Category of Balance Interest outstanding outstanding rate
aggregate short- at end of rate end during the during the during the
term borrowings period of period period period (1) period(2)
- ----------------- ----------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Twelve months ended December 31, 1996
Line of credit
with financial
institution $ 1,400,000 8.25% $ 9,500,000 $ 999,583 8.30%

Seven months ended December 31, 1995
Line of credit
with financial
institution $ 1,900,000 8.50% $ 1,900,000 $ 485,714 8.75%

Fiscal year ended May 31, 1995
Line of credit
with financial
institution $ 1,000,000 9.00% $ 5,900,000 $1,759,663 8.37%
</TABLE>

__________
(1) The average amount outstanding during the period was computed by dividing
the total of the month-end outstanding principal balances by 12.

(2) Average interest rate calculated using interest rates at the beginning and
end of the period.

F - 16
<PAGE>
Exhibit 10.44

THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

THIS THIRD AMENDMENT TO EMPLOYMENT AGREEMENT, dated as of October 25, 1996
(this "Amendment"), by and between WAYNE MERTES (the "Executive") and NATIONAL
R.V. HOLDINGS, INC., a Delaware corporation (the "Company").

W I T N E S S E T H

WHEREAS, the Executive and National R.V., Inc., a California corporation and a
wholly-owned subsidiary of the Company ("NRV"), have previously entered into an
Employment Agreement, dated as of October 29, 1991, as amended by the Amendment
to Employment Agreement, dated as of July 2, 1993 and the Second Amendment to
Employment Agreement (the "Second Amendment"), dated as of May 23, 1994 (as so
amended, the "Employment Agreement"), which, by its terms, is scheduled to
terminate on October 31, 1996; and

WHEREAS, the Employment Agreement was assigned by NRV to the Company pursuant
to that certain Assignment Agreement, dated as of September 29, 1993, with the
consent of the Executive;

WHEREAS, the Executive and the Company wish to hereby amend the Employment
Agreement in order to extend the term of the Employment Agreement an additional
two years until October 31, 1998 and to amend certain other terms.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree to
amend the Employment Agreement as follows:

I. Amendment to Employment Agreement. The Employment Agreement shall be
amended, effective October 31, 1996, as follows:

(a) Section 3(a) shall be amended by deleting the year "1996" on the second
line thereof and substituting in lieu thereof the year "1998";

(b) Section 3(c) shall be amended by deleting the year "1996" on the sixteenth
line thereof and substituting in lieu thereof the year "1998"; and

(c) Section 4(a) shall be amended by deleting it in its entirety and
substituting in lieu thereof the following: During the Term of Employment, the
Company shall pay to Executive as compensation for Executive's services
hereunder, $240,000 per year, in equal monthly installments, plus an incentive
bonus equal to 20% of Defined Income earned in excess of $5,392,000 with
respect to each fiscal year of the Company during the Term of Employment,
provided that such incentive bonus shall not exceed $158,333 for the fiscal
year of the Company ending December 31, 1996 and $200,000 for each fiscal year
of the Company which begins thereafter."

II. Miscellaneous. It is understood and agreed that, as amendment by the
amendments set forth in Part I above, the Employment Agreement is in all

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<PAGE>
respects ratified and confirmed and, as so amended, shall remain in full force
and effect; and that, except for said amendments, no other modification of any
of the terms of the Employment Agreement shall be deemed effected by the
execution of this Amendment. This Amendment shall be governed and construed
and enforced in accordance with the laws of the State of California. This
Amendment may be executed and accepted on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and
year first above written.

______________________________
EXECUTIVE:

______________________________
Wayne Mertes

NATIONAL R.V. HOLDINGS, INC.

By:__________________________
Name:
Title:

- 2 -
<PAGE>
Exhibit 10.46
ROBERT L. LEE
EMPLOYMENT AGREEMENT

This Employment Agreement is made and entered into this 6th day of November,
1996, by and between Country Coach, Inc., an Oregon corporation (the "Company"
or "CCI"), and Robert B. Lee, an individual ("Executive").

RECITALS

A. The Company has entered into a Share Exchange Agreement (the "Share
Exchange Agreement"), dated October 22, 1996, with National R.V. Holdings, Inc.
("NRVH"), pursuant to which NRVH will acquire all of the Common Stock of CCI
(the "Share Exchange"), including shares of CCI Common Stock owned by the
Executive, in accordance with the terms of the Share Exchange Agreement.

B. Executive is both an executive officer and stockholder of CCI and, as such,
will derive substantial benefit from the consummation of the transactions
contemplated by the Share Exchange Agreement and understands that the execution
of this Agreement, including Executive's agreement to be bound by the non-
compete and other provisions of Sections 5, 7 and 8 herein, is a condition to
the closing of the Share Exchange, that NRVH is relying on Executive's
agreement thereof in entering into the Share Exchange Agreement and that NRVH
would not consummate the Share Exchange without the benefit of Executive's
agreements under Sections 5, 7 and 8 herein.

C. NRVH desires to be assured of the association and services of Executive for
CCI.

D. Executive is willing and desires to be employed by the Company after the
Share Exchange, and the Company is willing to employ Executive, upon the terms,
covenants and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions
hereinafter set forth, the parties hereto do hereby agree as follows:

1. Employment. The Company hereby employs Executive as Chairman of the
Company.

2. Term. The term of this Agreement shall be for a period of three (3) years
commencing on the date hereof, unless terminated earlier pursuant to Section 6
herein; provided, however, that Executive's obligations in Sections 5, 7 and 8
herein shall continue in effect after any such termination as though no
termination occurred. The term of this Agreement may be extended by the mutual
written agreement of the Company and the Executive. The initial three year
period, together with any extension thereof, is herein referred to as the
"Term."

3. Compensation; Reimbursement.

- 1 -
<PAGE>
3.1 Base Salary. For all services rendered by Executive under this Agreement,
the Company shall pay Executive a base salary of Two Hundred Thousand Dollars
($200,000) per annum, payable biweekly in equal installments (the "Base
Salary").

3.2 Bonus Compensation. For each calendar year beginning January 1, 1997, the
Company shall also pay to Executive an annual bonus (the "Bonus") based upon
operating profits of CCI and targeted at $75,000 per year for reaching a
threshold amount (the "Threshold Amount"). The Threshold Amount shall be
established annually by the Board of Directors of NRVH. The determination of
CCI's operating profits shall be made as soon as practicable following the
availability of the Company's audited financial statements for the fiscal year.
The Executive shall be entitled to a pro rata Bonus in the event of termination
of employment due to death, disability (as defined herein) or without cause or,
during 1999, if the Company does not offer to renew this Agreement on
substantially the same terms and conditions (a "Termination Event"). In the
event of a Termination Event, the Company shall determine whether the
Executive's performance merits payment of a Bonus by comparing (x) the accrued
operating profits for the Company during the portion of year to (y) a budget
approved by CCI and NRVH which corresponds to the Threshold Amount for that
portion of the year multiplied by the ratio of the number of days elapsed in
the year through the date of the Termination Event to 365 (the "Ratio"). If
such determination results in a Bonus payable to the Executive, the Bonus
payable to the Executive shall be multiplied by the Ratio. In the discretion
of the Board of Directors of NRVH, Executive may receive additional bonus
payments. From the date hereof through December 31, 1996, the Executive shall
be entitled to the bonus described or contemplated in the Schedule to the Share
Exchange Agreement.

3.3 Additional Benefits. In addition to the Base Salary, Executive shall be
entitled to all other benefits of employment which are generally provided to
senior management of CCI and NRVH. On an annual basis, Executive shall be
entitled to purchase a motorhome at cost from the Company.

3.4 Reimbursement. Executive shall be reimbursed for all reasonable "out-of-
pocket" business expenses incurred in connection with the performance of his
duties under this Agreement. The reimbursement of Executive's business
expenses shall be upon presentation to, and approval by, the Company of valid
receipts and other appropriate documentation for such expenses.

4. Scope of Duties.

4.1 Assignment of Duties. Executive shall have such duties as are commensurate
with his experience and responsibilities and as are consistent with past
practice. Such duties shall be exercised subject to the control, supervision
and direction of the Board of Directors of NRVH.

4.2 Executive's Devotion of Time. Executive hereby agrees to devote his full
time, abilities and energy to the faithful performance of the duties assigned
to him and to the promotion and forwarding of the business affairs of the
Company. Executive shall have no other employment during the Term of this
Agreement.

4.3 Board of Directors. While Executive is employed by the Company hereunder,
Executive shall be a member of the Board of Directors of the Company.

- 2 -
<PAGE>
5. Confidentiality of Trade Secrets and Other Materials.

5.1 Trade Secrets. Other than in the performance of his duties hereunder,
Executive agrees not to disclose, either during the term of his employment by
the Company or at any time thereafter, to any person, firm or corporation, any
trade secrets or confidential information of the Company including, but not
limited to, trade secrets, lists of past or present clients or customers,
client or consultant contracts, product or service development plans, floor
plans and designs, marketing plans, pricing policies, business acquisition
plans or any portion or phase of any technical information, technique, method,
process, procedure, technology, or know-how (whether or not in written or
tangible form) used by the Company or any portion or phase of any technical
information, ideas, discoveries, designs, computer programs (including source
or object codes), processes, procedures, formulae or improvements of the
Company that is valuable (whether or not in written or tangible form) and
including all memoranda, notes, plans, reports, records, documents and other
evidence thereof and any other information of whatever nature which gives the
Company an opportunity to obtain an advantage over its competitors who do not
have access or know how to use such information shall be considered a "trade
secret" for the purposes of this Agreement.

5.2 Ownership of Trade Secrets; Assignment of Rights. Executive hereby agrees
that all know-how, documents, reports, plans, proposals, marketing and sales
plans, client lists, client files and materials made by him or by the Company
are the property of the Company and shall not be used by him in any way adverse
to the Company's interests. Executive shall not deliver, reproduce or in any
way allow such documents or things to be delivered or used by any third party
without specific direction or consent of the Board of Directors of the Company.
Executive hereby assigns to the Company any rights which he may have in any
such trade secret or proprietary information.

6. Termination.

6.1 Bases for Termination.

(1) Executive's employment hereunder may be terminated at any time by mutual
agreement of the parties.

(2) This Agreement shall automatically terminate upon the Executive's death or
incapacity. "Incapacity," as used herein, shall mean mental or physical
incapacity, or both, reasonably determined by the Company's Board of Directors
based upon a certification of such incapacity by, in the discretion of the
Company's Board of Directors, either Executive's regularly attending physician
or a duly licensed physician selected by the Company's Board of Directors,
rendering Executive unable to perform substantially all of his duties hereunder
and which appears reasonably certain to continue for at least 60 consecutive
days without substantial improvement. Executive shall be deemed to have
"become incapacitated" on the date the Company's Board of Directors has
determined that Executive is incapacitated and so notifies Executive.

(3) Executive's employment may be terminated by the Company "with cause,"
effective upon delivery of written notice to Executive given at any time
(without any necessity for prior notice) upon the occurrence of (i) a felony
criminal conviction or any other criminal conviction involving Executive's lack
of honesty or Executive's moral turpitude; (ii) drug or alcohol abuse; (iii)

- 3 -
<PAGE>
acts of dishonesty, gross carelessness or negligence or gross misconduct which
have, in the reasonable judgment of the Company's Board of Directors, a
material adverse effect on the Company; or (iv) material breach of any
provision of this Agreement.

(4) Executive's employment may be terminated by the Company "without cause"
(for any reason or no reason at all) at any time by giving Executive three days
prior written notice of termination, which termination shall be effective on
the fourth day following such notice.

6.2 Payment Upon Termination.

(1) If Executive's employment under this Agreement is terminated under
Paragraph 6.1(4) herein, the Company shall pay to Executive, in the manner set
forth below, an amount equal to the sum of (a) Executive's Base Salary through
the remaining portion of the Term, less any compensation actually earned or
accrued by Executive for services rendered elsewhere to himself or any other
person or entity; plus (b) any unpaid out-of-pocket expenses incurred by the
Executive prior to the date of termination which are reimbursable pursuant to
Section 3.4 herein. After the Company's termination of Executive under this
provision, the Company shall not be obligated to provide the benefits to
Executive described in Section 3.3 (except as may be required by law).
Payments made above shall be made in equal installments over such period of
time on regularly scheduled Company paydays.

(2) Upon termination under Paragraphs 6.1(1), (2) or (3), the Company shall not
be obligated to compensate Executive, his estate or representatives, except for
unpaid out-of-pocket expenses incurred by the Executive prior to the date of
termination which are reimbursable pursuant to Section 3.4 herein, nor provide
the benefits to Executive described in Section 3.3 (except as provided by law).

6.3 Acceleration of Certain Rights. If Executive's employment under this
Agreement is terminated under Paragraph 6.1(4) herein, the Executive shall be
automatically permitted to exercise as of such date of termination all demand
registration rights which Executive possesses pursuant Section 1.3(a) of the
Registration Rights Agreement, dated as of November __, 1996 (the "Rights
Agreement"), between the Company and the individuals set forth on Schedule A
thereto as a Stockholder (as defined in the Rights Agreement) thereunder with
respect to all Registrable Shares (as defined in the Rights Agreement) owned by
Executive as of such date of termination.

6.4 Dismissal from Premises. At the Company's option, Executive shall
immediately leave the Company's premises on the date notice of termination is
given by the Company.

6.5 Resignation as a Director. Executive agrees that if he leaves the employ
of the Company, for whatever reason whatsoever, Executive shall immediately
resign as a director of NRVH.

7. Non-Competition/Non-Interference.

7.1 Non-Competition.

(1) Executive covenants and agrees that until 18 months after the term of this
Agreement (the "Restricted Period"), neither the Executive nor any entity of

- 4 -
<PAGE>
which 5% or more of the beneficial ownership is held or owned directly or
indirectly by the Executive or controlled directly or indirectly by the
Executive ("Executive Entity") will, anywhere in the Market, directly or
indirectly own, manage, operate, advise (whether or not for compensation),
control, invest or acquire an interest in, or otherwise engage or participate
in, whether as a proprietor, partner, stockholder, director, officer, "Key
Employee" (defined herein to include any person who is employed in a manage-
ment, executive, supervisory, marketing or sales capacity for another person),
joint venturer, lender, investor or other participant, in any business which
competes, directly or indirectly, with the Business ("Competitive Business")
without regard to (X) whether the Competitive Business has its office,
manufacturing or other business facil-ities within or without the Market, (Y)
whether any of the activities of the Executive referred to above occur or are
performed within or without the Market or (Z) whether the Executive resides, or
reports to an office, within or without the Market.

(2) For purposes of this Agreement, (A) the "Business" refers to any business
conducted by the Company prior to the date of this Agreement or by the Company
during the Term, and (B) the "Market" refers to any and every state in the
United States of America or in any similar jurisdiction of any foreign country
in which the Business is so conducted.

7.2 Non-Interference.

(1) In consideration of all of the payments due to him hereunder, Executive
covenants and agrees that during the Restricted Period, neither the Executive
nor any Executive Entity will directly or indirectly solicit, induce or
influence any customer, supplier, lender, lessor or any other person which has
a business relationship with the Company or which had on the date of the end of
the Term a business relationship with the Company to discon-tinue or reduce the
extent of such relationship with the Company or its subsidi-aries, if any.

(2) In consideration of all of the payments due to him hereunder, Executive
covenants and agrees that during the Restricted Period, neither the Executive
nor any Executive Entity will (A) directly or indirectly recruit, solicit or
otherwise induce or influence any employee or sales agent of the Company to
discontinue such employment or agency relationship with the Company, or (B)
employ or seek to employ, or cause or permit any Competitive Business to employ
or seek to employ for any Competitive Business, any person who is then (or was
at any time within six months prior to the date the Executive or the
Competitive Business employs or seeks to employ such person) employed by the
Company. Nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment opportunity.

8.Injunctive Relief; Independence and Severability of Covenants.

8.1 Injunctive Relief. Executive acknowledges and agrees that NRVH is
acquiring CCI in reliance upon Executive's agreement contained herein and that,
in the event of any breach or likely breach of any of the covenants of Sections
5 and 7 herein, the Company and any relevant affiliate(s) would incur damages
in an amount difficult to ascertain and/or be irreparably harmed and could not
be made whole solely by monetary damages. It is accordingly agreed that such
persons, in addition to any other remedy to which they may be entitled at law
or in equity, shall be entitled to injunctive relief in respect of such breach
or likely breach as may be ordered by any court of competent jurisdiction

- 5 -
<PAGE>
including, but not limited to, an injunction restraining any violation of
Sections 5 and 7 herein and without the proof of actual damages. It is
intended to grant full third party rights under this provision.

8.2 Independence and Severability of Covenants. Executive acknowledges and
agrees that the covenants and other provisions set forth in Sections 5 and 7
herein and in this Section 8 are reasonable, including with respect to duration
and subject matter, and that he is receiving valuable and adequate
consideration for such covenants under this Agreement. The parties acknowledge
that it is their intention that all such covenants and provisions be
enforceable to the fullest extent possible under applicable law. If any of the
provisions set forth in Sections 5 or 7 and or in this Section 8 is found to be
unenforceable in any instance, such finding shall not preclude any other
enforcement of such provisions and reference is made to Section 9.2. If any of
the provisions set forth in Sections 5 or 7 or in this Section 8 is found to be
invalid, such finding or invalidity shall not affect the validity of the
remaining provisions and the provisions of Section 9.2 will apply.

9. Voting. NRVH agrees that while this Agreement is in effect and Executive is
an employee of the Company, it will nominate and use its best efforts to elect
the Executive as a director of NRVH and, with respect to the election of
directors of NRVH, Executive will vote all shares of NRVH beneficially owned by
him, or cause such shares to be voted, for the management slate of directors
proposed by NRVH.

10. Miscellaneous.

10.1 Transfer and Assignment. This Agreement is personal as to Executive and
shall not be assigned or transferred by Executive without the prior written
consent of the Company. This Agreement shall be binding upon, and inure to,
the benefit of all of the parties hereto and their respective permitted heirs,
personal representatives, successors and assigns.

10.2 Severability. Nothing contained herein shall be construed to require the
commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation, or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be
curtailed and limited only to the extent necessary to bring it within the
requirements of the law, and the remaining provisions of this Agreement shall
remain in full force and effect.

10.3 Governing Law. This Agreement is made under and shall be construed
pursuant to the laws of the State of Oregon.

10.4 Counterparts. This Agreement may be executed in several counterparts and
all documents so executed shall constitute one agreement, binding on all of the
parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.

10.5 Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements and
understandings with respect thereto. No representation, promise, inducement,
statement or intention has been made by any party hereto that is not embodied

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<PAGE>
herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement or statement not so set forth herein.

10.6 Modification. This Agreement may be modified, amended, superseded or
cancelled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation or waiver.

10.7 Waiver. The waiver by either of the parties, express or implied, of any
right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.

10.8 Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise
of any one or such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.

10.9 Headings. The section and other headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.

10.10 Notices. Any notice under this Agreement must be in writing, may be
telecopied, sent by express 24-hour guaranteed courier, or hand-delivered, or
may be served by depositing the same in the United States mail, addressed to
the party to be notified, postage-prepaid and registered or certified with a
return receipt requested. The addresses of the parties for the receipt of
notice shall be as follows:

If to CCI:

Country Coach, Inc.
135 East First Street
Junction City, Oregon 97448

with a copy to NRVH:

National R.V. Holdings, Inc.
3411 N. Perris Blvd.
Perris, California 92571
Attention: Mr. Wayne M. Mertes

If to Executive:

Robert B. Lee
1021 Quince Drive
Junction City, OR 97448

Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its address for notice
by giving notice thereof in the manner provided above.
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<PAGE>
10.11 Survival. Any provision of this Agreement which imposes an obligation
after termination or expiration of this Agreement shall survive the termination
or expiration of this Agreement and be binding on Executive and the Company.

IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to
be executed as of the date first set forth above.

COUNTRY COACH, INC.

By:___________________________
Name:
Title:

___________________________
Executive

With Respect to Section 9 Only:

NATIONAL R.V. HOLDINGS, INC.

By:___________________________
Name:
Title:

- 8 -
<PAGE>
Exhibit 10.47

NATIONAL R.V. HOLDINGS, INC.
1996 STOCK OPTION PLAN

1. Purpose. The purpose of this Plan is to strengthen National R.V. Holdings,
Inc. by providing an incentive to its employees, consultants and directors,
encouraging them to devote their abilities to the success of the Company. It
is intended that this purpose be achieved by extending to employees,
consultants and directors of the Company an added long-term incentive for high
levels of performance and exceptional efforts through the grant of options to
purchase shares of the Company's common stock under this National R.V.
Holdings, Inc. 1996 Stock Option Plan.

2. Definitions. For purposes of the Plan:

2.1. "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.

2.2. "Board" means the Board of Directors of the Company.

2.3. "Cause" means (i) intentional failure to perform reasonably assigned
duties (including, for example, with respect to an employee, such employee
voluntarily leaving the employ of the Company or a Subsidiary); (ii) dishonesty
or willful misconduct in the performance of an Optionee's duties; (iii) an
Optionee's engaging in a transaction in connection with the performance of such
Optionee's duties to the Company or any of its Subsidiaries thereof which
transaction is adverse to the interest of the Company or any of its
Subsidiaries and which is engaged in for personal profit to the Optionee; or
(iv) willful violation of any law, rule or regulation in connection with the
performance of an Optionee's duties (other than traffic violations or similar
offenses).

2.4. "Change in Capitalization" means any increase or reduction in the number
of Shares, or any change (including, but not limited to, a change in value) in
the Shares or exchange of Shares for a different number or kind of shares or
other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, public offering, private placement, change in
corporate structure or otherwise.

2.5. "Code" means the Internal Revenue Code of 1986, as amended.

2.6. "Committee" means a committee consisting of at least two (2) non-employee
directors appointed by the Board to administer the Plan and to perform the
functions set forth herein.

2.7. "Company" means National R.V. Holdings, Inc.

2.8. "Consultant Option" means an Option granted to a consultant pursuant to
Section 7.

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<PAGE>
2.9. "Director Option" means an Option granted to a Nonemployee Director
pursuant to Section 5.

2.10. "Disability" means a physical or mental infirmity which impairs the
Optionee's ability to perform substantially his or her duties for a period of
one hundred eighty (180) consecutive days.

2.11. "Eligible Employee" means an officer or other key employee of the Company
or a Subsidiary who is designated by the Committee as eligible to receive
Options subject to the conditions set forth herein.

2.12. "Employee Options" means an Option granted to an Eligible Employee
pursuant to Section 6.

2.13. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

2.14. "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as
quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the Board in
good faith and in accordance with Section 422 of the Code.

2.15. "Incentive Stock Option" means an Option satisfying the requirements of
Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.

2.16. "Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.

2.17. "Nonemployee Director" means a director of the Company who is not a full
time employee of the Company or any Subsidiary.

2.18. "Option" means an Employee Option, a Director Option, a Consultant Option
or any or all of them.

2.19. "Optionee" means a person to whom an Option has been granted under the
Plan.

2.20. "Parent" means any corporation which is a parent corporation (within the
meaning of Section 424(e) of the Code) with respect to the Company.

2.21. "Plan" means the National R.V. Holdings, Inc. 1996 Stock Option Plan.

2.22. "Shares" means the common stock, par value $.01 per share, of the
Company.

2.23. "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the Company.

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2.24. "Successor Corporation" means a corporation, or a parent or subsidiary
thereof within the meaning of Section 424(a) of the Code, which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.

2.25. "Ten-Percent Stockholder" means an Eligible Employee or other eligible
Plan participant, who, at the time an Incentive Stock Option is to be granted
to him or her, owns (within the meaning of Section 422(b)(6) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company, or of a Parent or a Subsidiary.

3. Administration.

3.1. The Plan shall be administered by the Committee which shall hold meetings
at such times as may be necessary for the proper administration of the Plan.
The Committee shall keep minutes of its meetings. A quorum shall consist of
not less than two members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and held.
Each member of the Committee shall be a director of the Company. No member of
the Committee shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or any transaction
hereunder, except for liability arising from his or her own willful
misfeasance, gross negligence or reckless disregard of his or her duties. The
Company hereby agrees to indemnify each member of the Committee for all costs
and expenses and, to the extent permitted by applicable law, any liability
incurred in connection with defending against, responding to, negotiation for
the settlement of or otherwise dealing with any claim, cause of action or
dispute of any kind arising in connection with any action or failure to act in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.

3.2. Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to determine those Eligible
Employees to whom Employee Options shall be granted under the Plan and the
number of Incentive Stock Options and/or Nonqualified Stock Options to be
granted to each Eligible Employee and to prescribe the terms and conditions
(which need not be identical) of each Employee Option, including the purchase
price per Share subject to each Employee Option, and make any amendment or
modification to any Agreement consistent with the terms of the Plan.

3.3. Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:

(a) to construe and interpret the Plan and the Options granted thereunder and
to establish, amend and revoke rules and regulations for the administration of
the Plan, including, but not limited to, correcting any defect or supplying any
omission, or reconciling any inconsistency in the Plan or in any Agreement, in
the manner and to the extent it shall deem necessary or advisable to make the
Plan fully effective, and all decisions and determinations by the Committee in
the exercise of this power shall be final, binding and conclusive upon the
Company, its Subsidiaries, the Optionees and all other persons having any
interest therein;
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(b) to determine the duration and purposes for leaves of absence which may be
granted to an Optionee on an individual basis without constituting a
termination of employment or service for purposes of the Plan;

(d) generally, to exercise such powers and to perform such acts as are deemed
necessary or advisable to promote the best interests of the Company with
respect to the Plan.

4. Stock Subject to Plan.

4.1. The maximum number of Shares that may be made the subject of Options
granted under the Plan is 450,000 Shares (or the number and kind of shares of
stock or other securities to which such Shares are adjusted upon a Change in
Capitalization pursuant to Section 9) and the Company shall reserve for the
purposes of the Plan, out of its authorized but unissued Shares or out of
Shares held in the Company's treasury, or partly out of each, such number of
Shares as shall be determined by the Board.

4.2. Whenever any outstanding Option or portion thereof expires, is canceled
or is otherwise terminated for any reason, the Shares allocable to the canceled
or otherwise terminated Option or portion thereof may again be the subject of
Options granted hereunder.

5. Option Grants for Nonemployee Directors.

5.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Nonemployee
Directors who will receive Director Options, the terms and conditions of which
shall be set forth in an Agreement.

5.2. Purchase Price. The amount or nature and type of the purchase price or
the manner in which the purchase price is to be determined for Shares under
each Director Option shall be determined by the Committee and set forth in the
Agreement evidencing the Option, provided that the purchase price per Share
under each Director Option shall be not less than the Fair Market Value of a
Share on the date the Director Option is granted.

5.3. Duration. Director Options shall be for a term as may be designated by
the Committee and set forth in the Agreement evidencing the Option. To the
extent not otherwise provided by the Committee, the term of Director Options
shall be ten (10) years.

5.4. Vesting. Each Director Option shall, commencing not earlier than the
date of its grant, become exercisable in such installments (which need not be
equal) and at such times as may be designated by the Committee and set forth in
the Agreement evidencing the Option. To the extent not otherwise provided by
the Committee and set forth in the Agreement, Director Options shall be
exercisable in three (3) equal installments, each equal to one-third of the
entire Option granted, the first of which shall become exercisable on the first
anniversary of the date of grant of the Director Options, the second
installment of which shall become exercisable on the second anniversary of the
date of grant, and the final installment of which shall become exercisable on

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the third anniversary of the date of grant. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or part, at any time
after becoming exercisable, to not later than the date the Director Option
expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.

5.5. Modification or Substitution. The Committee may, in its discretion,
modify outstanding Director Options or accept the surrender of outstanding
Director Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, no modification of a
Director Option shall adversely alter or impair any rights or obligations under
the Director Option without the Optionee's consent.

6. Option Grants for Eligible Employees.

6.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Employees who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement; provided, however, that no Eligible
Employee shall receive an Incentive Stock Option unless he is an employee of
the Company, a Parent or a Subsidiary at the time the Incentive Stock Option is
granted.

6.2. Purchase Price. The amount, nature and type of purchase price or the
manner in which the purchase price is to be determined for Shares under each
Employee Option shall be determined by the Committee and set forth in the
Agreement evidencing the Option, provided that the purchase price per Share
under each Employee Option shall be (i) except as provided in clause (ii) of
this Section 6.2, not less than the Fair Market Value of a Share on the date
the Employee Option is granted; and (ii) with respect to any Incentive Stock
Option granted to a Ten Percent Stockholder, not less than 110% of the Fair
Market Value of a Share on the date the Option is granted.

6.3. Duration. Employee Options granted hereunder shall be for such term as
the Committee shall determine, provided that no Employee Option shall be
exercisable after the expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option granted to a Ten-
Percent Stockholder). The Committee may, subsequent to the granting of any
Employee Option, extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding sentence.

6.4. Vesting. Each Employee Option shall, commencing not earlier then the
date of its grant, become exercisable in such installments (which need not be
equal) and at such times as may be designated by the Committee and set forth in
the Agreement evidencing the Option. To the extent not otherwise provided by
the Committee set forth in the Agreement, Employee Options shall be exercisable
in three (3) equal installments, each equal to one-third of the entire Option
granted, the first of which shall become exercisable on the first anniversary
of the date of the grant of the Employee Option, the second installment of
which shall become exercisable on the second anniversary of the date of grant
of the Employee Option, and the final installment of which shall become
exercisable on the third anniversary of the date of grant. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or part,
at any time after becoming exercisable, to not later than the date the Employee
Option expires. The Committee may accelerate the exercisability of any Option
or portion thereof at any time.
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<PAGE>
6.5. Modification or Substitution. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent.

7. Option Grants for Consultants.

7.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those consultants to
the Company or a Subsidiary who will receive Consultant Options, the terms and
conditions of which shall be set forth in an Agreement.

7.2. Purchase Price. The amount, nature and type of the purchase price or the
manner in which the purchase price is to be determined for Shares under each
Consultant Option shall be determined by the Committee and set forth in the
Agreement evidencing the Option, provided that the purchase price per Share
under each Consultant Option shall be not less than the Fair Market Value of a
Share on the date the Consultant Option is granted.

7.3. Duration. Consultant Options granted hereunder shall be for such term as
the Committee shall determine, provided that no Consultant Option shall be
exercisable after the expiration of ten (10) years from the date it is granted.
The Committee may, subsequent to the granting of any Consultant Option, extend
the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.

7.4. Vesting. Each Consultant Option shall, commencing not earlier then the
date of its grant, become exercisable in such installments (which need not be
equal) and at such times as may be designated by the Committee and set forth in
the Agreement evidencing the Option. To the extent not otherwise provided by
the Committee and set forth in the Agreement, Consultant Options shall be
exercisable in three (3) equal installments, each equal to one-third of the
entire Option granted, the first of which shall become exercisable on the first
anniversary of the date of grant of the Consultant Options, the second
installment of which shall become exercisable on the second anniversary of the
date of grant, and the final installment of which shall become exercisable on
the third anniversary of the date of grant. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or part, at any time
after becoming exercisable, to not later than the date the Consultant Option
expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.

8. Terms and Conditions Applicable to All Options

8.1. Non-transferability. No Option granted hereunder shall be transferable
by the Optionee to whom granted otherwise than by will or the laws of descent
and distribution, and an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal representative.
The terms of each Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.

8.2. Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company

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at the Company's principal executive office, specifying the number of Shares to
be purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The purchase
price for any Shares purchased pursuant to the exercise of an Option shall be
paid in full upon such exercise, as determined by the Committee in its
discretion, by any one or a combination of the following: (i) cash; (ii)
transferring Shares to the Company upon such terms and conditions as determined
by the Committee; (iii) on a "cashless" exercise basis upon such terms and
conditions as determined by the Committee; or (iv) on any other basis which the
Committee believes supports the purpose of the Plan. At the Optionee's request
and subject to the consent of the Committee, Shares to be acquired upon the
exercise of a portion of an Option will be applied automatically to pay the
purchase price in connection with the exercise of additional portions of the
Option then being exercised. The written notice pursuant to this Section 8.2
may also provide instructions from the Optionee to the Company that upon
receipt of the purchase price in cash from the Optionee's broker or dealer,
designated as such on the written notice, in payment for any Shares purchased
pursuant to the exercise of an Option, the Company shall issue such Shares
directly to the designated broker or dealer. Any Shares transferred to the
Company as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of such
Option. If requested by the Committee, the Optionee shall deliver the
Agreement evidencing the Option to the Secretary of the Company who shall
endorse thereon a notation of such exercise and return such Agreement to the
Optionee. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.

8.3. Rights of Optionees. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof; (ii) the Company shall
have issued and delivered the Shares to the Optionee; and (iii) the Optionee's
name shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.

8.4. Termination of Employment. Unless otherwise provided in the Agreement
evidencing the Option, an Option (other than an Option granted to a consultant
or a Nonemployee Director) shall terminate upon an Optionee's termination of
employment with the Company and its Subsidiaries as follows:

(a) if an Optionee's employment terminates for any reason other than death,
Disability or Cause, the Optionee may at any time within three (3) months after
his or her termination of employment or service as a director, exercise an
Option to the extent, and only to the extent, that the Option or portion
thereof was exercisable on the date of termination;

(b) in the event the Optionee's employment terminates as a result of
Disability, the Optionee may at any time within one (1) year after such
termination exercise such Option; provided, however, that the Option may be
exercised to the extent, and only to the extent, that, the Option or portion
thereof was exercisable at the date of such termination.

(c) if an Optionee's employment terminates for Cause, the Option shall
terminate immediately and no rights thereunder may be exercised;

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(d) if an Optionee dies while an employee of the Company or any Subsidiary or
within three months after termination as described in clause (a) of this
Section 8.4 or within one (1) year after termination as a result of Disability
as described in clause (b) of this Section 8.4, the Option may be exercised at
any time within one (1) year after the Optionee's death by the person or
persons to whom such rights under the Option shall pass by will or by the laws
of descent and distribution; provided, however, that an Option may be exercised
to the extent, and only to the extent, that the Option or portion thereof was
exercisable on the date of death or earlier termination.

Notwithstanding the foregoing, in no event may any Option be exercised by
anyone after the expiration of the term of the Option.

8.5. Termination of Consultant and Nonemployee Director Options. Options
granted to Nonemployee Directors and Consultant Options granted to consultants
to the Company or a Subsidiary shall terminate under such circumstances as are
provided in the Agreement evidencing the Option, but in no event may such an
Option be exercised by anyone after the expiration of the term of the Option.

9. Adjustment Upon Changes in Capitalization.

9.1. Subject to Section 10, in the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
the maximum number or class of Shares or other stock or securities with respect
to which Options may be granted under the Plan, the number and class of Shares
or other stock or securities which are subject to outstanding Options granted
under the Plan, and the purchase price therefor, if applicable.

9.2. Any such adjustment in the Shares or other stock or securities subject to
outstanding Incentive Stock Options (including any adjustments in the purchase
price) shall be made in such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.

9.3. If, by reason of a Change in Capitalization, an Optionee shall be
entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions which were applicable to the
Shares subject to the Option, as the case may be, prior to such Change in
Capitalization.

10. Effect of Certain Transactions. In the event of (i) the liquidation or
dissolution of the Company; (ii) a merger or consolidation of the Company;
(iii) a sale of all or substantially all of the assets of the Company; or (iv)
any similar transaction (a "Transaction"), the Plan and the Options issued
hereunder shall continue in effect in accordance with their respective terms
and each Optionee shall be entitled to receive in respect of each Share subject
to any outstanding Options, as the case may be, upon exercise of any Option,
the same number and kind of stock, securities, cash, property, or other
consideration that each holder of a Share was entitled to receive in the
Transaction in respect of a Share. In the event that, after a Transaction,
there occurs any change of a type described in Section 2.4 hereof with respect
to the shares of the surviving or resulting corporation, then adjustments
similar to, and subject to the same conditions as, those in Section 9 hereof
shall be made by the Committee.
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11. Termination and Amendment of the Program.

11.1. The Plan shall terminate on the day preceding the tenth anniversary of
the date of its adoption by the Board and no Option may be granted thereafter.
The Board may sooner terminate or amend the Plan at any time and from time to
time.

11.2. Except as provided in Sections 9 and 10 hereof, rights and obligations
under any Option granted before any amendment or termination of the Plan shall
not be adversely altered or impaired by such amendment or termination, except
with the consent of the Optionee, nor shall any amendment or termination
deprive any Optionee of any Shares which he may have acquired through or as a
result of the Plan.

12. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall
not be construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.

13. Limitation of Liability. As illustrative of the limitations of liability
of the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:

(i) give any person any right to be granted an Option other than at the sole
discretion of the Committee;

(ii) give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;

(iii) limit in any way the right of the Company to terminate the employment of
any person at any time; or

(iv) be evidence of any agreement or understanding, expressed or implied, that
the Company will employ any person at any particular rate of compensation or
for any particular period of time.

14. Regulations and Other Approvals; Governing Law.

14.1. This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of New York.

14.2. The obligation of the Company to sell or deliver Shares with respect to
Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws,
and the obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the Committee.

14.3. The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

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14.4. The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Employees granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.

14.5. Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions, or as otherwise
determined to be acceptable to the Committee.

14.6. Notwithstanding anything contained in the Plan to the contrary, in the
event that the disposition of Shares acquired pursuant to the Plan is not
covered by a then current registration statement under the Securities Act of
1933, as amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required by the
Securities Act of 1933, as amended, and Rule 144 or other regulations
thereunder. The Committee may require any individual receiving Shares pursuant
to the Plan, as a condition precedent to receipt of such Shares upon exercise
of an Option, to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said act or pursuant to a exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.

15. Miscellaneous.

15.1. Multiple Agreements. The terms of each Option may differ from other
Options granted under the Plan at the same time, or at some other time. The
Committee may also grant more than one Option to a given Eligible Employee
during the term of the Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Eligible Employee.

15.2. Withholding of Taxes. (a) The Company shall have the right to deduct
from any distribution of cash to any Optionee an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld (the "Withholding Taxes") with respect to any Option. If an Optionee
is entitled to receive Shares upon exercise of an Option, the Optionee shall
pay the Withholding Taxes to the Company prior to the issuance of such Shares.
In satisfaction of the Withholding Taxes, the Optionee may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the Shares issuable
to him or her upon exercise of the Option having an aggregate Fair Market
Value, on the date preceding the date of exercise, equal to the Withholding
Taxes, provided that in respect of an Optionee who may be subject to liability
under Section 16(b) of the Exchange Act, either (i) (A) the Optionee makes the
Tax Election at least six (6) months after the date the Option was granted; (B)

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the Option is exercised during the ten day period beginning on the third
business day and ending on the twelfth business day following the release for
publication of the Company's quarterly or annual statements of earnings (a
"Window Period"); and (C) the Tax Election is made during the Window Period in
which the Option is exercised or prior to such Window Period and subsequent to
the immediately preceding Window Period; or (ii) (A) the Tax Election is made
at least six months prior to the date the Option is exercised; and (B) the Tax
election is irrevocable with respect to the exercise of all Options which are
exercised prior to the expiration of six months following an election to revoke
the Tax Election. Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, (i) modify the provisions in the preceding
sentence or impose such other restrictions or limitations on Tax Elections as
may be necessary to ensure that the Tax Elections will be exempt transactions
under Section 16(b) of the Exchange Act; and (ii) permit Tax Elections to be
made at such other times and subject to such other conditions as the Committee
determines will constitute exempt transactions under Section 16(b) of the
Exchange Act.

(b) If an Optionee makes a disposition, within the meaning of Section 424(c) of
the Code and regulations promulgated thereunder, of any Share or Shares issued
to such Optionee pursuant to the exercise of an Incentive Stock Option within
the two-year period commencing on the day after the date of transfer of such
Share or Shares to the Optionee pursuant to such exercise, the Optionee shall,
within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office,
and immediately deliver to the Company the amount of Withholding Taxes.

15.3. Designation of Beneficiary. Each Optionee may designate a person or
persons to receive, in the event of his or her death, any Option or any amount
payable pursuant thereto, to which he or she would then be entitled. Such
designation will be made upon forms supplied by and delivered to the Company
and may be revoked in writing. If an Optionee fails effectively to designate a
beneficiary, then his or her estate will be deemed to be the beneficiary.

16. Effective Date. The effective date of the Plan shall be the date of its
adoption by the Board, subject only to the approval by the affirmative votes of
the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of Delaware within twelve (12)
months of such adoption.

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