10-K

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark one)

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004.

OR

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____.

          Commission file number 1-7160

COACHMEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Indiana
(State of incorporation
or organization) 35-1101097
(IRS Employer Identification No.)

2831 Dexter Drive, Elkhart, Indiana 46514
(Address of principal executive offices) (Zip Code)

(574) 262-0123
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, Without Par Value
and associated Common Share Purchase Rights
(Title of each class) New York Stock Exchange
(Name of each exchange on
which registered)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes _ 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 the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment hereto.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). X Yes _ No

The aggregate market value of Common Stock held by non-affiliates of the registrant on June 30, 2004 (the last business day of the registrant’s most recently completed second fiscal quarter) was $224.4 million (based upon the closing price on the New York Stock Exchange and that 90.0% of such shares are owned by non-affiliates).

As of February 28, 2005, 15,724,839 shares of the registrant’s Common Stock were outstanding.

Documents Incorporated by Reference

	Parts of Form 10-K into which
Document	the Document is Incorporated
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2005	Part III

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Part I

Item 1. Business

Coachmen Industries, Inc. (the “Company” or the “Registrant”) was incorporated under the laws of the State of Indiana on December 31, 1964, as the successor to a proprietorship established earlier that year. All references to the Company include its wholly owned subsidiaries and divisions.

The Company is one of America’s leading manufacturers of recreational vehicles with well-known brand names including Coachmen®, Georgie Boy®, Sportscoach®, and Viking®. Through its housing and building group, Coachmen Industries also comprises one of the nation’s largest producers of both system-built homes and commercial structures with its All American Homes®, Mod-U-Kraf®, All American Building Systems™, and Miller Building Systems™ products. Prodesign, LLC is a subsidiary that produces custom thermoformed plastic parts for numerous industries under the Prodesign® brand. Coachmen Industries, Inc. is a publicly held company with stock listed on the New York Stock Exchange (NYSE) under the ticker symbol COA.

The Company operates in two primary business segments, recreational vehicles and housing and buildings. The Recreational Vehicle (“RV”) Segment manufactures and distributes Class A and Class C motorhomes, travel trailers, fifth wheels, camping trailers and related parts and supplies. The Housing and Building Segment manufactures and distributes system-built modules for residential and commercial buildings.

The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are made available free of charge through the Investor Relations section of the Company’s Internet website (http://www.coachmen.com) as soon as practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

Recreational Vehicle Segment

RV Segment Products

The RV Segment consists of recreational vehicles and parts and supplies. This group consists of six operating companies: Coachmen RV Company, LLC; Coachmen RV Company of Georgia, LLC; Coachmen RV Licensed Products Division, LLC, Georgie Boy Manufacturing, LLC; Viking Recreational Vehicles, LLC; and Prodesign, LLC (a producer of plastic parts), a Company-owned retail dealership located in Indiana and a service facility located in Chino, California.

The principal brand names for the RV group are Adrenaline™, Aurora™, Bellagio™, Capri™, Captiva™, Cascade™, Catalina®, Chaparral™, Clipper®, Coachmen®, Concord™, Cross Country®, Cruise Air®, Cruise Master®, Epic™, Freedom by Coachmen™, Freelander by Coachmen™, Futura™, Georgie Boy™, Landau®, Legend™, Leprechaun®, Mirada™, Pursuit®, Saga™, Santara®, Somerset™, Spirit of America®, Sportscoach®, Velocity™ and Viking®.

Recreational vehicles are either driven or towed and serve as temporary living quarters for camping, travel and other leisure activities. Recreational vehicles manufactured by the Company may be categorized as motorhomes, travel trailers or camping trailers. A motorhome is a self-powered mobile dwelling built on a special heavy-duty motor vehicle chassis. A travel trailer is a non-motorized mobile dwelling designed to be towed behind another vehicle. Camping trailers are smaller towed units constructed with sidewalls that may be raised up and folded out.

The RV group currently produces recreational vehicles on an assembly line basis in Indiana, Michigan, and Georgia. Components used in the manufacturing of recreational vehicles are primarily purchased from outside sources. However, in some cases (such as thermoformed plastic products) where it is profitable for the RV group to do so, or where it has experienced shortages of supplies, the RV group has undertaken to manufacture its own components. The RV group depends on the availability of chassis from a limited number of manufacturers. Occasionally, chassis availability has limited the group’s production (see Note 12 of Notes to Consolidated Financial Statements for information concerning the use of converter pool agreements to purchase vehicle chassis).

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Prodesign, LLC, located in Indiana, is a custom manufacturer of diversified thermoformed products for the automotive, marine, recreational vehicle, medical and heavy truck industries.

In January 2004, the Company entered into a long-term exclusive licensing agreement with The Coleman Company, Inc. to design, produce and market a full line of new Coleman® brand recreational vehicles. In November 2004, the judge presiding over the legal dispute between Fleetwood Enterprises, Inc. and The Coleman Company, Inc. entered an order granting Fleetwood’s request for an injunction against Coleman, prohibiting their use of the trademark registration “Coleman” in the recreational vehicle industry. To protect its rights under its existing license agreement with Coleman, Consolidated Leisure Industries, LLC, doing business as the Coachmen RV Group, has filed suit against The Coleman Company, Inc. in federal court in Kansas City, Kansas, to enforce its rights under the license agreement. Until this matter is finally and completely adjudicated, Coachmen will introduce and market the new products under a different name, through an independent body of dealers. The new Camping Trailer and Travel Trailer lines, which were to be launched under the “Coleman” brand, were introduced to dealers in the fourth quarter of 2004.

On December 31, 2004, the Company sold all operating assets of the Company-owned dealership located in North Carolina. The total sale price was $11.8 million, of which the Company received cash of $10.8 and a promissory note of $1 million. The promissory note is due in two annual payments, including interest. The sale resulted in a gain on sale of discontinued operations of $1.7 million, net of $.8 million in taxes. In accordance with Statement of Financial Accounting Standard No. 144, the dealership qualified as a separate component of the Company’s business and as a result, the operating results and the gain on the sale of assets have been accounted for as a discontinued operation. Previously reported financial results for all periods presented have been restated to reflect this business as a discontinued operation.

RV Segment Marketing

Recreational vehicles are generally manufactured against orders received from RV dealers, who are responsible for the retail sale of the product. These products are marketed through approximately 670 independent dealers located in 48 states and internationally and through the Company-owned dealership. Subject to applicable laws, agreements with most of its dealers are cancelable on short notice, provide for minimum inventory levels and establish sales territories. No dealer or dealer network accounts for 10% or more of the Company’s consolidated net sales.

The RV group considers itself customer driven. Representatives from sales and service regularly visit dealers in their regions, and respond to questions and suggestions. Divisions host dealer advisory groups and conduct informative dealer seminars and specialized training classes in areas such as sales and service. Open forum meetings with owners are held at campouts, providing ongoing focus group feedback for product improvements. Engineers and product development team members are encouraged to travel and vacation in Company recreational vehicles to gain a complete understanding and appreciation for the products.

As a result of these efforts, the RV group believes it has the ability to respond promptly to changes in market conditions. Most of the manufacturing facilities can be changed over to the assembly of other existing products in two to six weeks. In addition, these facilities may be used for other types of light manufacturing or assembly operations. This flexibility enables the RV group to adjust its manufacturing capabilities in response to changes in demand for its products.

Most dealers’ purchases of RV’s from the RV group are financed through “floor plan” arrangements. Under these arrangements, a bank or other financial institution agrees to lend the dealer all or most of the purchase price of its recreational vehicle inventory, collateralized by a lien on such inventory. The RV group generally executes repurchase agreements at the request of the financing institution. These agreements typically provide that, for up to twelve months after a unit is financed, the Company will repurchase a unit that has been repossessed by the financing institution for the amount then due to the financing institution. This is usually less than 100% of the dealer’s cost. Risk of loss resulting from these agreements is spread over the Company’s numerous dealers and is further reduced by the resale value of the products repurchased (see Note 12 of Notes to Consolidated Financial Statements). Resulting mainly from periodic business conditions negatively affecting the recreational vehicle industry, the Company has previously experienced some losses under repurchase agreements. Accordingly, the

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Company has recorded an accrual for estimated losses under repurchase agreements. In addition, at December 31, 2004, the group was contingently liable under guarantees to financial institutions of their loans to independent dealers for amounts totaling approximately $19.2 million, an increase of approximately $14.6 million from the $4.6 million in guarantees at December 31, 2003. The RV group does not finance retail consumer purchases of its products, nor does it generally guarantee consumer financing.

RV Segment Business Factors

Many recreational vehicles produced by the RV group require gasoline or diesel fuel for their operation. Gasoline and diesel fuel has, at various times in the past, been difficult to obtain, and there can be no assurance that the supply of gasoline and diesel fuel will continue uninterrupted, that rationing will not be imposed or that the price of, or tax on, fuel will not significantly increase in the future. Shortages of gasoline or diesel fuel and significant increases in fuel prices have had a substantial adverse effect on the demand for recreational vehicles in the past and could have a material adverse effect on demand in the future.

Recreational vehicle businesses are dependent upon the availability and terms of financing used by dealers and retail purchasers. Consequently, increases in interest rates and the tightening of credit through governmental action, economic conditions or other causes have adversely affected recreational vehicle sales in the past and could do so in the future.

Recreational vehicles are high-cost discretionary consumer durables. In the past, recreational vehicle sales have fluctuated in a generally direct relationship to overall consumer confidence and economic prosperity.

RV Segment Competition and Regulation

The RV industry is highly competitive, and the RV group has numerous competitors and potential competitors in each of its classes of products, some of which have greater financial and other resources than the Company. Initial capital requirements for entry into the manufacture of recreational vehicles, particularly towables, are comparatively small; however, codes, standards, and safety requirements enacted in recent years may act as deterrents to potential competitors.

The RV group’s recreational vehicles generally compete at all price points except the ultra high-end. The RV group strives to be a quality and value leader in the RV industry. The RV group emphasizes a quality product and a strong commitment to competitive pricing in the markets it serves. The RV group estimates that its current overall share of the recreational vehicle market is approximately six percent, on a unit basis.

The recreational vehicle industry is fairly heavily regulated. The National Highway Traffic Safety Administration (NHTSA), the Transportation Recall Enhancement, Accountability, and Documentation Act (TREAD), state lemon law statutes, laws regulating the operation of vehicles on highways, state and federal product warranty statutes and state legislation protecting motor vehicle dealerships all impact the way the RV group conducts its recreational vehicle business.

State and federal environmental laws also impact both the production and operation of the Company’s products. The Company has an Environmental Department dedicated to efforts to comply with applicable environmental regulations. To date, the RV group has not experienced any material adverse effect from existing federal, state, or local environmental regulations. Elkhart County, which is where most of the recreational vehicle manufacturing facilities of the Company are located, was recently designated as a non-attainment area, which could impact future air emissions permitting.

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Housing and Building Segment

Housing and Building Segment Products

The Housing and Building Segment consists of residential and commercial buildings. The Company’s housing and building subsidiaries (the All American Homes group, All American Building Systems, LLC, Mod-U-Kraf Homes, LLC and Miller Building Systems, Inc.) produce system-built modules for single-family residences, multi-family duplexes, apartments, condominiums, hotels and specialized structures for municipal and commercial use.

All American Homes and Mod-U-Kraf design, manufacture and market system-built housing and commercial structures. All American Homes is the largest producer of system-built homes in the United States and has seven operations strategically located in Colorado, Indiana, Iowa, Kansas, North Carolina, Ohio and Tennessee. Mod-U-Kraf operates from a plant in Virginia. Together these plants serve approximately 527 independent builders in 35 states and three Company-owned builders located in Indiana, Tennessee and Kansas. System-built homes are built to the same local building codes as site-built homes by skilled craftsmen in a factory environment unaffected by weather conditions during production. Production takes place on an assembly line, with components moving from workstation to workstation for framing, electrical, plumbing, drywall, roofing, and cabinet setting, among other operations. An average two-module home can be produced in just a few days. As nearly completed homes when they leave the plant, home modules are delivered to their final locations, typically in two to seven sections, and are crane set onto a waiting basement or crawl space foundation.

Miller Building Systems, Inc. (“Miller Building”) designs, manufactures and markets system-built buildings for commercial use such as office buildings, permanent housing, temporary housing, classrooms, telecommunication shelters and other forms of shelter. Miller Building specializes in the education and medical fields with its commercial system-built buildings. It is also a major supplier of shelters to house sophisticated telecommunications equipment for cellular and digital telephones, data transmission systems and two-way wireless communications. Miller Building also offers site construction services, which range from site management to full turnkey operations. Depending on the specific requirements of its customers, Miller Building uses wood, wood and steel, concrete and steel, cam-lock panels or all concrete to fabricate its structures. Miller Building manufactures its buildings in a factory, and the assembled modules are delivered to the site location for final installation. Miller Building has manufacturing facilities located in Indiana and Pennsylvania.

Housing and Building Segment Marketing

The Housing and Building group participates in an expanding market for system-built residential and commercial buildings. Housing is marketed directly to approximately 527 builders in 35 states who will sell, rent or lease the buildings to the end-user. Commercial buildings are marketed to approximately 100 companies in 36 states. Customers may be national, regional or local in nature.

The housing group regularly conducts builder meetings to review the latest in new design options and component upgrades. These meetings provide an opportunity for valuable builder input and suggestions at the planning stage. The system-built homes business is currently concentrated in the rural, scattered lot markets in the geographic regions served. The Company has launched initiatives to supply product into additional markets, including residential subdivisions in lower tier metropolitan areas, group living facilities, motels/hotels, professional office buildings and other commercial structures.

The success of system-built buildings in the commercial market is the result of innovative designs that are created by listening to customer needs and taking advantage of advancements in technology. While price is often a key factor in the purchase decision, other factors may also apply, including delivery time, quality and prior experience with a certain manufacturer. A significant benefit to the customer is the speed with which system-built buildings can be made available for use compared to on-site construction, and, in the commercial area, the ability to relocate the building to another location if the end-user’s utilization requirements change. The sales staff calls on prospective customers in addition to maintaining continuing contact with existing customers and assists its customers in developing building specifications to facilitate the preparation of a quotation. The sales staff, in conjunction with the engineering staff, maintains ongoing contact with the customer for the duration of the building project.

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To further develop its initiatives to expand into additional markets, in 2003 the Company formed a new subsidiary called All American Building Systems, LLC. This subsidiary has integrated direct sales and marketing for both the All American Homes facilities and the Miller Building Systems facilities. This new entity is responsible for identifying new markets for the Company’s products through channels other than the traditional builder/dealer network.

Housing and Building Segment Business Factors

As a result of transportation costs, the effective distribution range of system-built homes and commercial buildings is limited. The shipping area from each manufacturing facility is typically 200 to 300 miles for system-built homes and 600 miles for commercial buildings. The potential shipping radius of the telecommunication shelters is not as restricted as that of system-built homes and commercial buildings; however, the marketing of these shelters is concentrated in geographic areas where there is a freight advantage over a large portion of competitors.

The overall strength of the economy and the availability and terms of financing used by builders, dealers and end-users have a direct impact on the sales of the Housing and Building group. Consequently, increases in interest rates and the tightening of credit due to government action, economic conditions or other causes have adversely affected the group’s sales in the past and could do so in the future.

Housing and Building Segment Competition and Regulation

Competition in the system-built building industry is intense and the Housing and Building group competes with a number of entities, some of which may have greater financial and other resources than the Company. The demand for system-built homes may be impacted by the ultimate purchaser’s acceptance of system-built homes as an alternative to site-built homes. To the extent that system-built buildings become more widely accepted as an alternative to conventional on-site construction, competition from local contractors and manufacturers of other pre-engineered building systems may increase. In addition to the competition from companies designing and constructing on-site buildings, the Housing and Building group competes with numerous system-built building manufacturers that operate in particular geographical regions.

The Housing and Building group competes for orders from its customers primarily on the basis of quality, timely delivery, engineering capability, reliability and price. The group believes that the principal basis on which it competes with on-site construction is the combination of: the timeliness of factory versus on-site construction, the cost of its products relative to on-site construction, the quality and appearance of its buildings, its ability to design and engineer buildings to meet unique customer requirements, and reliability in terms of completion time. Manufacturing efficiencies, quantity purchasing and generally lower wage rates of factory construction, even with the added transportation expense, result in the cost of system-built buildings being equal to or lower than the cost of on-site construction of comparable quality. With manufacturing facilities strategically located throughout the country, the Housing and Building group provides a streamlined construction process. This process of manufacturing the building modules in a weather-free, controlled environment, while the builder prepares the site, significantly reduces the time to completion on a customer’s project.

Customers of the Housing and Building group are generally required to obtain building installation permits from applicable governmental agencies. Buildings completed by the group are manufactured and installed in accordance with applicable building codes set forth by the particular state or local regulatory agencies.

State building code regulations applicable to system-built buildings vary from state to state. Many states have adopted codes that apply to the design and manufacture of system-built buildings, even if the buildings are manufactured outside the state and delivered to a site within that state’s boundaries. Generally, obtaining state approvals is the responsibility of the manufacturer. Some states require certain customers to be licensed in order to sell or lease system-built buildings. Additionally, certain states require a contractor’s license from customers for the construction of the foundation, building installation, and other on-site work. On occasion, the Housing and Building group has experienced regulatory delays in obtaining the various required building plan approvals. In addition to some of its customers, the group actively seeks assistance from various regulatory agencies in order to facilitate the approval process and reduce the regulatory delays.

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General
(Applicable to all of the Company’s principal markets)

Business Segments

The table below sets forth the composition of the Company’s net sales from continuing operations for each of the last three years (dollar amounts in millions):

                                   2004            2003            2002
                               Amount   %      Amount   %      Amount   %
                               ----------      ----------      ----------

 Recreational Vehicles        $606.2   70.1   $475.4   68.1   $421.4   64.7

 Housing and Buildings         258.9   29.9    223.0   31.9    229.6   35.3
                              ------   ----   ------   ----   ------   ----

     Total                    $865.1  100.0   $698.4  100.0   $651.0  100.0
                              ======  =====   ======  =====   ======  =====

Additional information concerning business segments is included in Note 2 of the Notes to Consolidated Financial Statements.

Seasonality

Historically, the Company has experienced greater sales during the second and third quarters with lesser sales during the first and fourth quarters. This reflects the seasonality of RV sales for products used during the summer camping season and also the adverse impact of weather on general construction for the system-built building applications.

Employees

At December 31, 2004, Coachmen employed 4,416 persons, 993 of whom are salaried and involved in operations, engineering, purchasing, manufacturing, service and warranty, sales, distribution, marketing, human resources, accounting and administration. The Company provides group life, dental, vision services, hospitalization, and major medical plans under which the employee pays a portion of the cost. In addition, employees can participate in a 401(k) plan and a stock purchase plan. Certain employees can participate in a stock option plan and in deferred and supplemental deferred compensation plans (see Notes 8 and 9 of Notes to Consolidated Financial Statements). The Company considers its relations with employees to be good.

Research and Development

During 2004, the Company spent approximately $8.0 million on research related to the development of new products and improvement of existing products. The amounts spent in 2003 and 2002 were approximately $7.2 million and $6.4 million, respectively.

Item 2. Properties

The Registrant owns or leases 3,708,897 square feet of plant and office space, located on 1,156.1 acres, of which 3,150,993 square feet are used for manufacturing, 225,136 square feet are used for warehousing and distribution, 46,024 square feet are used for research and development, 69,644 square feet are used for customer service and 217,100 square feet are offices. Included in these numbers are 71,310 square feet leased to others and 115,210 square feet available for sale or lease. The Registrant believes that its present facilities, consisting primarily of steel clad, steel frame or wood frame construction and the machinery and equipment contained therein, are well maintained and in good condition.

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The following table indicates the location, number and size of the Registrant’s properties by segment as of December 31, 2004:

                                                   No. of      Building Area
                  Location              Acreage    Buildings     (Sq. Ft.)
                  --------              -------    ---------     ---------

Properties Owned and Used by Registrant:

  Recreational Vehicle Group

     Elkhart, Indiana                     43.0       10         317,094
     Middlebury, Indiana                 525.0       29       1,143,443
     Fitzgerald, Georgia                  29.6        5         170,670
     Centreville, Michigan               105.0        4          84,865
     Edwardsburg, Michigan                83.1       12         303,254
                                       -------       --       ---------

          Subtotal                       785.7       60       2,019,326
                                       -------       --       ---------

  Housing and Building Group

     Decatur, Indiana                     40.0        2         215,995
     Elkhart, Indiana                     20.0        4         132,300
     Dyersville, Iowa                     20.0        1         168,277
     Leola, Pennsylvania                  20.0        2         113,100
     Springfield, Tennessee               45.0        2         140,603
     Rutherfordton, North Carolina        37.7        1         169,177
     Zanesville, Ohio                     23.0        2         139,753
     Rocky Mount, Virginia                39.6        5         137,693
     Osage City, Kansas                   29.2        3         130,818
     Wichita, Kansas                       3.0        0               0
     Milliken, Colorado                   23.0        1         141,675
                                       -------       --       ---------

          Subtotal                       300.5       23       1,489,391
                                       -------       --       ---------

          Total owned and used         1,086.2       83       3,508,717
                                       -------       --       ---------

Properties Leased and Used by Registrant:

  Recreational Vehicle Group


     Elkhart, Indiana                      6.6        1           8,000
     Chino, California                     1.0        3          84,296
                                       -------       --       ---------

          Subtotal                         7.6        4          92,296

  Housing and Building Group

     Vestal, New York                      0.0        1           5,660
                                       -------       --       ---------

          Total leased and used            7.6        5          97,956
                                       -------       --       ---------

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Properties Owned by Registrant and Leased to Others:

  Recreational Vehicle Group


     Crooksville, Ohio                    10.0        2          39,310
     Melbourne, Florida                    7.5        1          32,000
                                       -------       --       ---------

          Total owned and leased          17.5        3          71,310
                                       -------       --       ---------

Properties Owned by Registrant and Available for Sale or Lease:

  Recreational Vehicle Group

     Perris, California                    2.2        0               0
     Colfax, North Carolina                7.8        0               0
     Grapevine, Texas                      8.6        0               0
     Longview, Texas                       9.2        0               0
                                       -------       --       ---------
          Subtotal                        27.8        0               0
                                       -------       --       ---------

  Housing and Building Group


    Decatur, Indiana                       3.3        2          86,310
    Bennington, Vermont                    5.0        1          28,900
    Rocky Mount, Virginia                  9.7        0               0
                                       -------       --       ---------

          Subtotal                        18.0        3         115,210
                                       -------       --       ---------

          Total owned and available
            for sale or lease             45.8        3         115,210
                                       -------       --       ---------

          Total Company                1,157.1       94       3,793,193
                                       =======       ==       =========

Item 3. Legal Proceedings

The Company is involved in various legal proceedings, most of which are ordinary disputes incidental to the industry and most of which are covered in whole or in part by insurance. Management believes that the ultimate outcome of these matters and any liabilities in excess of insurance coverage and self-insurance accruals will not have a material adverse impact on the Company’s consolidated financial position, future business operations or cash flows.

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

No matters were submitted during the quarter ended December 31, 2004 to a vote of security holders, through the solicitation of proxies or otherwise.

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Executive Officers of the Registrant

The following table sets forth the executive officers of the Company, as of December 31, 2004:

       Name                                    Position
       ----                                    --------

  Claire C. Skinner           Chairman of the Board and Chief Executive Officer

  Matthew J. Schafer          President and Chief Operating Officer

  Richard M. Lavers           Executive Vice President and General Counsel and Secretary

  Joseph P. Tomczak           Executive Vice President and Chief Financial Officer

  Michael R. Terlep, Jr.      President, CLI dba Coachmen RV Group and President,
                              Coachmen Recreational Vehicle Company, LLC

  Steven E. Kerr              President, All American Homes, LLC

  William G. Lenhart          Senior Vice President, Human Resources

Claire C. Skinner (age 50) joined Coachmen Industries in 1983 and has served as Chairman of the Board and Chief Executive Officer since August 1997 while assuming the position of President of the Company from September 2000 through November 2003. Before that, she served as Vice Chairman of the Company since May 1995, and as Executive Vice President from 1990 to 1995. From 1987 through July 1997, Ms. Skinner served as the President of Coachmen RV, the Company’s largest division. Prior to that, she held several management positions in operations and marketing since 1983. She received her B.F.A. degree in Journalism/Marketing from Southern Methodist University and her J.D. degree from the University of Notre Dame Law School.

Matthew J. Schafer (age 44) joined Coachmen Industries in December 2003 as President and Chief Operating Officer. Before joining Coachmen, Mr. Schafer served for more than 19 years in various executive positions with General Electric Company. From 2002 to 2003, he was Chief Operating Officer, GE Equipment Management, TIP & Modular Space, a full-line leasing, sales and service company of trailers, modular space units, containers and storage products. From 1999 to 2002, Schafer served as President, GE Equipment Management, Modular Space North America, a leading leasing, sales, turnkey construction and service business of modular units. From 1995 through 1998, he served as the General Manager for three businesses of General Electric Industrial Systems, a global manufacturer of AC/DC motors, controls, security equipment, and software for the HVAC, commercial, appliance, and industrial markets. Schafer also held several other management positions with General Electric from 1984 through 1994. Schafer holds a Bachelor of Science degree in mechanical engineering from Union College in Schenectady, New York, and an Associates of Science degree in engineering science from Hudson Valley College in Troy, New York.

Richard M. Lavers (age 57) joined Coachmen Industries in October of 1997 as General Counsel and assumed the position of Executive Vice President of the Company in May 2000 and has served as Secretary of the Company since March 1999. From 1994 through 1977, Mr. Lavers was Vice President, Secretary and General Counsel of RMT, Inc. and Heartland Environmental Holding Company. Mr. Lavers earned both his B.A. degree and his J.D. degree from the University of Michigan.

Joseph P. Tomczak (age 49) joined Coachmen Industries in July 2001 as Executive Vice President and Chief Financial Officer. Before joining Coachmen, Mr. Tomczak served in that same capacity at Kevco, Inc. from January 2000 through June 2001. In February 2001, Kevco and all of its wholly owned subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Prior to that, he held the positions at Outboard Marine Corporation of Vice President of Finance for the Engine Operations Group and Vice President and Corporate Controller. Prior to that, Mr. Tomczak was Vice President and Corporate Controller at Alliant Foodservice, Inc. He received his Masters of Management degree from Northwestern University’s Kellogg Graduate School of Management and his B.A. degree in Accounting and Business Administration from Augustana College. Mr. Tomczak is a Certified Public Accountant.

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Michael R. Terlep, Jr. (age 43) joined Coachmen Industries in 1984. Mr. Terlep was appointed President of CLI, dba Coachmen RV Group in March 2003 and appointed President of Coachmen Recreational Vehicle Company (RV) in June 1997. Prior to that, he was Executive Vice President of Coachmen RV, with retained responsibility for product development, among other duties, since 1993. He was given the additional responsibility of General Manager of the Indiana Division in 1995. Prior to his promotion to Executive Vice President, Mr. Terlep served as Vice President of Sales and Product Development from 1990 to 1993. He has held several other management positions with the Company since joining Coachmen in 1984. He received his B.A. degree from Purdue University.

Steven E. Kerr (age 56) joined Coachmen Industries in February 1999. He served as Vice President/General Manager of All American Homes from February 1999 to July 2000, when he was appointed President of All American Homes. Prior to joining the Company, Mr. Kerr served as Vice President, Marketing of Unibilt Industries, Inc. Prior to that, he served as Vice President/General Manager of New England Homes, Inc. Mr. Kerr received his B.A. degree from Indiana University.

William G. Lenhart (age 56) joined Coachmen Industries in June 2001 as Senior Vice President of Human Resources. Prior to that, he held the position of Vice President of Human Resources for Svedala Industries, Inc., an international mining and mineral processing equipment manufacturing company. Prior to that, he held senior human resources positions with Arandel Corporation and St. Mary’s Medical Center. Mr. Lenhart holds a B.S. degree in Business Administration from Defiance College.

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Part II

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

The following table discloses the high and low sales prices for Coachmen’s common stock during the past two years as reported on the New York Stock Exchange, along with information on dividends paid per share during the same periods.

                         High & Low Sales Prices           Dividends Paid
                         2004               2003           2004      2003
                         ----               ----           ----      ----

   1st Quarter     $20.19 - $14.92    $16.54 - $10.00      $.06      $.06

   2nd Quarter      18.01 -  13.70     13.82 -  10.50       .06       .06

   3rd Quarter      16.54 -  13.22     14.30 -  11.45       .06       .06

   4th Quarter      17.99 -  13.70     19.20 -  11.96       .06       .06

The Company’s common stock is traded on the New York Stock Exchange: Stock symbol COA. The number of shareholders of record as of January 31, 2005 was 1,853.

See Item 12 for the Equity Compensation Table.

12

Item 6. Selected Financial Data

Five-Year Summary of Selected Financial Data
-Year Ended December 31-
(in thousands, except per share amounts)

                                2004       2003        2002        2001        2000
                                ----       ----        ----        ----        ----

Net sales                    $865,144   $698,376    $651,028    $570,071    $712,796
Gross profit                  124,619    102,068      96,855      80,755      93,802
Net income (loss) from
   continuing operations       13,425      6,919       9,619      (4,291)      1,767
Discontinued operations
  Income from operations of
   discontinued entity            174        446         310         340         397
  Gain on sale of assets of
   discontinued entity          1,735          0           0           0           0
                             --------   --------    --------    --------   ---------
Income from discontinued
   operations                   1,909        446         310         340         397

Net income                   $ 15,334   $  7,365    $  9,929    $ (3,951)   $  2,164

Earnings per share - Basic
  Continuing operations           .87        .45         .60        (.27)        .11
  Discontinued operations         .12        .03         .02         .02         .03
                                  ---        ---         ---         ---         ---
Net earnings per share - Basic    .99        .48         .62        (.25)        .14

Earnings per share - Diluted
  Continuing operations           .87        .45         .60        (.27)        .11
  Discontinued operations         .12        .03         .02         .02         .03
                                  ---        ---         ---         ---         ---
Net earnings per share - Diluted  .99        .48         .62        (.25)        .14

Cash dividends per share          .24        .24         .22         .20         .20

At year-end:

   Working capital            121,312     95,963      93,574     102,006     116,237

   Total assets               357,723    310,688     293,195     288,560     296,446

   Long-term debt              14,943      9,419      10,097      11,001      11,795

   Shareholders' equity       224,418    211,151     209,426     208,640     214,949

   Book value per share         14.27      13.58       13.37       13.09       13.69

   Number of employees          4,416      4,490       4,233       3,788       4,149

Note: The Five-Year Summary of Selected Financial Data above has been restated to reflect discontinued operations and should be read in conjunction with Note 11, Discontinued Operations, of the Notes to the Consolidated Financial Statements appearing in this report.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The analysis of the Company’s financial condition and results of operations should be read in conjunction with the Selected Financial Data and the Consolidated Financial Statements.

OVERVIEW

The Company was founded in 1964 as a manufacturer of recreational vehicles and began manufacturing system-built homes in 1982. Since that time, the Company has evolved into a leading manufacturer in both the recreational vehicle (“RV”) and housing and building business segments through a combination of internal growth and strategic acquisitions.

During 2003, the Company completed construction of a new Class C motorhome manufacturing facility in Indiana and purchased an existing facility in Georgia to expand its manufacturing capacity for travel trailers and fifth

13

wheels.   During 2004, the Company acquired two new RV production facilities five miles north of the main complex in Middlebury, Indiana and sold one smaller facility located in Goshen, Indiana. These new manufacturing facilities were acquired to meet increased market demand for the Company’s travel trailers and fifth wheels and for production of the Company’s new camping and travel trailer lines. In addition, the Company opened a new regional service center in Chino, California to better meet the needs of its recreational vehicle dealers and retail customers on the West Coast.

The Company’s business segments are cyclical and subject to certain seasonal demand cycles and changes in general economic and political conditions. Demand in the RV and certain portions of the housing and building segments generally declines during the winter season, while sales and profits are generally highest during the spring and summer months. Inflation and changing prices have had minimal direct impact on the Company in the past in that selling prices and material costs have generally followed the rate of inflation. However, in 2004, rapid escalation of prices for certain raw materials combined with a number of price protected sales contracts adversely affected profits in the housing and building segment. The RV segment was also affected adversely by raw material inflation but to a lesser degree due to material surcharges added to the prices of products sold to dealers. Changes in interest rates impact both the RV and housing and building segments, with rising interest rates potentially dampening sales.

14

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items reflected in the Consolidated Statements of Income expressed as a percentage of sales and the percentage change in the dollar amount of each such item from that in the indicated previous year:

                                  Percentage of Net Sales      Percent Change
                                  Years Ended December 31       2004    2003
                                                                 to      to
                                  2004      2003      2002      2003    2002
                                  ----      ----      ----      ----    ----


Net sales                        100.0%    100.0%    100.0%     23.9%    7.3%
Cost of sales                     85.6      85.4      85.1      24.2     7.6
                                 -----     -----     -----
 Gross profit                14.4      14.6      14.9      22.1     5.4
Operating expenses:
 Delivery                          4.8       4.8       4.7      22.9    11.5
 Selling                           3.6       3.7       3.5      22.1    13.4
 General and administrative        4.0       4.7       4.8       5.2     4.2
 Gain on sale of properties, net   (.2)      (.1)      (.4)      n/m   (79.9)
                                 -----     -----     -----
   Total operating expenses       12.2      13.1      12.6      15.1    11.9
                                 -----     -----     -----
 Operating income                  2.2       1.5       2.3      83.5   (30.3)
                                 -----     -----     -----
Nonoperating (income) expense:
 Interest expense                   .3        .2        .3      65.1    (9.8)
 Investment income                 (.3)      (.1)      (.1)    129.1   125.5
  Other (income) expense           (.1)      (.1)      (.1)     10.0   (45.4)
                                 -----     -----     -----
   Total nonoperating
     (income) expense              (.1)       .0        .1       n/m   114.8
                                 -----     -----     -----
 Income from continuing
   operations before income taxes  2.3       1.5       2.2      88.0   (28.1)
 Income taxes                       .7        .5        .7      76.1   (28.2)
                                 -----     -----     -----
 Net income from continuing
   operations                      1.6       1.0       1.5      94.0   (28.1)
 Discontinued operations
  Income from operations of
   discontinued entity              .0        .1        .0     (61.0)   43.8
  Gain on sale of assets
   of discontinued entity           .2        .0        .0       n/m       0
                                 -----     -----     -----                 -
 Net income                        1.8       1.1       1.5     108.2   (25.8)
                                 =====     =====     =====

n/m — not meaningful

Note: The Results of Operations above has been restated to reflect discontinued operations and should be read in conjunction with Note 11, Discontinued Operations, of the Notes to the Consolidated Financial Statements appearing in this report.

Comparison of 2004 to 2003

Consolidated net sales from continuing operations increased $166.8 million, or 23.9% to $865.1 million in 2004 from $698.4 million in 2003. The Company’s RV Segment experienced a net sales increase of $130.9 million, or 27.5%, over 2003. During 2004, the Company continued to see a shift in demand towards higher end products in the RV Segment. Full-year recreational vehicle wholesale unit shipments for the Company were up 10.1% compared to 2003, while the industry was up 15.5% in the same categories. In the various product categories, the Company’s Class A market share increased to 7.9% in 2004 as compared to 7.1% in 2003. Class C market share increased to 12.5% compared to 11.6% in 2003. Travel trailer market share declined 0.6 percentage points to 4.4% from 5.0% in 2003. Fifth wheel market share decreased to 2.1% in 2004 from 3.1% in 2003 and camping trailer market share increased to 14.7% from 12.0% the previous year. The increase in Class A market share is attributable to the improved performance of the Company’s Georgie Boy subsidiary during 2004 coupled with the increased emphasis on rear diesel products at Coachmen Recreational Vehicle Company. Travel trailer market share decreased mainly due to an increase of 11.3% in unit shipments within the industry while the Company’s unit shipments remained flat for 2004. Likewise, the fifth wheel market share decline is a result of an increase of 35.0%

15

in unit shipments within the industry, while the Company’s unit shipments declined 11.2%. Camping trailers saw an industry-wide decline in wholesale shipments of over 4% during 2004 while the Company experienced a 16.9% increase in unit shipments. As a result of the overall lower increase in unit shipments when compared to the industry, Coachmen’s share of recreational vehicle wholesale shipments for the year declined to 5.8%, a 0.2 percentage point decline from its 2003 full-year share of 6.0%. The 27.5% increase in sales dollars for the Recreational Vehicle Segment coupled with a 10.1% increase in unit shipments resulted in an increase of 15.9% in the average sales price per unit for products sold by the Company in 2004. RV backlogs at the end of 2004 were $101 million. Although the backlog is down approximately 35% from a year ago, the Company considers the current backlog to be at a healthy level. The backlog at the end of 2003 was exceedingly high as a result of improving market fundamentals at that time. The Housing and Building Segment had a net sales increase in 2004 of $35.9 million, or 16.1%. Residential wholesale unit shipments increased 8.6% compared with the prior year and backlogs at December 31, 2004 rose 23.7% to $47 million, compared with $38 million at December 31, 2003. For 2004, the Housing and Building Segment experienced a 5.0% increase in the average sales price per unit as well as an overall 10.5% increase in unit sales. The increase was the result of product mix, sales price increases and surcharges related to increased cost of raw materials, particularly lumber. Historically, the Company’s first and fourth quarters are the slowest for sales in both segments.

Gross profit was $124.6 million, or 14.4% of net sales, in 2004 compared to $102.1 million, or 14.6% of net sales, in 2003. For the RV Segment, gross profit in dollars and as a percentage improved in 2004. Gross profit in dollars and as a percentage of net sales improved in 2004 for the RV Segment as a result of increased production volume, resulting in improved utilization of the Company’s manufacturing facilities. For the Housing and Building Segment, gross profit in dollars improved while the gross profit percentage declined slightly due to the Company’s continued investment in new business initiatives. The overall increase in gross profit dollars was primarily attributable to the continued recovery of the RV Segment while the decrease in gross profit as a percentage of sales was primarily the result of material price increases in the Housing and Building Segment and new business initiatives in both the RV and Housing and Building Segments.

Operating expenses, consisting of selling, delivery, general and administrative expenses, were $107.3 million and $92.2 million, or as a percentage of net sales, 12.4% and 13.2% for 2004 and 2003, respectively. Delivery expenses were $41.6 million in 2004 or 4.8% of net sales, compared with $33.8 million in 2003, or 4.8% of net sales. Product mix, delivery distance, as well as, operating expenses and outsourcing costs affect delivery expense. Selling expenses for 2004 were $31.5 million, or 3.6% of net sales, a 0.1 percentage point decrease from the $25.8 million, or 3.7% of net sales, experienced in 2003. The $5.7 million increase in selling expense was the result of an increase of $3.7 million from the RV Segment which was related to increased staffing, sales commissions and bonuses, along with increased expenses associated with new product shows plus $2.0 million from the Housing and Building Segment which was related to increased staffing, commissions, new product shows and literature expenses. General and administrative expenses were $34.2 million in 2004, or 4.0% of net sales, compared with $32.5 million, or 4.7% of net sales, in 2003. The increase, while less as a percentage of sales than 2003, was primarily related to increases in management bonuses and regulatory compliance costs including professional services related to the audit.

Operating income in 2004 of $19.1 million increased $8.7 million compared with the operating income of $10.4 million in 2003. This increase is consistent with the $22.6 million increase in gross profit coupled with the $15.2 million overall increase in operating expenses and the $1.3 million increase in gain on sale of properties.

The gain on sale of properties increased to $1.8 million in 2004 from $.5 million in 2003. The gains for 2004 resulted primarily from the sale of a 79,000 square foot facility in Goshen, Indiana and the sale of various properties that had not been used in production, which were located in Elkhart and Middlebury, Indiana. The gains for 2003 resulted primarily from the sale of vacant lots located in California. Assets are continually analyzed and every effort is made to sell or dispose of properties that are determined to be excess or unproductive.

Interest expense for 2004 and 2003 was $2.2 million and $1.3 million, respectively. Interest expense varies with the amount of short-and long-term borrowings incurred by the Company and the amount borrowed by the Company against the cash surrender value of the Company’s investment in life insurance contracts. During 2004, the Company borrowed from its line of credit ($10 million outstanding at December 31, 2004), obtained a one-time short-term note ($10 million outstanding at December 31, 2004) and borrowed against the cash surrender value of

16

its investment in life insurance contracts ($15 million outstanding at December 31, 2004) to meet working capital needs. These borrowings were generally associated with the increased inventory and accounts receivable levels maintained by the Company during 2004, along with the investment in two strategic growth initiatives within the RV Segment during 2004 that were funded primarily from available cash and borrowings. The first growth initiative was the purchase, tooling and staffing of a business unit that was to have been dedicated to the Coleman® brand of recreational vehicles. The second initiative was the opening of the Company’s new West Coast Service Center in southern California to better serve customers in the western states.

Investment income for 2004 of $2.4 million was $1.4 million higher than 2003 (see Note 1 of Notes to Consolidated Financial Statements).

Pretax income from continuing operations for 2004 was $19.6 million compared with pretax income from continuing operations of $10.4 million for 2003. The Company’s RV Segment generated pretax income from continuing operations of $11.6 million, or 1.9% of recreational vehicle net sales in 2004, compared with pretax income from continuing operations of $3.8 million, or ..8% of the RV Segment’s net sales in 2003. The Housing and Building Segment recorded 2004 pretax income from continuing operations of $8.3 million and in 2003, $7.3 million, or 3.2% and 3.3%, respectively, of segment net sales (see Note 2 of Notes to Consolidated Financial Statements).

The provision for income taxes related to continuing operations was an expense of $6.2 million for 2004 versus an expense of $3.5 million for 2003, representing an effective tax rate of 31.6% for 2004 and 33.8% for 2003. The lower effective tax rate in 2004 resulted primarily from the reversal of certain reserves for federal income taxes which were no longer required since the statute of limitations expired or the risk of additional tax assessments was no longer probable. The Company’s effective tax rate fluctuates based upon the states where sales occur, the level of export sales, the mix of nontaxable investment income and changes in recorded tax reserves (see Note 10 of Notes to Consolidated Financial Statements).

Net income from continuing operations for the year ended December 31, 2004 was $13.4 million ($.87 per diluted share) compared to net income from continuing operations for the year ended December 31, 2003 of $6.9 million ($.45 per diluted shared). Net income for the year ended December 31, 2004 was $15.3 million ($.99 per diluted share) compared to net income of $7.4 million ($.48 per diluted share) for 2003.

On December 31, 2004, the Company sold all operating assets of the Company-owned dealership located in North Carolina. The total sale price was $11.8 million, of which the Company received cash of $10.8 million and a promissory note of $1 million. The promissory note is due in two annual payments, including interest. The sale resulted in a gain on sale of discontinued operations of $1.7 million, net of $.8 million in taxes. In accordance with Statement of Financial Accounting Standard No. 144, the dealership qualified as a separate component of the Company’s business and as a result, the operating results and the gain on the sale of assets have been accounted for as a discontinued operation. Previously reported financial results for all periods presented have been restated to reflect this business as a discontinued operation.

Comparison of 2003 to 2002

Consolidated net sales increased $47.3 million, or 7.3% to $698.3 million in 2003 from $651.0 million in 2002. After a slow start at the beginning of 2003, hindered by the anticipation of war in Iraq, industry trends improved, particularly in the RV Segment. The Company’s RV Segment experienced a net sales increase of $54.0 million, or 12.8%, over 2002. During 2003, the Company saw a shift in demand towards higher end products in the RV segment resulting in a sales dollar increase over 2002 while unit shipments declined. Full-year recreational vehicle wholesale unit shipments for the Company were down 4.0% compared to 2002, while the industry was up 3.9% in the same categories. In the various product categories, the Company’s Class A market share increased to 7.1% in 2003 as compared to 6.6% in 2002. Class C market share declined to 11.6% compared to 13.3% in 2002. Travel trailer market share declined 0.9 percentage points to 5.0% from 5.9% in 2002. Fifth wheel market share increased to 3.1% in 2003 from 2.4% in 2002 and camping trailer market share increased to 12.0% from 11.9% the previous year. The increase in Class A market share is attributable to the improved performance of the Company’s Georgie Boy subsidiary during 2003 coupled with the increased emphasis on rear diesel products at Coachmen Recreational

17

Vehicle Company. Travel trailer market share decreased mainly due to the lower volumes achieved from Coachmen RV’s Spirit of America entry-level trailer. Also, more of the Company’s towable business shifted to fifth wheels, with unit shipments increasing 34.8% as compared to 2002. Fifth wheel market share increased 29.2% as a result of several successful new floor plan introductions during 2003. Camping trailers saw an industry-wide decline in wholesale shipments of over 20% during 2003. The Company did slightly better, resulting in a 0.1 percentage point market share gain. Because of this overall decrease in unit shipments when compared to the industry, Coachmen’s share of recreational vehicle wholesale shipments for the year declined to 6.0%, a 0.6 percentage point decline from its 2002 full-year share of 6.6%. The 12.8% increase in sales dollars for the Recreational Vehicle Segment coupled with a 4.0% decrease in unit shipments resulted in an increase of 16.7% in the average sales price per unit for products sold by the Company in 2003. RV backlogs were a positive sign at the end of 2003, being 26.6% higher at the end of 2003 as compared to the end of 2002. The Housing and Building Segment had a net sales decrease in 2003 of $6.6 million, or 2.9%. Due to weather related problems, deliveries were hampered throughout much of the year at several of the Company’s locations, as builders were unable to complete the foundations and site-preparations. As a result, finished goods for the Housing and Building Segment were 23.9% higher at December 31, 2003 as compared to December 31, 2002. On a positive note, 2003 year-end residential backlogs were 16.1% higher than year-end 2002. These products were delivered during the first quarter of 2004. For 2003, the Housing and Building Segment experienced an increase in the average sales price per unit but a decrease in unit sales. The increase was mainly the result of sales price increases and surcharges related to increased cost of raw materials, particularly lumber. Historically, the Company’s first and fourth quarters are the slowest for sales in both segments.

Gross profit was $102.1 million, or 14.6% of net sales, in 2003 compared to $96.9 million, or 14.9% of net sales, in 2002. For the RV Segment, gross profit in dollars improved in 2003 while the gross profit percentage declined slightly. Gross profit in dollars and as a percentage of net sales was negatively affected in 2003 for the RV Segment as a result of major material shortages experienced throughout the year, including ovens and ranges during the fourth quarter. Initial startups at the Company’s two new RV manufacturing facilities located in Indiana and Georgia also affected production efficiencies. However, as production rates increased in these new plants, efficiencies steadily improved. For the Housing and Building Segment, gross profit in dollars and as a percentage of net sales improved slightly in 2003 when compared to the previous year. The overall increase in gross profit dollars was primarily attributable to the continued recovery of the RV Segment while the decrease in gross profit as a percentage of sales was primarily the result of manufacturing inefficiencies in the RV Segment previously discussed.

Operating expenses, consisting of selling, delivery, general and administrative expenses, were $92.2 million and $84.3 million, or as a percentage of net sales, 13.2% and 13.0% for 2003 and 2002, respectively. Delivery expenses were $33.8 million in 2003, or 4.8% of net sales, compared with $30.3 million, or 4.7% of net sales in 2002. Delivery expense is affected by product mix, delivery distance as well as operating expenses and outsourcing costs. For 2003, delivery expense increased $3.5 million as compared to 2002. However, revenue generated from delivery, included in sales revenue, increased $4.9 million, more than offsetting the increase in expenses for the year. Selling expenses for 2003 were $25.8 million, or 3.7% of net sales, a 0.2 percentage point increase over the $22.8 million, or 3.5% of net sales, experienced in 2002. The $3.0 million increase in selling expense came primarily from the RV Segment and was related to increased sales staffing and travel-related expenses along with increased expenses associated with new product shows. General and administrative expenses were $32.5 million in 2003, or 4.7% of net sales, compared with $31.2 million, or 4.8% of net sales, in 2002. The increase, while less as a percentage of sales than 2002, was primarily related to increases in insurance costs and professional services.

Operating income in 2003 of $10.4 million compared with operating income of $14.9 million in 2002, a decrease of $4.5 million. This decrease is consistent with the $5.2 million increase in gross profit coupled with the $7.9 million overall increase in operating expenses coupled with the gain on sale of properties which decreased to $.5 million in 2003 from $2.3 million in 2002. The gains on sales of properties for 2003 resulted primarily from the sale of vacant lots located in California. Assets are continually analyzed and every effort is made to sell or dispose of properties that are determined to be excess or unproductive.

Interest expense for 2003 and 2002 was $1.3 million and $1.5 million, respectively. Interest expense varies with the amount of short-and long-term borrowings incurred by the Company. The Company periodically borrows from its line of credit to meet working capital needs, as indicated by the $5.0 million outstanding balance at December 31, 2003. These borrowings were generally associated with the increased inventory levels maintained by the Company

18

during 2003, along with the investment in two new manufacturing facilities during 2003 that were funded primarily from available cash and marketable securities. Investment income for 2003 of $1.0 million was $.5 million higher than 2002 (see Note 1 of Notes to Consolidated Financial Statements).

Pretax income from continuing operations for 2003 was $10.4 million compared with pretax income from continuing operations of $14.5 million for 2002. The Company’s RV Segment generated pretax income from continuing operations of $3.8 million, or 0.8% of recreational vehicle net sales in 2003, compared with pretax income from continuing operations of $5.0 million, or 1.2% of the RV segment’s net sales in 2002. The Housing and Building Segment recorded 2003 pretax income of $7.3 million and in 2002, $9.9 million, or 3.3% and 4.3%, respectively, of segment net sales (see Note 2 of Notes to Consolidated Financial Statements).

The provision for income taxes was an expense of $3.5 million for 2003 versus an expense of $4.9 million for 2002, representing an effective tax rate of 33.8% for both periods. The Company’s effective tax rate fluctuates based upon the states where sales occur, the level of export sales, the mix of nontaxable investment income and other factors (see Note 10 of Notes to Consolidated Financial Statements).

Net income from continuing operations for the year ended December 31, 2003 was $6.9 million ($0.45 per diluted share) compared to net income from continuing operations for the year ended December 31, 2002 of $9.6 million ($0.60 per diluted share). Net income from discontinued operations for the year ended December 31, 2003 was $0.4 million ($0.03 per diluted share) compared to net income from discontinued operations for the year ended December 31, 2002 of $0.3 million ($0.02 per diluted share). Net income for the year ended December 31, 2003 was $7.4 million ($.48 per diluted share) compared to net income of $9.9 million ($.62 per diluted share) for 2002.

Liquidity and Capital Resources

The Company generally relies on funds from operations as its primary source of working capital and liquidity. In addition, the Company maintains a $35 million unsecured line of credit to meet its seasonal working capital needs (see Note 5 of Notes to Consolidated Financial Statements). This credit line was utilized in 2004 and 2003 and there were $10.0 million and $5.0 million in outstanding borrowings at December 31, 2004 and 2003, respectively. The credit line was not utilized during 2002. In addition to the line of credit borrowings, on December 30, 2004, the Company entered into an Amendment to the Credit Agreement. The amendment provides for a one-time short-term loan to the Company of $10 million. This short-term loan bears interest at the prime rate and is due and payable on February 28, 2005. At December 31, 2004, there was $10 million outstanding on this loan. During 2004, the Company also borrowed against the cash surrender value of the Company’s investment in life insurance contracts. As of December 31, 2004, $15 million had been borrowed against the cash surrender value of Company-owned life insurance contracts.

For 2002, the Company’s operating activities had been the principal source of cash flows. However, during 2003 and 2004, mainly as a result of increased inventories and receivables, offset somewhat by an increase in trade payables, the Company generated a negative cash flow from operations. Cash used in operations in 2004 was $22.3 million and $3.6 million in 2003 while cash flows provided by operations were $13.1 million for 2002. For 2004, net income adjusted for depreciation and a slight increase in trade payables were the significant factors in generating cash flows, which were offset by increases in accounts receivables and inventories. The increase in accounts receivable was primarily related to the 8.6% increase in fourth quarter sales as compared to the previous year. For the year 2003, net income, adjusted for depreciation, and an increase in trade payables, were the significant factors in generating operating cash flows, which were offset by increases in trade receivables and inventories. The increase in receivables was related to the 15.8% increase in fourth quarter sales as compared to the previous year and particularly by the RV Segment’s strong sales effort during the final two weeks of December. For the year 2002, net income, adjusted for depreciation, was a significant factor in generating operating cash flows, offset by increases in trade receivables and inventories. The increase in receivables was related to the 28.5% increase in fourth quarter sales volume. The $35 million increase in inventory from 2003 was primarily related to increases in the RV segment as a result of production of higher value units as compared to 2003 and lower-than-expected RV sales during the fourth quarter. During the fourth quarter, the RV Segment faced an industry-wide slowdown in retail activity, and resulting high dealer inventories. In response to the level of inventory on hand, production levels were adjusted in the fourth quarter and into 2005.

19

Investing activities used cash of $9.8 million in 2004 and provided cash of $3.4 million in 2003 and $4.8 million in 2002. In 2004, the investment in the West Coast Service Center and in the business unit that was to have been dedicated to the Coleman® brand of recreational vehicles represented major uses of cash, which were offset in part by the sale of the property and equipment of a company-owned dealership and certain other property and equipment. In 2003, the investment in two additional manufacturing facilities for the RV Segment represented a major use of cash. In 2002, the sale of property and equipment, including real estate held for sale and rental properties provided cash flows of $10.0 million. The sale of marketable securities, net of purchases, provided cash flows of $1.0 million, $4.9 million, and $0.4 million for 2004, 2003, and 2002, respectively. These proceeds were used in part to fund the investment in the additional manufacturing facilities in 2004 and 2003. Capital expenditures in 2004 of $16.5 million consisted of the investment in the West Coast Service Center and the business unit that was to have been dedicated to the Coleman® brand of recreational vehicles, and investments in machinery and equipment and transportation equipment for both the Recreational Vehicle Segment and the Housing and Building Segment. Other than the two additional manufacturing facilities, capital expenditures of $12.1 million during 2003 included a new service facility constructed at the Company-owned dealership in North Carolina that was sold in December 2004 and investments in machinery and equipment and transportation equipment for both the Recreational Vehicle Segment and the Housing and Building Segment. Capital expenditures during 2002 consisted mainly of completion of a new office building for Mod-U-Kraf Homes and investments in machinery and equipment and transportation equipment for both operating segments.

In 2004, financing activities provided cash flows of $40.7 million. Proceeds from borrowings on the line of credit, including the short-term loan, borrowings on the cash surrender value of life insurance polices and proceeds from long-term debt, net of repayments, provided cash of $43.7 million. Offsetting the cash provided by borrowings in 2004 was the payment of cash dividends. In 2003, cash flows from financing activities reflected the Company’s short-term borrowing activity. The principal use of cash flows from financing activities was $4.4 million used to purchase common shares under the Company’s share repurchase program during the first quarter. In 2002, the principal use of cash flows from financing activities was the $18.5 million used to repay borrowings against life insurance policies, and $7.9 million used to purchase common shares under the Company’s share repurchase program. Other financing activities for 2003 and 2002, were payments of long-term debt and cash dividends. The negative cash flows for 2003 and 2002 were partially offset by the issuance of common shares under stock option and stock purchase plans. For a more detailed analysis of the Company’s cash flows for each of the last three years, see the Consolidated Statements of Cash Flows.

The Company’s cash and temporary cash investments at December 31, 2004 were $15 million or an increase of $8.6 million from 2003. The Company anticipates that available funds, together with anticipated cash flows generated from future operations and amounts available under its existing credit facilities, will be sufficient to fund future planned capital expenditures and other operating cash requirements through the end of 2005. In addition, the Company has $1.7 million of marketable securities available, if needed, for operations.

Any downturn in the U.S. economy, decline in consumer confidence and other factors may adversely impact the RV industry. This may have a negative impact on the Company’s sales of recreational vehicles and also increases the Company’s risk of loss under repurchase agreements with lenders to the Company’s independent dealers (see Note 12 of Notes to Consolidated Financial Statements and Critical Accounting Policies below).

In 2004, working capital increased $25.3 million, to $121.3 million from $96.0 million. The $53.7 million increase in current assets at December 31, 2004 versus December 31, 2003 was primarily due to increases in trade receivables and inventories. The $28.4 million increase in current liabilities is substantially due to increases in trade payables, accrued expenses and other liabilities and short-term borrowings.

The Company anticipates capital expenditures in 2005 of approximately $13 million. The major planned expenditures include a plant expansion at one of the housing manufacturing facilities to provide increased capacity. The balance of the planned capital expenditures for 2005 will be for purchase or replacement of machinery and equipment and transportation equipment to be used in the ordinary course of business. The Company plans to finance these expenditures with funds generated from operating cash flows.

20

Principal Contractual Obligations and Commercial Commitments

The Company’s future contractual obligations for agreements with initial terms greater than one year are summarized as follows (in thousands):

                                          Payment Period
                                          --------------

                    2005      2006      2007      2008      2009   Thereafter
                    ----      ----      ----      ----      ----   ----------

Credit facility
  borrowings     $10,000.0  $   -     $   -     $   -     $   -     $   -
Long-term debt     2,194.7   2,145.0   2,510.6   2,212.1   5,650.1   2,425.7
Operating leases     831.0     797.2     708.2     525.1     521.0     968.9

The Company’s commercial commitments, along with the expected expiration period of the commitment, is summarized as follows (in thousands):

                                                 Amount of Commitment
                                                Expiration Per Period
                                   Total        ---------------------
                                  Amounts      Less Than   In Excess of
                                 Committed      One Year     One Year
                                 ---------      --------     --------
Letters of credit               $  2,950.0    $  2,950.0    $   -
Guarantees                        21,488.9      19,239.7      2,249.2
Standby repurchase obligations   302,094.6     297,586.3      4,508.3
Chassis pool obligations          29,669.0      29,669.0        -
Financing obligation               3,200.0       3,200.0        -

Critical Accounting Policies

The following discussion of accounting policies is intended to supplement the summary of significant accounting policies presented in Note 1 of Notes to Consolidated Financial Statements. These policies were selected because they are broadly applicable within our operating units and they involve additional management judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related income statement, asset and/or liability amounts.

Investments — The Company regularly reviews its investment portfolio for any unrealized losses that would be deemed other-than-temporary and require the recognition of an impairment loss in earnings. The Company recognizes other-than-temporary losses for investments when cost has exceeded fair market value for nine or more months. At December 31, 2004 and 2003, there were unrealized losses of $355,500 and $457,800, respectively, that were considered other-than-temporary.

Impairment of Goodwill – Indefinite-Lived Intangibles — The Company evaluates the carrying amounts of goodwill and indefinite-lived intangible assets annually to determine if they may be impaired. If the carrying amounts of the assets are not recoverable based upon discounted cash flow analysis, they are reduced by the estimated shortfall of fair value compared to the recorded value. The Company completed the annually required valuation process and no impairment losses were recognized in 2004. However, should actual results or changes in future expectations differ from those projected by management, goodwill impairment may be required and may be material.

Warranty Reserves — The Company provides customers of its products with a warranty covering defects in material or workmanship for periods generally ranging from one to two years in length and up to ten years on certain structural components. The Company records a liability based on its estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Estimated costs related to product warranty are accrued at the time of sale and included in cost of sales. Average per unit costs are estimated based upon past warranty claims and unit sales history and adjusted as required to reflect actual costs incurred, as information becomes available. Warranty expense totaled $22.2 million, $16.5 million and $16.6 million in 2004,

21

2003 and 2002, respectively. Accrued liabilities for warranty expense at December 31, 2004 and 2003 were $10.1 million and $8.7 million, respectively.

Litigation and Product Liability Reserves — At December 31, 2004 the Company had reserves for certain other loss exposures, such as product liability ($2.9 million) and litigation ($0.5 million) (see Note 12 of Notes to Consolidated Financial Statements). The Company’s litigation reserve is determined based on an individual case evaluation process. The Company’s estimated loss reserves for product liability are determined using loss triangles established by the Company’s management reflecting historical claims incurred by the Company. While the Company believes this method to be consistent and appropriate, changes in estimates based on historical trends could materially affect the Company’s recorded liabilities for loss.

New and Pending Accounting Policies

(See New Accounting Pronouncements in Note 1 of Notes to Consolidated Financial Statements.)

Forward-Looking Statements

This Annual Report contains certain statements that are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks and uncertainties, and are dependent on various factors, many of which are outside the control of the Company. These uncertainties and other factors include, but are not limited to, the potential fluctuations in the Company’s operating results; the availability for floor plan financing for the Company’s recreational vehicle dealers and corresponding availability of cash to the Company; the condition of the telecommunications industry which purchases system-built structures; the impact of performance on the valuation of intangible assets; the availability and price of gasoline and diesel fuel, which can impact the sale of recreational vehicles; the Company’s dependence on chassis and appliance suppliers, which are used in the production of many of the Company’s recreational vehicle products; interest rates, which affect the affordability of the Company’s products; the availability and cost of real estate for residential housing; the ability of the Housing and Building Segment to perform in new market segments where it has limited experience; potential liabilities under repurchase agreements and guarantees; changing government regulations, such as those covering accounting standards; environmental matters or product warranties and recalls, which may affect costs of operations, revenues, product acceptance and profitability; legislation governing the relationships of the Company with its recreational vehicle dealers, which may affect the Company’s options and liabilities in the event of a general economic downturn; the impact of consumer confidence and economic uncertainty on high-cost discretionary product purchases, which can hinder the sales of recreational vehicles; the demand for commercial structures in the various industries that the Housing and Building Segment serves; uncertainties related to the launch of a new brand product line of recreational vehicles; consolidation of distribution channels in the recreational vehicle industry; and also on the state of the recreational vehicle and housing industries in the United States. Other factors affecting forward-looking statements include the cyclical and seasonal nature of the Company’s businesses, uncertainties related to the launch of a new brand product line of recreational vehicles and regarding the Coleman trademark license for recreational vehicles, consolidation of distribution channels in the recreational vehicle industry, adverse weather conditions affecting home deliveries, changes in property taxes and energy costs, changes in federal income tax laws and federal mortgage financing programs, changes in public policy, competition in these industries, the Company’s ability to maintain or increase gross margins which are critical to profitability whether there are or are not increased sales, further developments in the war on terrorism and related international crises, oil supplies and other risks and uncertainties. In addition, investors should be aware that generally accepted accounting principles prescribe when a company must disclose or reserve for particular risks, including litigation exposure. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a major contingency. Reported results may therefore appear to be volatile in certain accounting periods. The foregoing lists are not exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.

At times, the Company’s actual performance differs materially from its projections and estimates regarding the economy, the recreational vehicle and building industries and other key performance indicators. Readers of this Report are cautioned that reliance on any forward-looking statements involves risks and uncertainties. Although the

22

Company believes that the assumptions on which the forward-looking statements contained herein are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There can be no assurance that the forward-looking statements contained in this Report will prove to be accurate. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company’s objectives will be achieved.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, operations of the Company are exposed to fluctuations in interest rates. These fluctuations can vary the costs of financing and investing yields. Throughout 2004, the Company utilized its revolving credit facility to meet short-term working capital needs. The Company had $10 million outstanding against the revolving credit facility on December 31, 2004. In addition, on December 30, 2004, the Company entered into an Amendment to the Credit Agreement. The December amendment provided for a one-time short-term loan to the Company of $10 million. At December 31, 2004, there was $10 million outstanding on this loan. In 2003, the Company periodically utilized its credit facility to meet short-term working capital needs and these borrowings were typically repaid in the near-term. The Company had borrowings of $5.0 million outstanding against its credit facility at December 31, 2003. The Company did not utilize its credit facility in 2002. Accordingly, changes in interest rates would impact both the Company’s short and long-term debt. At December 31, 2004, the Company had $17.1 million of long-term debt, including current maturities. Long-term debt consists mainly of industrial development revenue bonds of approximately $9.2 million and $7.2 million outstanding related to a term loan. In January of 2003, the Company entered into various interest rate swap agreements that became effective beginning in October of 2003. These swap agreements, which are designated as cash flow hedges for accounting purposes, effectively convert a portion of the Company’s variable-rate borrowings to a fixed-rate basis through November of 2011, thus reducing the impact of changes in interest rates on future interest expense. The fair value of the Company’s interest rate swap agreements represents the estimated receipts or payments that would be made to terminate the agreements. A cumulative loss of $96,000, net of taxes, attributable to changes in the fair value of interest rate swap agreements was recorded as a component of accumulated other comprehensive income (loss) as of December 31, 2004. If in the future the interest rate swap agreements were determined to be ineffective or were terminated before the contractual termination dates, or if it became probable that the hedged variable cash flows associated with the variable-rate borrowings would stop, the Company would be required to reclassify into earnings all or a portion of the unrealized losses on cash flow hedges included in accumulated other comprehensive income (loss). At December 31, 2004, the Company had four interest rate swap agreements with notional amounts of $1.8 million, $350,000, $3.4 million, and $2.0 million, respectively, that were used to convert the variable interest rates on certain industrial development revenue bonds to fixed rates. In accordance with the terms of the swap agreements, the Company pays 3.39%, 3.12%, 3.71%, and 3.36% interest rates, respectively, and receives the Bond Market Association Index (BMA), calculated on the notional amounts, with net receipts or payments being recognized as adjustments to interest expense.

At December 31, 2004, the Company had $1.7 million invested in marketable securities. The Company’s marketable securities consist of public utility preferred stocks which typically pay quarterly fixed rate dividends. These financial instruments are subject to market risk in that available energy supplies and changes in available interest rates would impact the market value of the preferred stocks. As discussed in Note 1 of Notes to Consolidated Financial Statements, the Company utilizes U.S. Treasury bond futures options as a protection against the impact of increases in interest rates on the fair value of the Company’s investments in these fixed rate preferred stocks. Outstanding options are marked to market with market value changes recognized in current earnings. The U.S. Treasury bond futures options generally have terms ranging from 90 to 180 days. Based on the Company’s overall interest rate exposure at December 31, 2004, including variable or floating rate debt and derivatives used to hedge the fair value of fixed rate preferred stocks, a hypothetical 10 percent change in interest rates applied to the fair value of the financial instruments as of December 31, 2004, would have no material impact on earnings, cash flows or fair values of interest rate risk-sensitive instruments over a one-year period.

23

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements	Page
Financial Statements:      Report of Independent Registered Public Accounting Firm	25
Report of Independent Registered Public Accounting Firm on      Internal Control over Financial Reporting	26
Consolidated Balance Sheets at December 31, 2004 and 2003	28
Consolidated Statements of Income      for the years ended December 31, 2004, 2003 and 2002	29
Consolidated Statements of Income      for the years ended December 31, 2004, 2003 and 2002	30
Consolidated Statements of Cash Flows for the years      ended December 31, 2004, 2003 and 2002	31-32
Notes to Consolidated Financial Statements	33-57
Financial Statement Schedule:      II - Valuation and Qualifying Accounts for the years           ended December 31, 2004, 2003 and 2002	61

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

24

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
Coachmen Industries, Inc.

We have audited the accompanying consolidated balance sheets of Coachmen Industries, Inc. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Coachmen Industries, Inc. and subsidiaries at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 4, 2005 expressed an unqualified opinion thereon.

Ernst & Young LLP

Grand Rapids, Michigan
March 4, 2005

25

Report of Independent Registered Public Accounting Firm
On Internal Control Over Financial Reporting

Board of Directors and Shareholders
Coachmen Industries, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Coachmen Industries, Inc. and subsidiaries (the Company) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Coachmen Industries, Inc. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Coachmen Industries, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

26

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Coachmen Industries, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004 of Coachmen Industries, Inc. and subsidiaries and our report dated March 4, 2005 expressed an unqualified opinion thereon.

Ernst & Young LLP

Grand Rapids, MI
March 4, 2005

27

Coachmen Industries, Inc. and Subsidiaries

Consolidated Balance Sheets
as of December 31
(in thousands)

Assets 
                                                 2004           2003
                                                 ----           ----
CURRENT ASSETS
  Cash and temporary cash investments          $ 14,992       $  6,408
  Marketable securities                           1,747          5,667
  Trade receivables, less allowance for
   doubtful receivables 2004 - $919 and
   2003 - $1,208                                 58,805         46,232
  Other receivables                               4,209          1,906
  Refundable income taxes                           244            642
  Inventories                                   136,088        101,100
  Prepaid expenses and other                      4,144          4,622
  Deferred income taxes                           6,014          5,959
                                               --------       --------

    Total current assets                        226,243        172,536

Property, plant and equipment, net               82,351         79,225
Goodwill                                         18,132         18,954
Cash value of life insurance, net of loans       25,162         36,506
Real estate held for sale                            60            -
Other                                             5,775          3,467
                                               --------       --------

    TOTAL ASSETS                               $357,723       $310,688
                                               ========       ========


Liabilities and Shareholders' Equity

CURRENT LIABILITIES
  Accounts payable, trade                      $ 33,805       $ 30,486
  Accrued income taxes                            2,479          2,511
  Accrued expenses and other liabilities         39,466         37,586
  Floor plan notes payable                        6,986            -
  Short-term borrowings and current
   maturities of long-term debt                  22,195          5,990
                                               --------       --------

    Total current liabilities                   104,931         76,573

Long-term debt                                   14,943          9,419
Deferred income taxes                             3,512          4,089
Postretirement deferred compensation benefits     9,724          9,172
Other                                               195            284
                                               --------       --------

    Total liabilities                           133,305         99,537
                                               --------       --------

COMMITMENTS AND CONTINGENCIES (Note 12)

SHAREHOLDERS' EQUITY
  Common shares, without par value: authorized
   60,000 shares; issued 2004 - 21,108
   shares and 2003 - 21,086 shares               91,850         91,539
  Additional paid-in capital                      8,894          7,616
  Retained earnings                             184,284        172,700
  Treasury shares, at cost, 2004 - 5,384
    shares and 2003 - 5,533 shares              (59,002)       (59,858)
  Unearned compensation                          (1,700)        (1,136)
  Accumulated other comprehensive income             92            290
                                               --------       --------

    Total shareholders' equity                  224,418        211,151
                                               --------       --------

    TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY                     $357,723       $310,688
                                               ========       ========

See Notes to Consolidated Financial Statements.

28

Coachmen Industries, Inc. and Subsidiaries

Consolidated Statements of Income
for the years ended December 31
(in thousands, except per share amounts)

                                            2004          2003         2002
                                            ----          ----         ----

Net sales                                 $865,144      $698,376     $651,028
Cost of sales                              740,525       596,308      554,173
                                          --------      --------     --------

    Gross profit                           124,619       102,068       96,855
                                          --------      --------     --------

Operating expenses:
  Delivery                                  41,569        33,814       30,324
  Selling                                   31,523        25,811       22,752
  General and administrative                34,221        32,526       31,210
  Gain on sale of properties, net           (1,754)         (471)      (2,342)
                                          --------      --------     --------
                                           105,559        91,680       81,944
                                          --------      --------     --------

    Operating income                        19,060        10,388       14,911
                                          --------      --------     --------

Nonoperating (income) expense:
  Interest expense                           2,199         1,332        1,476
  Investment income                         (2,394)       (1,045)        (463)
  Other (income) expense, net                 (378)         (344)        (630)
                                          --------      --------     --------
                                              (573)          (57)         383
                                          --------      --------     --------

    Income from continuing operations
    before income taxes                     19,633        10,445       14,528

Income taxes                                 6,208         3,526        4,909
                                          --------      --------     --------

    Net income from continuing operations   13,425         6,919        9,619

Discontinued operations
  Income from operations of
   discontinued entity (net of taxes of
   $82, $230, and $158, respectively)          174           446          310
  Gain on sale of assets of discontinued
   entity (net of taxes of $816)             1,735             -            -
                                          --------      --------     --------
    Income from discontinued operations      1,909           446          310

    Net Income                            $ 15,334      $  7,365     $  9,929
                                          ========      ========     ========

Earnings per share - Basic
    Continuing operations                 $    .87      $    .45     $    .60
    Discontinued operations                    .12           .03          .02
                                               ---           ---          ---
      Net earnings per share                   .99           .48          .62
Earnings per share - Diluted
    Continuing operations                      .87           .45          .60
    Discontinued operations                    .12           .03          .02
                                               ---           ---          ---
      Net earnings per share                   .99           .48          .62

Number of common shares used in the
computation of earnings per share:
    Basic                                   15,483        15,437       15,996
    Diluted                                 15,551        15,487       16,107

See Notes to Consolidated Financial Statements.

29

Coachmen Industries, Inc. and Subsidiaries

Consolidated Statements of Shareholders' Equity
for the years ended December 31, 2004, 2003 and 2002
(in thousands, except per share amounts)

                                                                        Additional
                                    Comprehensive       Common Shares     Paid-In    Retained
                                    Income(Loss)      Number       Amount      Capital     Earnings
                                    ------------      ------       ------      -------     --------
Balance at January 1, 2002                            21,046    $  91,072   $   5,755    $ 162,646
  Net income                          $   9,929         --          --           --          9,929
  Reduction in unrealized losses on
    securities net of taxes of $105         270         --          --           --           --
                                      ---------
  Total comprehensive income          $  10,199
                                      =========

  Issuance of common shares upon
    the exercise of stock options
    net of tax benefit of $121                          --          --           (222)        --
  Issuance of common shares under
    employee stock purchase plan                          16         211         --           --
  Issuance of common shares from
    treasury                                            --           --           600         --
  Acquisition of common shares
    for treasury                                        --           --          --           --
  Cash dividends of $.22 per
    common share                                        --           --          --         (3,521)
                                                   ---------    ---------    --------     --------
Balance at December 31, 2002                          21,062       91,283       6,133      169,054
                                                   ---------    ---------    --------     --------

  Net income                          $   7,365         --          --           --          7,365
  Net unrealized gain on securities
    net of taxes of $681                  1,111         --          --           --           --
 Net unrealized loss on cash flow
    hedges net of taxes of $98             (160)        --          --           --           --
                                     ---------
  Total comprehensive income          $   8,316
                                      =========
  Issuance of common shares upon
    the exercise of stock options
    net of tax benefit of $37                           --          --           112          --
  Issuance of common shares under
    employee stock purchase plan                          24          256        --           --
  Issuance of common shares from
    treasury                                            --          --         1,371          --
  Acquisition of common shares
    for treasury                                        --          --           --           --
  Cash dividends of $.24 per
    common share                                        --          --           --         (3,719)
                                                   ---------   ---------    ---------    ---------
Balance at December 31, 2003                          21,086      91,539        7,616      172,700
                                                   ---------   ---------    ---------    ---------
Comprehensive Income - 2004
  Net income                          $  15,334         --          --           --         15,334
  Net unrealized loss on
    securities net of taxes of $160        (262)        --          --           --           --
 Net unrealized gain on
    cash flow hedges net of
    taxes of $39                             64         --          --           --           --
                                     ---------
  Total comprehensive income          $  15,136
                                      =========
  Issuance of common shares upon
    the exercise of stock options
    net of tax benefit of $46                           --           --           250         --
  Issuance of common shares under
    employee stock purchase plan                          22         311         --           --
  Issuance of common shares from
    treasury                                            --           --         1,028         --
  Cash dividends of $.24 per
    common share                                        --           --          --         (3,750)
                                                   ---------   ---------    ---------    ---------
Balance at December 31, 2004                          21,108   $  91,850    $   8,894    $ 184,284
                                                   =========   =========    =========    =========

                                                                               Accumulated
                                                                                  Other            Total
                                         Treasury Shares         Unearned      Comprehansive    Shareholders'
                                         Number     Amount     Compensation      Income(Loss)      Equity
                                         ------     ------     ------------      ------------      ------

 Balance at January 1, 2002               (5,110) $(49,902)         --              $(931)       $208,640
  Net income                                --        --            --                --            9,929
  Reduction in unrealized losses on
    securities net of taxes of $105         --        --            --                270             270
  Total comprehensive income
  Issuance of common shares upon
    the exercise of stock options
    net of tax benefit of $121               164     1,044          --                --              822
  Issuance of common shares under
    employee stock purchase plan            --        --            --                --              211
  Issuance of common shares from
    treasury                                  58       332          --                --              932
  Acquisition of common shares
    for treasury                            (507)   (7,857)         --                --           (7,857)
  Cash dividends of $.22 per
    common share                            --        --            --                --           (3,521)
                                       --------- ---------        ------            -----        --------
Balance at December 31, 2002              (5,395)  (56,383)         --               (661)        209,426
                                       --------- ---------        ------            -----        --------

  Net income                                --        --            --                --            7,365
  Net unrealized gain on securities
    net of taxes of $681                    --        --            --               1,111          1,111
  Net unrealized loss on cash flow
    hedges net of taxes of $98              --        --            --                (160)          (160)
  Total comprehensive income
  Issuance of common shares upon
    the exercise of stock options
    net of tax benefit of $37                 25       143          --                --              255
  Issuance of common shares under
    employee stock purchase plan            --        --            --                --              256
  Issuance of common shares from
    treasury                                 130         736      $(1,136)            --              971
  Acquisition of common shares
    for treasury                            (293)     (4,354)         --              --           (4,354)
  Cash dividends of $.24 per
    common share                            --        --            --                --           (3,719)
                                       ---------   ---------     --------             ------       --------
Balance at December 31, 2003              (5,533)    (59,858)      (1,136)             290        211,151
                                       ---------   ---------     --------             ------       --------

Comprehensive Income - 2004
  Net income                                --        --            --                --           15,334
  Net unrealized loss on
    securities net of taxes of $160         --        --            --                (262)         (262)
  Net unrealized gain on
    cash flow hedges net of
    taxes of $39                            --        --            --                  64             64
  Total comprehensive income
 Issuance of common shares upon
    the exercise of stock options
    net of tax benefit of $46                34        199          --                --              449
  Issuance of common shares under
    employee stock purchase plan            --        --            --                --              311
  Issuance of common shares from
    treasury                                115        657         (564)              --            1,121
  Cash dividends of $.24 per
    common share                            --        --            --                --           (3,750)
                                       --------  ---------        -------           ------     ----------

Balance at December 31, 2004             (5,384)  $(59,002)       $(1,700)          $   92       $ 224,418
                                       ========   ========        =======           ======       =========

See Notes to Consolidated Financial Statements.

30

Coachmen Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
for the years ended December 31
(in thousands)

                                                      2004         2003       2002
                                                      ----         ----       ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                       $ 15,334     $  7,365   $  9,929
  Adjustments to reconcile net income to
    net cash provided by (used in) operating
    activities:
      Depreciation                                    9,402        9,678      9,927
      Provision for doubtful receivables                200          574        183
      Net realized and unrealized (gains)/losses on
        marketable securities and derivatives            93          (74)     1,048
      Gain on sale of properties and other assets,
        net of losses                                (4,305)        (471)    (2,343)
      Gain on sale of intangible assets              (1,550)        -          -
      Increase in cash surrender value of
        life insurance policies                      (1,074)      (2,055)    (1,472)
      Deferred income tax provision (benefit)          (892)         309      2,802
      Tax benefit from stock options exercised           46           37        121
      Other                                           2,696        2,170      1,529
      Changes in certain assets and liabilities, net
        of effects of acquisitions and dispositions:
          Trade receivables                         (15,076)     (17,732)    (5,245)
          Inventories                               (34,789)     (16,090)    (4,533)
          Prepaid expenses and other                    478         (210)       244
          Accounts payable, trade                     3,319       11,685       (143)
          Income taxes - accrued and refundable         366        3,525         91
          Accrued expenses and other liabilities      1,880       (2,270)     1,010
                                                    -------      -------    -------
              Net cash provided by (used in)
                operating activities                (22,322)      (3,559)    13,148
                                                    -------      -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales of marketable securities        3,629       30,975     32,157
  Proceeds from sale of properties and other assets   7,034        2,869     10,004
  Investments in marketable securities               (2,582)     (26,072)   (31,756)
  Purchases of property and equipment               (16,477)     (12,067)    (5,283)
  Other                                              (1,377)         902       (294)
                                                    -------      -------    -------
              Net cash provided by (used in)
                investing activities                 (9,773)      (3,393)     4,828
                                                    -------      -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings                39,938       32,000       -
  Payments of short-term borrowings                 (17,952)     (27,000)      -
  Proceeds from long-term debt                        8,036          571       -
  Payments of long-term debt                         (1,307)      (1,161)      (919)
  Proceeds from borrowings on cash value of
    life insurance policies                          20,000
  Repay borrowings against cash value of life
    insurance policies                               (5,000)        -       (18,458)
  Issuance of common shares under stock
    incentive plans                                     714          474        912
  Cash dividends paid                                (3,750)      (3,719)    (3,521)
  Purchases of common shares for treasury              -          (4,354)    (7,857)
                                                    -------      -------    -------
              Net cash provided by (used in)
                financing activities                 40,679       (3,189)   (29,843)
                                                    -------      -------    -------

31

Coachmen Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows, Continued

                                                      2004         2003       2002
                                                      ----         ----       ----

Increase (decrease) in cash and temporary cash
  investments                                         8,584      (10,141)   (11,867)

CASH AND TEMPORARY CASH INVESTMENTS
  Beginning of year                                   6,408       16,549     28,416
                                                   --------     --------   --------

  End of year                                      $ 14,992     $  6,408   $ 16,549
                                                   ========     ========   ========


Supplemental disclosures of cash flow
  information:
    Cash paid during the year for:
      Interest                                     $  1,460     $  1,109   $ 1,153
      Income taxes                                    7,114        2,130     4,626

See Notes to Consolidated Financial Statements.

32

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES

 Nature of Operations — Coachmen Industries, Inc. and its subsidiaries (the “Company”) manufacture a full array of recreational vehicles and system-built housing and buildings. Recreational vehicles are sold through a nationwide dealer network. The system-built products (single-family homes, multi-family dwellings, schools, offices, commercial facilities and specialized structures) are sold to builders/dealers or directly to the end user for certain specialized structures.

Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Coachmen Industries, Inc. and its subsidiaries, all of which are wholly or majority owned. All intercompany transactions have been eliminated in consolidation.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition — For the Recreational Vehicle Segment, the shipping terms are free on board (“FOB”) shipping point and title and risk of ownership are transferred to the independent dealers at that time. Accordingly, sales are recognized as revenue at the time the products are shipped. For the Housing and Building Segment, the shipping terms are generally FOB destination. Title and risk of ownership are transferred when the Company completes installation of the product. The Company recognizes the revenue at the time delivery and installation are completed. Revenue from final set-up procedures, which are perfunctory, is deferred and recognized when such set-up procedures are completed.

Cash Flows and Noncash Activities — For purposes of the consolidated statements of cash flows, cash and temporary cash investments include cash, cash investments and any highly liquid investments purchased with original maturities of three months or less.

          Noncash investing and financing activities are as follows (in thousands):

                                                                  2004         2003        2002
                                                                  ----         ----        ----
      Issuance of common shares, at market
         value, in lieu of cash compensation                     $1,121     $   991     $   932
      Note receivable received in connection with the sale of
         certain assets (see also Note 11)                        1,000           -            -

Concentrations of Credit Risk — Financial instruments that potentially subject the Company to credit risk consist primarily of cash and temporary cash investments and trade receivables.

At December 31, 2004 and 2003, cash and temporary cash investments invested in money market accounts and short-term bond funds was less than $0.1 million.

33

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
 

The Company has a concentration of credit risk in the recreational vehicle industry, although there is no geographic concentration of credit risk. The Company performs ongoing credit evaluations of its customers’ financial condition and sales to its recreational vehicle dealers are generally subject to pre-approved dealer floor plan financing whereby the Company is paid upon delivery or shortly thereafter. The Company generally requires no collateral from its customers. Future credit losses are provided for currently through the allowance for doubtful receivables and actual credit losses are charged to the allowance when incurred.

Marketable Securities — Marketable securities consist of public utility preferred stocks which pay quarterly cash dividends. The preferred stocks are part of a dividend capture program whereby preferred stocks are bought and held for the purpose of capturing the preferred dividend. The securities are available to be sold after exceeding the minimum 45 or 90-day holding period required for favorable tax treatment and the proceeds are reinvested again in preferred stocks. The Company’s dividend capture program is designed to maximize dividend income which is 70% excludable from taxable income under the Internal Revenue Code and related state tax provisions. The Company accounts for its marketable securities under Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” which requires certain securities to be categorized as either trading, available-for-sale or held-to-maturity. Based on the Company’s intent to invest in the securities at least through the minimum holding period, the Company’s marketable securities at December 31, 2004 and 2003 are classified as available-for-sale and, accordingly, are carried at fair value with net unrealized appreciation (depreciation) recorded as a separate component of shareholders’ equity. The Company has previously concluded that certain marketable securities which had been in a loss position for nine or more months were other-than-temporarily impaired and the loss position on those securities were charged against earnings. At December 31, 2004 and 2003, there were unrealized losses of $355,500 and $457,800, respectively, that were considered other-than-temporary. The cost of securities sold is determined by the specific identification method and are classified as short-term marketable securities based on the intended holding period.

The cost, unrealized gains and losses, and market value of securities available for sale as of December 31, 2004 and 2003 are as follows (in thousands):

                                                         2004          2003
                                                         ----          ----
           Cost                                         $1,807        $5,399
           Recognized losses for other-than-
            temporary impairment                         ( 356)        ( 458)
           Unrealized gains                                296           726
           Unrealized losses                                 -             -
                                                        ------        ------

           Market value                                 $1,747        $5,667
                                                        ======        ======

The Company utilizes U.S. Treasury bond futures options to mitigate the impact of increases in interest rates on the fair value of the Company’s investments in marketable securities (fixed rate preferred stocks). The options are marked to market with market value changes recognized in the consolidated statements of income in the period of change. At December 31, 2004 and 2003, the carrying amounts of U.S. Treasury bond futures options, which are derivative instruments, aggregated $2,000 and $10,000 respectively.

34

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
 

Investment income consists of the following for the years ended December 31 (in thousands):

                                                2004         2003        2002
                                                ----         ----        ----
     Interest income                           $  344       $  107      $  818
     Increase in cash value of life insurance
       policies                                 1,148        1,241           -
     Dividend income on
       preferred stocks                           770          415         839
     Net realized gains (losses) on sale of
       preferred stocks and bond funds            586         (342)       (920)
     Net realized gains (losses) on closed
       U.S. Treasury bond futures options         (55)          82        (240)
     Other than temporary unrealized losses on
       preferred stocks                          (390)        (458)          -
     Unrealized gains (losses) on open
       U.S. Treasury bond futures options          (9)           -         (34)
                                               ------       ------      ------

          Total                                $2,394       $1,045      $  463
                                               ======       ======      ======

Fair Value of Financial Instruments — The carrying amounts of cash and temporary cash investments, receivables and accounts payable approximated fair value as of December 31, 2004 and 2003, because of the relatively short maturities of these instruments. The carrying amount of long-term debt, including current maturities, approximated fair value as of December 31, 2004 and 2003, based upon terms and conditions currently available to the Company in comparison to terms and conditions of the existing long-term debt. The Company has investments in life insurance contracts principally to fund obligations under deferred compensation agreements (see Note 9). At December 31, 2004 and 2003, the carrying amount of life insurance policies, which equaled their fair value, was $25.2 million ($40.2 million, net of $15 million of policy loans) and $36.5 million, respectively.

As required by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” the Company adopted the requirements of SFAS No. 133 effective January 1, 2001. SFAS No. 133, as amended by Statement No.‘s. 137 and 138, requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company utilizes U.S. Treasury bond futures options, which are derivative instruments, and changes in market value are recognized in current earnings. The Company has also entered into various interest rate swap agreements to manage the economic risks associated with fluctuations in interest rates by converting a portion of the Company’s variable rate debt to a fixed rate basis, thus reducing the impact of changes in interest rates on future interest expense. These financial instruments have been designated as cash flow hedges, with changes in fair value being included as a component of other comprehensive income (loss) within shareholders’ equity. Hedge effectiveness is evaluated by the hypothetical derivative method and any hedge ineffectiveness is reported as interest expense. Hedge ineffectiveness was not material in 2004 or 2003.

Inventories — Inventories are valued at the lower of cost (first-in, first-out method) or market.

35

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
 

Property, Plant and Equipment — Property, plant and equipment are carried at cost less accumulated depreciation. Amortization of assets held under capital leases is included in depreciation and amortized over the estimated useful life of the asset. Depreciation is computed using the straight-line method on the costs of the assets, at rates based on their estimated useful lives as follows:

               Land improvements                                   3-15  years
               Buildings and improvements                         10-30  years
               Machinery and equipment                             3-10  years
               Transportation equipment                             2-7  years
               Office furniture and fixtures,
                including capitalized computer software            2-10  years

Upon sale or retirement of property, plant and equipment, including real estate held for sale and rental properties, the asset cost and related accumulated depreciation is removed from the accounts and any resulting gain or loss is included in earnings.

Evaluation of Impairment of Long-Lived Assets — In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets,” which revised the standard for accounting for goodwill and other intangible assets. Statement No. 142 requires that goodwill and indefinite lived identifiable intangible assets no longer be amortized, but be tested for impairment at least annually based on their estimated fair market values. Any impairment of goodwill must be recognized currently as a charge to earnings in the financial statements. The provisions for SFAS No. 142 became effective on January 1, 2002 and required full implementation of the impairment measurement provisions by December 31, 2002. The Company completed its initial impairment analysis under SFAS No. 142 in June 2002 and performed its annual impairment analyses as of October 31, thereafter. Based on the estimated fair values of the Company’s reporting units using a discounted cash flows valuation, no goodwill for any unit was evaluated as impaired. Effective January 1, 2002, the Company discontinued recording goodwill amortization expense.

The Company periodically reviews its long-lived assets and finite-lived intangible assets for impairment and assesses whether significant events, changes in business circumstances or economic trends indicate that the carrying value of the assets may not be recoverable. An impairment loss, equal to the difference between carrying value and fair value, is recognized after an indicator of impairment has occurred. Such an indicator would be when the carrying amount of an asset exceeds the anticipated undiscounted future cash flows expected to result from use of the asset or a decision is made to dispose of the asset.

Warranty Expense — The Company offers to its customers a variety of warranties on its products ranging from 1 to 2 years in length and up to ten years on certain structural components. Estimated costs related to product warranty are accrued at the time of sale and included in cost of sales. Estimated costs are based upon past warranty claims and sales history and adjusted as required to reflect actual costs incurred, as information becomes available. Warranty expense totaled $22.2 million, $16.5 million and $16.6 million in 2004, 2003 and 2002, respectively.

36

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
 

Changes in the Company’s warranty liability during the years ended December 31, 2004 and 2003 were as follows (in thousands):

                                                         2004      2003
                                                           ----      ----

     Balance of accrued warranty at January 1            $ 8,658    $ 8,796

     Warranties issued during the period and
      changes in liability for pre-existing warranties    22,189     16,467

     Cash settlements made during the period             (20,707)   (16,605)
                                                         -------    -------

     Balance of accrued warranty at December 31          $10,140    $ 8,658
                                                         =======    =======

Stock-Based Compensation — On March 1, 2003, the Company adopted the Performance Based Restricted Stock Plan initiated to motivate and reward participants for superior achievement of the Company’s pre-established long-term financial performance goals. This new plan, effective as of January 1, 2003, utilizes variable plan accounting, meaning that the cost of the awards are expensed over the vesting period based upon the fair value of the estimated shares to be earned at the end of the vesting period.

The following table summarizes, by plan year, the number of contingent shares awarded, forfeited and the remaining contingent shares outstanding as of December 31, 2004:

                                                            Plan Year
                                                         2004         2003
                                                         ----         ----
     Contingent shares awarded                          99,600       88,500

     Shares forfeited                                    2,400       16,590
                                                        ------       ------

     Contingent shares outstanding
      as of December 31, 2004                           97,200       71,910
                                                        ======       ======

The exact number of shares that each employee will receive is dependent on the Company’s performance, with respect to net income, over a three-year period. The amount expensed during the years ended December 31, 2004 and 2003 was $871,000 and $523,000, respectively.

The Company also has stock option plans and an employee stock purchase plan, which are described more fully in Note 8. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. No stock-based employee compensation cost is reflected in net earnings for these plans, as all options granted under these plans have an exercise price equal to the market value of the underlying common stock at the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based compensation.

37

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
 

Had the Company adopted the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company’s pro forma net income and net income per share would have been:

                                           2004         2003         2002
                                           ----         ----         ----
      Net income, as reported            $15,334      $ 7,365      $ 9,929

      Add: Stock-based compensation expense
       under variable plan included in
       reporting net income, net of taxes    584          347           -

      Deduct: Total stock-based employee
       compensation expense determined under
       fair value based method for all awards,
       net of taxes                         (739)        (943)        (517)
                                          -------      -------      -------

      Pro forma net income               $15,179      $ 6,769      $ 9,412
                                         =======      =======      =======

      Earnings per share:

        Basic - as reported                  .99          .48          .62
        Basic - pro forma                    .98          .44          .59

        Diluted - as reported                .99          .48          .62
        Diluted - pro forma                  .98          .44          .58

The pro forma amounts and the weighted-average grant-date fair-value of options granted were estimated using the Black-Scholes option-pricing model with the following assumptions:

                                            2004         2003         2002
                                            ----         ----         ----
      Risk free interest rate               3.05%        3.05%        3.68%
      Expected life                         4.00 years   4.00 years   4.00 years
      Expected volatility                   49.3%        49.4%        48.6%
      Expected dividends                     1.5%         1.8%         1.4%

New Accounting Pronouncements — On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

Statement 123(R) must be adopted no later than July 1, 2005 for the Company. Early adoption will be permitted in periods in which financial statements have not yet been issued. The Company expects to adopt Statement 123(R) on July 1, 2005.

Statement 123(R) permits public companies to adopt its requirements using one of two methods:

1. A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of Statement 123(R) that remain unvested on the effective date.

38

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued

2. A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

The company is still evaluating the adoption alternatives available to adopt Statement 123(R). The available options are (a) modified-prospective method, (b) the modified-retrospective method, restating all prior periods or (c) the modified-retrospective method, restating only the prior interim periods of 2005.

As permitted by Statement 123, the Company currently accounts for share-based payments to employees using Opinion 25‘s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. Accordingly, the adoption of Statement 123(R)‘s fair value method will have an impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of Statement 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share as previously noted. Statement 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.

Research and Development Expenses — Research and development expenses charged to operations were approximately $8,040,000; $7,220,000; and $6,370,000 for the years ended December 31, 2004, 2003 and 2002, respectively.

Shipping and Handling Costs — The Company records freight billed to customers as sales. Costs incurred related to shipping and handling of products are reported as delivery expense in operating expenses.

Comprehensive Income (Loss) — Comprehensive income (loss) represents net earnings and any revenues, expenses, gains and losses that, under accounting principles generally accepted in the United States, are excluded from net earnings and recognized directly as a component of shareholders’ equity. The components of accumulated other comprehensive income (loss) are as follows (in thousands):

                                                         Unrealized     Accumulated
                                        Unrealized      Gains(Losses)      Other
                                        Gains(Losses)   on Cash Flow   Comprehensive
                                        on Securities      Hedges       Income(Loss)
                                        -------------      ------       ------------
   Balances at January 1, 2002            $ (931)         $   -           $ (931)
   Other comprehensive income (loss)         270              -              270
                                          ------          ------          ------

   Balances at December 31, 2002            (661)             -             (661)
   Other comprehensive income (loss)       1,111            (160)            951
                                          ------          ------          ------

   Balances at December 31, 2003             450            (160)            290
   Other comprehensive income (loss)        (262)             64            (198)
                                          ------          ------          ------

   Balances at December 31, 2004          $  188          $  (96)         $   92
                                          ======          ======          ======

39

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
 

Volume-Based Sales and Dealer Incentives — The Company nets certain dealer incentives, including volume-based bonuses, interest reimbursements and other rebates, against revenue in accordance with EITF 00-22 and EITF 01-09.

Income Taxes — The Company recognizes income tax expense in accordance with SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are established for the expected future tax consequences of events that have been included in the financial statements or tax returns using enacted tax rates in effect for the years in which the differences are expected to reverse and are subject to ongoing assessment of realizability. Deferred income tax expense (benefit) represents the change in net deferred tax assets and liabilities during the year.

2. SEGMENT INFORMATION
 

The Company has determined that its reportable segments are those that are based on the Company’s method of internal reporting, which disaggregates its business by product category. The Company’s two reportable segments are recreational vehicles, including related parts and supplies, and housing and building. The Company evaluates the performance of its segments and allocates resources to them based on performance. The accounting policies of the segments are the same as those described in Note 1 and there are no inter-segment revenues. During 2004, management adjusted its method for allocating corporate expenses to better reflect the actual use of corporate resources by the divisions. Historically, corporate expenses were allocated based on revenues. The new methodology allocates the expenses based on three dimensions: revenues, subsidiary structure and number of employees. The segment data presented below has been adjusted to reflect this change in corporate expense allocation. In addition, the recreational vehicle data excludes the results of the discontinued operation (see Note 11). Differences between reported segment amounts and corresponding consolidated totals represent corporate income or expenses for administrative functions and income, costs or expenses relating to property and equipment that are not allocated to segments.

40

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

2. SEGMENT INFORMATION, Continued.
 

The table below presents information about segments, including product class information within the Recreational Vehicle Segment, used by the chief operating decision maker of the Company for the years ended December 31 (in thousands):

                                             2004          2003          2002
                                             ----          ----          ----
    Net sales:
      Recreational vehicles
         Motorhomes                        $422,631      $304,625      $263,749
         Travel trailers
           and fifth wheels                 143,697       135,536       119,053
         Camping trailers                    22,866        17,543        21,693
         Truck campers                            4            13            11
         Parts and supplies                  17,079        17,692        16,878
                                           --------      --------      --------

          Total recreational vehicles       606,277       475,409       421,384

      Housing and buildings                 258,867       222,967       229,644
                                           --------      --------      --------

          Consolidated total               $865,144      $698,376      $651,028
                                           ========      ========      ========

    Gross profit
      Recreational vehicle                 $ 60,070      $ 45,148      $ 41,702
      Housing and building                   64,369        56,971        55,337
      Other reconciling items                   180           (51)         (184)
                                           --------      --------      --------
         Total                             $124,619      $102,068      $ 96,855
                                           ========      ========      ========

    Operating expenses
      Recreational vehicle                 $ 48,685      $ 41,409      $ 36,331
      Housing and building                   56,357        49,629        45,157
      Other reconciling items                   517           642           456
                                           --------      --------      --------
         Total                             $105,559      $ 91,680      $ 81,944
                                           ========      ========      ========

     Operating income/(loss)
       Recreational vehicle                $ 11,385      $  3,739      $  5,371
       Housing and building                   8,012         7,342        10,180
       Other reconciling items                 (337)         (693)         (640)
                                           --------      --------      --------
         Total                             $ 19,060      $ 10,388      $ 14,911
                                           ========      ========      ========

    Pre-tax income/(loss) from
    continuing operations
      Recreational vehicle                 $ 11,614      $  3,784      $  5,015
      Housing and building                    8,315         7,281         9,944
      Other reconciling items                  (296)         (620)         (431)
                                           --------      --------      --------
         Total                             $ 19,633      $ 10,445      $ 14,528
                                           ========      ========      ========

    Total assets
      Recreational vehicles                $174,101      $126,157      $ 93,571
      Housing and buildings                 111,099       105,056        97,765
      Other reconciling items                72,523        79,475       101,859
                                           --------      --------      --------
         Total                             $357,723      $310,688      $293,195
                                           ========      ========      ========

41

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

2. SEGMENT INFORMATION, Continued.
 

The following specified amounts are included in the measure of segment pretax income or loss reviewed by the chief operating decision maker (in thousands):

                                             2004          2003          2002
                                             ----          ----          ----
    Interest expense:
         Recreational vehicles             $    136      $    277      $    299
         Housing and buildings                  323           227           528
         Other reconciling items              1,740           828           649
                                           --------      --------      --------

           Consolidated total              $  2,199      $  1,332      $  1,476
                                           ========      ========      ========

    Depreciation:
         Recreational vehicles             $  3,477      $  2,869      $  2,737
         Housing and buildings                4,181         4,268         4,400
         Other reconciling items              1,744         2,541         2,790
                                           --------      --------      --------

           Consolidated total              $  9,402      $  9,678      $  9,927
                                           ========      ========      ========

3.     INVENTORIES.

        Inventories consist of the following (in thousands):

                                                      2004          2003
                                                      ----          ----
      Raw materials                                $ 39,524      $ 32,452
      Work in process                                21,173        15,256
      Improved lots                                   2,236         2,314
      Finished goods                                 73,155        51,078
                                                   --------      --------

        Total                                      $136,088      $101,100
                                                   ========      ========

4.     PROPERTY, PLANT AND EQUIPMENT.

        Property, plant and equipment consists of the following (in thousands):

                                                      2004          2003
                                                      ----          ----
      Land and improvements                        $ 15,671      $ 15,889
      Buildings and improvements                     78,359        76,250
      Machinery and equipment                        33,241        29,575
      Transportation equipment                       16,127        14,707
      Office furniture and fixtures                  20,311        19,252
                                                   --------      --------

        Total                                       163,709       155,673
      Less, accumulated depreciation                 81,358        76,448
                                                   --------      --------

        Property, plant and equipment, net         $ 82,351      $ 79,225
                                                   ========      ========

42

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

5. SHORT-TERM BORROWINGS.
 

The Company maintains a Revolving Credit Facility that provides an unsecured line of credit aggregating $35 million through June 30, 2006. As of December 31, 2004, the Company had borrowings outstanding on this facility of $10.0 million and outstanding letters of credit of $3.0 million. Borrowings under the new Credit Facility bear interest equal to: (i) a eurodollar rate plus an applicable margin of 1.5% to 2.0%, or (ii) a floating rate, for any day, equal to the greater of the prime rate or the federal funds effective rate plus ..5%. The effective interest rate at December 31, 2004 was 4.38%. The Company is also required to pay a facility fee of .25% of the daily unborrowed portion of the aggregate commitment.

On December 30, 2004, the Company entered into an Amendment to the Credit Agreement. The December amendment provided for a one-time short-term loan to the Company of $10 million. At December 31, 2004, there was $10 million outstanding on this loan. This loan bears interest at the prime rate and was due and paid in full on February 28, 2005.

The Credit Facility also contains customary affirmative and negative covenants including financial covenants requiring the maintenance of a specified consolidated current ratio, fixed charge coverage ratio, leverage ratio and a required minimum net worth.

At December 31, 2004, the new and used recreational vehicle inventory of the Company-owned dealership was pledged as collateral on floor plan notes aggregating $7.0 million. The interest rate on these floor plan notes is tiered based on the outstanding note balance. The effective rate at December 31, 2004 was 5.13%.

6. LONG-TERM DEBT.
 

          Long-term debt consists of the following (in thousands):

                                                              2004         2003
                                                              ----         ----

      Term Loan, variable rate (4.5% at December 31,
       2004), maturities through 2009                       $ 7,188      $   -
      Obligations under industrial development revenue
       bonds, variable rates (effective weighted average
       interest rates of 2.1% and 3.1% at December 31,
       2004 and 2003, respectively), with various
       maturities through 2015                                9,200       10,065
      Obligations under Community Development Block
       Grants, fixed rates of 3.5% and 4.5% with various
       maturities through 2005                                    2           32
      Obligations under capital leases, interest imputed
       at rates ranging from 2.9% to 5.5%, with maturities
       through 2011                                             748          312
                                                            -------      -------

        Subtotal                                             17,138       10,409

      Less, current maturities of long-term debt              2,195          990
                                                            -------      -------

        Long-term debt                                      $14,943      $ 9,419
                                                            =======      =======

Principal maturities of long-term debt during the four fiscal years succeeding 2005 are as follows: 2006 — $2,145,000; 2007 — $2,511,000; 2008 — $2,212,000; 2009 — $5,650,000 and thereafter — $2,425,000.

43

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

6. LONG-TERM DEBT, Continued.
 

In July 2004, the Company entered into an Amendment to the Credit Agreement, which provided for a term loan of $7.5 million, payable in monthly installments through July 2009. In connection with the industrial development revenue bond obligations, the Company obtained, as a credit enhancement for the bondholders, irrevocable letters of credit in favor of the bond trustees. Under the industrial revenue bond for the Mod-U-Kraf Homes manufacturing facility in Virginia , the issuer of the letter of credit holds a first lien and security interest on that facility. The agreements relating to these letters of credit contain, among other provisions, certain covenants relating to required amounts of working capital and net worth and the maintenance of certain required financial ratios. At December 31, 2004, the Company was in compliance with all related covenants.

In January of 2003, the Company entered into various interest rate swap agreements that became effective beginning in October of 2003. These swap agreements are designated as cash flow hedges under the provisions of Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and are used to manage the economic risks associated with fluctuations in interest rates by converting a portion of the Company’s variable-rate debt to a fixed-rate basis through November of 2011, thus reducing the impact of changes in interest rates on future interest expense. Hedge effectiveness is evaluated by the hypothetical derivative method. Any hedge ineffectiveness is reported within the interest expense caption of the statements of income. Hedge ineffectiveness was not material in 2004 or 2003. The fair value of the Company’s interest rate swap agreements represents the estimated receipts or payments that would be made to terminate the agreements. If, in the future, the interest rate swap agreements are determined to be ineffective hedges or are terminated before the contractual termination dates, or if it became probable that the hedged variable cash flows associated with the variable-rate borrowings would stop, the Company would be required to reclassify into earnings all or a portion of the unrealized amounts on cash flow hedges included in accumulated other comprehensive income (loss) within shareholders’ equity.

At December 31, 2004, the Company had four interest rate swap agreements with notional amounts of $1.8 million, $350,000, $3.4 million, and $2.0 million, respectively, that were used to convert the variable interest rates on certain industrial development revenue bonds to fixed rates. In accordance with the terms of the swap agreements, the Company pays 3.39%, 3.12%, 3.71%, and 3.36% interest rates, respectively, and receives the Bond Market Association Index (BMA), calculated on the notional amounts, with net receipts or payments being recognized as adjustments to interest expense. The Company recorded a liability for the potential early settlement of these new swap agreements in the amount of $167,000 at December 31, 2004 and $267,000 at December 31, 2003. This exposure represents the fair value of the swap instruments and has been recorded in the balance sheets in accordance with SFAS No. 133 as a noncurrent liability. The effective portion of the cash flow hedge has been recorded, net of taxes, as a reduction of shareholders’ equity as a component of accumulated other comprehensive loss.

44

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

7. ACCRUED EXPENSES AND OTHER LIABILITIES.

          Accrued expenses and other liabilities at year-end consist of the following (in thousands):

                                                              2004         2003
                                                              ----         ----

          Wages, salaries, bonuses and commissions           $ 5,366      $ 4,953
          Dealer incentives, including volume bonuses,
            dealer trips, interest reimbursement,
            co-op advertising and other rebates                5,119        3,839
          Warranty                                            10,140        8,658
          Insurance-products and general liability,
            workers compensation, group health and other       5,589        6,361
          Customer deposits and unearned revenues              7,340        7,000
          Other current liabilities                            5,912        6,775
                                                             -------      -------

           Total                                             $39,466      $37,586
                                                             =======      =======

8. COMMON STOCK MATTERS AND EARNINGS PER SHARE.

Stock Option Plan

The Company has stock option plans, including the 2000 Omnibus Stock Incentive Program (the “2000 Plan”), which was approved by the shareholders on May 4, 2000. The 2000 Plan provides for an additional one million common shares to be reserved for grants under the Company’s stock option and award plans. The Company’s stock option plan provides for the granting of options to directors, officers and eligible key employees to purchase common shares. The 2000 Plan permits the issuance of either incentive stock options or nonqualified stock options. Stock Appreciation Rights (“SAR’s”) may be granted in tandem with stock options or independently of and without relation to options. There were no SAR’s outstanding at December 31, 2004 or 2003. The option price for incentive stock options shall be an amount of not less than 100% of the fair market value per share on the date of grant and the option price for nonqualified stock options shall be an amount of not less than 90% of the fair market value per share on the date the option is granted. No such options may be exercised during the first year after grant, and are exercisable cumulatively in four installments of 25% each year thereafter. Options have terms ranging from five to ten years.

45

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

8. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

          The following table summarizes stock option activity (number of shares in thousands):

                                                                      Weighted-
                                                                       Average
                                                   Number             Exercise
                                                  of Shares             Price
                                                  ---------             -----
    Outstanding, January 1, 2002                    1,016              $13.84
      Granted                                         102               16.69
      Canceled                                       (135)              19.37
      Exercised                                      (267)               8.37
                                                    -----

    Outstanding, December 31, 2002                    716               15.74
      Granted                                          36               12.41
      Canceled                                       (180)              18.17
      Exercised                                       (26)               8.66
                                                    -----

    Outstanding, December 31, 2003                    546               15.05
      Granted                                          -                   -
      Canceled                                       (184)              20.52
      Exercised                                       (35)              12.21
                                                    -----

    Outstanding, December 31, 2004                    327              $12.26
                                                    =====

Options outstanding at December 31, 2004 are exercisable at prices ranging from $7.88 to $18.68 per share and have a weighted average remaining contractual life of 6.5 years. The following table summarizes information about stock options outstanding and exercisable at December 31, 2004 (in thousands):

                                      Options Outstanding       Options Exercisable
                                     Weighted-
                        Number        Average    Weighted-      Number      Weighted-
                   Outstanding at   Remaining    Average    Exercisable at  Average
      Range of       December 31,   Contractual  Exercise    December 31,   Exercise
   Exercise Price        2004          Life        Price         2004         Price
   --------------        ----          ----        -----         ----         -----
   $7.88 - $12.00         233           6.2       $10.61          201        $10.46
   12.01 -  17.00          82           7.2        16.12           39         16.29
   17.01 -  18.68          12           8.0        18.15            5         18.34
                          ---                                     ---
                          327                                     245
                          ===                                     ===

At December 31, 2003 and 2002 there were exercisable options to purchase 373,000 and 395,000 shares, respectively, at weighted-average exercise prices of $15.88 and $16.62, respectively. There were no options granted during 2004. The weighted-average grant-date fair value of options granted during the years ended December 31, 2003 and 2002 were $4.55 and $6.31, respectively. As of December 31, 2004, 1,194,000 shares were reserved for the granting of future stock options and awards, compared with 1,129,000 shares at December 31, 2003.

46

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

8. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

Stock Award Programs

On October 19, 1998, the Board of Directors approved a Stock Award Program, which provided for the awarding to key employees of up to 109,000 shares of common stock from shares reserved under the Company’s stock option plan. This Stock Award Program expired December 31, 2002, therefore no shares were awarded, issued or canceled in 2004 or 2003. During the year ended December 31, 2002, no shares were awarded, 8,800 shares were issued and 300 shares were canceled. The shares under the stock award program were issued in four annual installments of 25% beginning one year from the date of grant. The Company recognized compensation expense over the term of the awards. No compensation expense was recognized for the years ended December 31, 2004 or 2003. During the year ended December 31, 2002, compensation expense of $196,000 was recognized.

The 2000 Plan also permits the granting of restricted and unrestricted stock awards to the Company’s key employees and non-employee directors. In accordance with the provisions of the 2000 Plan, the Board of Directors may grant shares of stock to eligible participants for services to the Company. Restricted shares vest over a period of time as determined by the Board of Directors and are granted at no cost to the recipient. For restricted shares that are not subject to pre-established Company performance objectives, compensation expense is recognized over the vesting period at an amount equal to the fair market value of the shares on the grant date. Compensation expense for discretionary unrestricted stock awards is recognized at date of grant. There were 17,900; 14,200 and 4,600 restricted non-contingent stock awards granted at a weighted-average per share grant-date fair value of $15.95, $14.98, and $18.68 in 2004, 2003 and 2002, respectively. Compensation expense of $148,700, $124,600, and $134,000 was recognized in the years ended December 31, 2004, 2003 and 2002, respectively.

On March 1, 2003, the Company adopted the Performance Based Restricted Stock Plan covering 115,000 shares of common stock per performance period for officers and other key employees. The purpose of the plan is to permit grants of shares, subject to restrictions, to key employees of the Company as a means of retaining and rewarding them for long-term performance and to increase their ownership in the Company. Shares awarded under the plan entitle the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, pledged, exchanged or otherwise disposed of during the restriction period. There is also a requirement to forfeit the award upon certain terminations of employment, in cases other than death, disability or retirement. The plan, effective as of January 1, 2003, is accounted for in accordance with the variable plan accounting provisions of FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, and therefore awards are expensed based upon the fair value of the estimated shares to be earned over the vesting period. The exact number of shares that each employee will receive is dependent on the Company’s performance, with respect to net income, over a three-year period. The weighted-average grant-date fair value was $16.65 and $11.18 in 2004 and 2003, respectively, for the shares awarded under the plan. The market value of the shares awarded is recognized as unearned compensation in the consolidated statements of shareholders’ equity and is amortized to operations over the vesting period. The Company amortized $871,300 and $523,400 to compensation expense for the years ended December 31, 2004 and 2003, respectively.

47

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

8. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

The following table summarizes the activity of this program (in thousands):

                                                   Number
                                                  of Shares

    Outstanding, January 1, 2003                       -
      Granted                                      88,500
      Forfeited                                    (1,800)
                                                  -------

    Outstanding, December 31, 2003                 86,700
      Granted                                      99,600
      Forfeited                                   (17,190)
                                                  -------

    Outstanding, December 31, 2004                169,110
                                                  =======

Stock Purchase Plan

The Company has an employee stock purchase plan under which a total of 431,000 shares of the Company’s common stock are reserved for purchase by full-time employees through weekly payroll deductions. Shares of the Company’s common stock are purchased quarterly by the employees at a price equal to the lesser of 90% of the market price at the beginning or end of the quarter. As of December 31, 2004, there were 303 employees actively participating in the plan. Since its inception, a total of 390,000 shares have been purchased by employees under the plan. The Company sold to employees 21,600, 24,300 and 16,500 shares at weighted fair values of $14.48, $10.53 and $12.77 in 2004, 2003 and 2002, respectively. Certain restrictions in the plan limit the amount of payroll deductions an employee may make in any one quarter. There are also limitations as to the amount of ownership in the Company an employee may acquire under the plan.

Earnings Per Share

Basic earnings per share is based on the weighted average number of shares outstanding during the period. Diluted earnings per common share is based on the weighted average number of shares outstanding during the period, after consideration of the dilutive effect of stock options and awards and shares held in deferred compensation plans. Basic and diluted earnings per share were calculated using the average shares as follows (in thousands):

                                                     2004         2003         2002
                                                     ----         ----         ----
     Numerator:
      Net income available
       to common stockholders                      $15,334      $ 7,365      $ 9,929

     Denominator:
      Number of shares outstanding, end of period:
       Common stock                                 15,724       15,553       15,667
       Effect of weighted average contingently
        liable shares outstanding during period       (172)         (77)          -
       Effect of weighted average shares
        outstanding during period                      (69)         (39)         329
                                                    ------       ------       ------
      Weighted average number of common
       shares used in basic EPS                     15,483       15,437       15,996
      Effect of dilutive securities
       Stock options and awards                         68           50          101
                                                    ------       ------       ------
       Deferred compensation plans                      -            -            10
      Weighted average number of common
       shares used in diluted EPS                   15,551       15,487       16,107
                                                    ======       ======       ======

48

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

8. COMMON STOCK MATTERS AND EARNINGS PER SHARE, Continued.

For the years ended December 31, 2004, 2003 and 2002, 85,400, 285,275 and 305,300 shares, respectively, of outstanding stock options were not included in the computation of diluted earnings per share because their exercise price was greater than the average market prices for the respective periods and their inclusion would have been antidilutive.

The sum of quarterly earnings per share may not equal year-to-date earnings per share due to rounding and changes in diluted potential common shares.

Shareholder Rights Plan

On October 21, 1999, the Company’s Board of Directors adopted a new shareholder rights plan to replace an existing rights plan that was due to expire on February 15, 2000. The new rights plan, which became effective January 12, 2000 (the “Record Date”), provides for a dividend distribution of one common share purchase right (the “Rights”) for each outstanding common share to each shareholder of record on the Record Date. The Rights will be represented by common share certificates and will not be exercisable or transferable apart from the common shares until the earlier to occur of (i) ten (10) business days following a public announcement that a person or group of persons (an “Acquiring Person”) has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding common shares or (ii) ten (10) business days following the commencement of (or announcement of an intention to make) a tender offer or exchange offer if, upon consummation thereof, such an Acquiring Person would be the beneficial owner of 20% or more of the outstanding common shares. Upon the occurrence of the certain events and after the Rights become exercisable, each right would entitle the rightholder (other than the Acquiring Person) to purchase one fully paid and nonassessable common share of the Company at a purchase price of $75 per share, subject to anti-dilutive adjustments. The Rights are nonvoting and expire February 1, 2010. At any time prior to a person or a group of persons becoming an Acquiring Person, the Company’s Board of Directors may redeem the Rights in whole, but not in part, at a purchase price $.01 per Right.

9. COMPENSATION AND BENEFIT PLANS.

Incentive Compensation

The Company has incentive compensation plans for its officers and other key management personnel. The amounts charged to expense for the years ended December 31, 2004, 2003 and 2002 aggregated $3,516,000, $1,598,000, and $2,959,000, respectively.

49

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued.

9. COMPENSATION AND BENEFIT PLANS, Continued.

Deferred Compensation

The Company has established a deferred compensation plan for executives and other key employees. The plan provides for benefit payments upon termination of employment, retirement, disability, or death. The Company recognizes the cost of this plan over the projected service lives of the participating employees based on the present value of the estimated future payment to be made. The plan is funded by insurance contracts on the lives of the participants. At December 31, 2004 and 2003, the carrying amount of these policies, which equaled their fair value, was $22,496,000 ($37,496,000, net of $15,000,000 of policy loans) and $35,117,000, respectively. The deferred compensation obligations, which aggregated $7,632,000 and $7,588,000 at December 31, 2004 and 2003, respectively, are included in other non-current liabilities, with the current portion ($372,000 and $364,000 at December 31, 2004 and 2003, respectively) included in other current liabilities.

In connection with the acquisitions of Miller Building Systems and Mod-U-Kraf Homes in 2000, the Company assumed obligations under existing deferred compensation agreements. During 2003, the trustees of the Miller plan elected to dissolve their plan and release the collateral to the five remaining participants in the plan. Liquidation of the Miller plan had no impact on earnings. The remaining liability recognized in the consolidated balance sheet related to Mod-U-Kraf aggregated $417,000 and $536,000 at December 31, 2004 and 2003, respectively. As part of the Mod-U-Kraf acquisition, the Company assumed ownership of life insurance contracts and trust accounts established for the benefit of participating executives. Such assets, which are valued at fair value, aggregated $60,000 and $58,000 at December 31, 2004 and 2003, respectively.

Supplemental Deferred Compensation

The Company has established a supplemental deferred compensation plan (Mirror Plan) for key employees as determined by the Board of Directors. The plan allows participants to defer compensation only after they had deferred the maximum allowable amount under the Company’s 401(k) Plan. The participants select certain mutual funds investments and Company stock whose performance is tracked by the Company. In addition, the Company matches a certain level of participant contributions that vests over a five-year period. Under the plan, the investments are not funded directly, including the matching contributions and investments in Company stock. Instead, the plan administrator tracks the performance of investments in mutual funds and Company stock as directed by the participant and a liability to the participants is recorded by the Corporation based on the performance of the phantom investments. Participant benefits are limited to the value of the vested benefits recorded on their behalf.

The Company has also established a supplemental deferred compensation plan (Executive Savings Plan) for certain key executive management as determined by the Board of Directors. This plan allows participants to defer compensation without regard to participation in the Company’s 401(k) plan. The participants select certain mutual funds investments and Company stock whose performance is tracked by the Company. In addition, the Company matches a certain level of participant contributions that vests after a five-year period. Under the plan, the investments are not funded directly, including the matching contributions and investments in Company stock. Instead, the plan administrator tracks the performance of investments in mutual funds and Company stock as directed by the participant and a liability to the participants is recorded by the Corporation based on the performance of the phantom investments. Participant benefits are limited to the value of the vested benefits recorded on their behalf. Liabilities recorded on the consolidated balance sheets related to these plans as of December 31, 2004 and 2003 are $2,190,000 and $1,523,000, respectively.

50

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

9. COMPENSATION AND BENEFIT PLANS, Continued.

Employee Benefit Plans

The Company sponsors a retirement plan (the “Plan”), under Section 401(k) of the Internal Revenue Code (IRS) that covers all eligible employees. The Plan is a defined contribution plan and allows employees to make voluntary contributions up to 20% of annual compensation. Effective January 1, 2005, the Plan was amended to allow for voluntary contributions of up to 50% of annual compensation, not to exceed IRS limits. Under the Plan, the Company may make discretionary matching contributions on up to 6% of participants’ compensation. Expenses under the Plan aggregated $1,291,000, $1,291,000, and $1,296,000 for the years ended December 31, 2004, 2003 and 2002, respectively.

10. INCOME TAXES.

Income taxes (benefit) attributable to continuing operations are summarized as follows for the years ended December 31 (in thousands):

                                                   2004         2003         2002
                                                   ----         ----         ----
            Federal:
              Current                            $ 5,894      $ 2,824      $ 1,747
              Deferred                              (855)         285        2,581
                                                 -------      -------      -------

                                                   5,039        3,109        4,328
                                                 -------      -------      -------

            State:
              Current                              1,206          393          360
              Deferred                               (37)          24          221
                                                 -------      -------      -------

                                                   1,169          417          581
                                                 -------      -------      -------

                Total                            $ 6,208      $ 3,526      $ 4,909
                                                 =======      =======      =======

The following is a reconciliation of the provision for income taxes attributable to continuing operations computed at the federal statutory rate (35% in 2004 and 2003 and 34% in 2002) to the reported provision for income taxes (in thousands):

                                                   2004         2003         2002
                                                   ----         ----         ----
          Computed federal income tax
            at federal statutory rate            $ 6,872      $ 3,656      $ 4,940
          Changes resulting from:
            Increase in cash surrender
              value of life insurance
              contracts                             (395)        (434)        (389)
            Current year state income taxes,
              net of federal income tax benefit      461          279          305
            Preferred stock dividend
              exclusion                             (189)        (100)        (199)
            Extraterritorial income exclusion        (57)         (50)         (34)
          Decrease in federal tax reserves,
             net of additional state tax
             reserves                               (570)          -            -
            Other, net                                86          175          286
                                                 -------      -------      -------

                Total                            $ 6,208      $ 3,526      $ 4,909
                                                 =======      =======      =======

51

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

10. INCOME TAXES, Continued.

For the year ended December 31, 2004, the effective tax rate was adversely impacted by the accrual of additional state income taxes as a result of state tax audits and the Company’s decision to participate in voluntary compliance programs of certain states. In addition, the effective tax rate was favorably affected in 2004 by the reversal of certain reserves for federal income taxes, which were no longer required since the statute of limitations expired or the risk of additional tax assessments was no longer probable.

The components of the net deferred tax assets (liabilities) are as follows (in thousands):

                                                          2004            2003
                                                          ----            ----
         Current deferred tax asset (liability):
            Accrued warranty expense                    $ 2,979         $ 3,277
            Accrued self-insurance                        1,991           1,355
            Inventories                                     572             544
            Receivables                                     365             459
            Prepaid Insurance                              (394)             -
            Other                                           501             324
                                                        -------         -------

         Net current deferred
             tax asset                                  $ 6,014         $ 5,959
                                                        =======         =======


         Noncurrent deferred tax asset (liability):
          Deferred compensation                         $ 3,721         $ 2,869
          Property and equipment and other
            real estate                                  (5,216)         (4,482)
          Intangible assets                              (2,361)         (2,263)
          Other                                             344            (213)
                                                        -------         -------

       Net noncurrent deferred
          tax liability                                 $(3,512)        $(4,089)
                                                        =======         =======

11. DISCONTINUED OPERATIONS.

On December 31, 2004, the Company sold all operating assets of the Company-owned dealership located in North Carolina. The total sale price was $11.8 million, of which the Company received cash of $10.8 and a promissory note of $1 million. The promissory note is due in two annual payments, including interest at 4%. The sale resulted in a gain on sale of discontinued operations of $1.7 million, net of $.8 million in taxes. In accordance with SFAS No. 144, the dealership qualified as a separate component of the Company’s business and as a result, the operating results and the gain on the sale of assets have been accounted for as a discontinued operation. Previously reported financial results for all periods presented have been restated to reflect this business as a discontinued operation.

Net sales of the North Carolina dealership for the years ended December 31, 2004, 2003, and 2002 were $20.0 million, $12.8 million, and $14.2 million, respectively.

52

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

12. COMMITMENTS AND CONTINGENCIES.

Lease Commitments

The Company leases various manufacturing and office facilities under non-cancelable agreements that expire at various dates through November 2011. Several of the leases contain renewal options and options to purchase and require the payment of property taxes, normal maintenance and insurance on the properties. Certain office and delivery equipment is also leased under non-cancelable agreements that expire at various dates through June 2010. The above-described leases are accounted for as operating leases.

Future minimum annual operating lease commitments at December 31, 2004 aggregated $4,351,000 and are payable during the next 5 years as follows: 2005 — $831,000, 2006 — $797,000, 2007 — $708,000, 2008 — $525,000, 2009 — $521,000 and $969,000 for years thereafter. Total rental expense for the years ended December 31, 2004, 2003 and 2002 aggregated $1,114,000, $1,057,000 and $1,118,000, respectively.

Obligation to Purchase Consigned Inventories

The Company obtains vehicle chassis for its recreational vehicle products directly from automobile manufacturers under converter pool agreements. The agreements generally provide that the manufacturer will provide a supply of chassis at the Company’s various production facilities under the terms and conditions as set forth in the agreement. Chassis are accounted for as consigned inventory until either assigned to a unit in the production process or 90 days have passed. At the earlier of these dates, the Company is obligated to purchase the chassis and it is recorded as inventory. At December 31, 2004 and 2003, chassis inventory, accounted for as consigned inventory, approximated $29.7 million and $11.6 million, respectively.

Repurchase Agreements

The Company was contingently liable at December 31, 2004 to banks and other financial institutions on repurchase agreements in connection with financing provided by such institutions to most of the Company’s independent dealers in connection with their purchase of the Company’s recreational vehicle products. These agreements provide for the Company to repurchase its products from the financing institution in the event that they have repossessed them upon a dealer’s default. Products repurchased from dealers under these agreements are accounted for as a reduction in revenue at the time of repurchase. Although the estimated contingent liability approximates $298 million at December 31, 2004 ($238 million at December 31, 2003), the risk of loss resulting from these agreements is spread over the Company’s numerous dealers and is further reduced by the resale value of the products repurchased. Based on losses previously experienced under these obligations, the Company has established a reserve for estimated losses under repurchase agreements. At December 31, 2004 and 2003, $0.3 million was recorded as an accrual for estimated losses under repurchase agreements.

53

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

12. COMMITMENTS AND CONTINGENCIES, Continued.

The Company was also contingently liable at December 31, 2004 to a financial institution on repurchase agreements in connection with financing provided by the institution to certain of the Company’s independent home builders in connection with their purchase of the Company’s housing products. This agreement, which began in 2004, provides for the Company to repurchase its products from the financing institution in the event that they have repossessed them upon a builder’s default. Products repurchased from builders under this agreement are accounted for as a reduction in revenue at the time of repurchase. Although the estimated contingent liability approximates $4.5 million at December 31, 2004, the risk of loss resulting from these agreements is spread over the Company’s numerous builders and is further reduced by the resale value of the products repurchased. The Company has evaluated the potential for losses under this agreement and has recorded an accrual of $0.1 million at December 31, 2004 for estimated losses under the repurchase agreement.

Corporate Guarantees

The Company was contingently liable under guarantees to financial institutions of their loans to independent dealers for amounts totaling approximately $19.2 million at December 31, 2004, $4.6 million at December 31, 2003 and $0.9 million at December 31, 2002. During 2003, the Company entered into an agreement with a financial institution to form a private-label financing program to provide wholesale inventory financing to the Company’s dealers in the Recreational Vehicle Segment. The agreement provides for a preferred program that provides financing that is subject to the standard repurchase agreement described above. In addition, the agreement provides for a reserve pool whereby the financial institution makes available an aggregate line of credit not to exceed $40 million that will provide financing for dealers that may not otherwise qualify for credit approval under the preferred program. No dealer being provided financing from the reserve pool can receive an aggregate line of credit exceeding $5 million. In addition to the standard repurchase agreement described above, for 2005 the Company will be liable to the financial institutions for a maximum of $3.8 million of aggregate losses, as defined by the agreement, incurred by the financial institutions on designated dealers with higher credit risks that are accepted into the reserve pool financing program, thereafter the Company will be liable to the financial institutions for the first $2 million of aggregate losses. The Company has recorded a loss reserve of $0.3 million at December 31, 2004 and $0.1 million at December 31, 2003 associated with these guarantees.

During the first quarter of 2004, the Company entered into an agreement to guarantee the indebtedness incurred by a recreational vehicle dealer towards the purchase of a dealership facility. The guarantee is in the principal amount of $1 million for a period of five years or until all indebtedness has been fully paid, whichever occurs first. The Company has evaluated the potential for losses under this agreement and has determined that the resolution of any claims that may arise in the future would not materially affect the Company’s financial statements.

In addition, the Company is liable under a guarantee to a financial institution for model home financing provided to certain independent builders doing business with the Company’s Housing and Building Segment. The amount outstanding under this agreement at December 31, 2004 is $1.2 million. Any losses incurred under this guarantee would be offset by the proceeds from the resale of the model home and losses are limited to 20% of the original contract price, and cannot exceed $2.0 million. As of December 31, 2004, no losses have been incurred by the Company under the model home financing program.

54

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

12. COMMITMENTS AND CONTINGENCIES, Continued.

Share Repurchase Programs

Periodically, the Company has repurchased its common stock as authorized by the Board of Directors. Under the repurchase program, common shares are purchased from time to time, depending on market conditions and other factors, on the open market or through privately negotiated transactions. There were no shares repurchased in 2004. The Company repurchased 293,000,and 507,000 shares during 2003 and 2002, respectively. At December 31, 2004, there are 73,000 remaining shares authorized for repurchase by the Board of Directors.

Financing Obligation

During the second quarter of 2004, the Company entered into an agreement to provide financing of up to $4.9 million to a developer for the construction of a hotel. After the construction loan financing period as defined in the agreement, the construction loan may be converted to a term loan for a period of two years, provided the terms and conditions of the agreement are met. The loans are collateralized by a first priority interest in all tangible and intangible property of the borrower. As of December 31, 2004, the Company has provided $1.7 million in financing to the developer.

Self-Insurance

The Company is self-insured for a portion of its product liability and certain other liability exposures. Depending on the nature of the claim and the date of occurrence, the Company’s maximum exposure ranges from $250,000 to $500,000 per claim. The Company accrues an estimated liability based on various factors, including sales levels, insurance coverage and the amount of outstanding claims. Management believes the liability recorded (See Note 7) is adequate to cover the Company’s self-insured risk.

Change of Control Agreements

On February 3, 2000, the Company entered into Change of Control Agreements with key executives. Under the terms of these agreements, in the event of a change in control of the Company, as defined, the Company would be obligated to pay these key executives for severance and other benefits. These agreements, as adjusted for subsequent changes in key personnel, aggregated obligations of approximately $14.6 million and $14.0 million based on salaries and benefits at December 31, 2004 and 2003, respectively. In addition, in the event of a change of control of the Company, all outstanding stock options and SAR’s shall become immediately exercisable, restrictions are removed from restricted stock and all stock awards shall immediately be deemed fully achieved.

Also on February 3, 2000, the Company established a rabbi trust, which in the event of a change of control, as defined, will be funded to cover the Company’s obligations under its Change of Control Agreements and its deferred compensation plan (see Note 9).

55

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

12. COMMITMENTS AND CONTINGENCIES, Continued.

Litigation

The Company is involved in various legal proceedings, most of which are ordinary disputes incidental to the industry and most of which are covered in whole or in part by insurance. Management believes that the ultimate outcome of these matters and any liabilities in excess of insurance coverage and self-insurance accruals will not have a material adverse impact on the Company’s consolidated financial position, future business operations or cash flows.

13. UNAUDITED INTERIM FINANCIAL INFORMATION.
 

Certain selected unaudited quarterly financial information for the years ended December 31, 2004 and 2003 is as follows (in thousands):

                                                        2004
                                                    Quarter Ended
                                    March 31    June 30    September 30  December 31
                                    --------    -------    ------------  -----------
    Net sales                       $197,465    $231,138     $232,311      $204,230
    Gross profit                      24,317      35,638       37,275        27,389
    Net income from continuing
      operations                         587       5,076        5,885         1,877
    Net income                           642       5,185        5,940         3,567
    Net income per common share-Basic
        Continuing operations            .04         .33          .38           .12
        Discontinuing operations         .00         .01          .00           .11
                                         ---         ---          ---           ---
                                         .04         .34          .38           .23
                                         ===         ===          ===           ===
    Net income per common share-Diluted
        Continuing operations            .04         .33          .38           .12
        Discontinuing operations         .00         .00          .00           .11
                                         ---         ---          ---           ---
                                         .04         .33          .38           .23
                                         ===         ===          ===           ===

                                                         2003
                                                    Quarter Ended
                                    March 31    June 30    September 30  December 31
                                    --------    -------    ------------  -----------
    Net sales                       $143,728    $169,772     $196,902      $187,974
    Gross profit                      16,493      26,675       32,335        26,565
    Net income/(loss)from
      continuing operations           (2,878)      2,624        5,203         1,970
    Net income/(loss)                 (2,820)      2,836        5,358         1,991
    Net income/(loss) per common
      share-Basic
        Continuing operations           (.19)        .17          .34           .13
        Discontinuing operations         .01         .01          .01           .00
                                         ---         ---          ---           ---
        Diluted                         (.18)        .18          .35           .13
                                         ===         ===          ===           ===
    Net income/(loss) per common
      share-Diluted
        Continuing operations           (.19)        .17          .34           .13
        Discontinuing operations         .01         .01          .01           .00
                                         ---         ---          ---           ---
        Diluted                         (.18)        .18          .35           .13
                                         ===         ===          ===           ===

56

Coachmen Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

13. UNAUDITED INTERIM FINANCIAL INFORMATION, Continued.
 

On December 31, 2004, the Company sold all operating assets of the Company-owned dealership located in North Carolina. The total sale price was $11.8 million, of which the Company received cash of $10.8 and a promissory note of $1 million. The promissory note is due in two annual payments, including interest. The sale resulted in a gain on sale of discontinued operations of $1.7 million, net of $.8 million in taxes. In accordance with Statement of Financial Accounting Standard No. 144, the dealership qualified as a separate component of the Company’s business and as a result, the operating results and the gain on the sale of assets have been accounted for as a discontinued operation. Previously reported financial results for all periods presented have been restated to reflect this business as a discontinued operation.

During the fourth quarter of 2004, income taxes were favorably impacted by the reversal of certain reserves that were no longer required since the statute of limitations had expired or the risk of additional tax assessments was no longer probable. In addition, there was an adverse impact on state income taxes related to the accrual of additional income taxes resulting from state audits and the Company’s decision to participate in voluntary compliance programs of certain states. The adverse impact on state income taxes was partially offset by a favorable impact resulting from the determination that the Company qualified for new jobs creation tax incentives. The net impact of these items on total income tax expense from continuing operations was a reduction of $557,000.

Included in the fourth quarter of 2003 were gains of $376,000 from the sale of vacant lots located in California and investment income $870,000 which included the sale of marketable securities and increased cash surrender value of investments in Company-owned life insurance policies.

57

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable in 2004.

Item 9A.  Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has conducted an evaluation, as of December 31, 2004, of the Company’s disclosure controls and procedures; as such term is defined under Exchange Act Rule 13a-15(e). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2004.

The Company’s independent registered public accounting firm has audited and issued their report on management’s assessment of the Company’s internal control over financial reporting, which appears on page 26.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the fiscal quarter ended December 31, 2004 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

58

Part III.

Item 10. Directors and Executive Officers of the Registrant

     (a)  Identification of Directors

Information regarding the Registrant’s directors is contained under the caption “Election of Directors” in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

     (b)  Executive Officers of the Company

See “Executive Officers of the Registrant” contained herein.

     (c)  Beneficial Ownership Reporting Compliance

Information for “Section 16(a) Beneficial Ownership Reporting Compliance” is contained under that caption in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

     (d)  Code of Ethics

The Company has adopted a code of ethics that applies to all of its directors, officers (including its chief executive officer, chief operating officer, chief financial officer, controller and any person performing similar functions) and employees. The Company has made the Code of Ethics available on its website at http://www.coachmen.com.

     (e)   Audit Committee and Financial Expert of the Audit Committee

Information regarding the Registrant’s Audit Committee, including the committee members designated as Financial Experts is contained under the caption “Audit Committee” in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

     (f)  Nominations for Director

Information regarding the Registrant’s procedures for nominations for director is contained under the caption “Nominations for Director” in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

Item 11. Executive Compensation

Information for Item 11 is contained under the headings “Compensation of Executive Officers,” “Management Development/Compensation Committee Report,” “Outside Director Compensation” and “Performance Graph” in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information for Item 12 is contained under the captions “Directors’ and Officers’ Stock Ownership” and “Stock Ownership Information” in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

59

The following table summarizes share and exercise price information about the Company’s equity compensation plans as of December 31, 2004:

                                   Equity Compensation Plan Information

                              # of securities                             # of securities
                                to be issued        Weighted average    remaining available
                              upon exercise of     exercise price of    for future issuance
                             outstanding options,  outstanding options,     under equity
         Plan Category       warrants and rights   warrants and rights   compensation plans
         -------------       -------------------   -------------------   ------------------

Equity compensation plans
 approved by shareholders           326,650                $12.26               1,194,208

Equity compensation plans not
 approved by shareholders              -                     -                      -
                                    -------                ------               ---------

       Total                        326,650                $12.26               1,194,208
                                    =======                ======               =========

Item 13. Certain Relationships and Related Transactions

Not Applicable.

Item 14. Principal Accountant Fees and Services

Information regarding the Principal Accountant Fees and Services is contained under the caption “Independent Registered Public Accounting Firm” in the Company’s Proxy Statement dated April 1, 2005 and is incorporated herein by reference.

Part IV.

Item 15. Exhibits and Financial Statement Schedule

(a) The following Financial Statements and Financial Statement Schedule are included in Item 8 herein.

1. Financial Statements

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2004 and 2003

Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements

2. Financial Statement Schedule

         Schedule II — Valuation and Qualifying Accounts

All other schedules required by Form 10-K Annual Report have been omitted because they were inapplicable, included in the Notes to the Consolidated Financial Statements, or otherwise not required under instructions contained in Regulation SX.

3. Exhibits

         See Index to Exhibits.

60

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

                                    Additions
                        Balance At   Charged                      Balance
                        Beginning    To Costs     Payment or      At End
Description             Of Period  And Expenses   Utilization     Of Period
- -----------             ---------  ------------   -----------     ---------
Fiscal year ended
 December 31, 2004:

Allowance for doubtful
 accounts:              $1,208,000 $   158,000    $   (447,000)(A)$   919,000

Product warranty
 reserves:              $8,658,000 $22,189,000    $(20,707,000)(B)$10,140,000

Repurchase agreement and
 Corporate guarantee
 loss reserves:         $  350,000 $   564,000    $   (188,000)   $   726,000

Fiscal year ended
 December 31, 2003:

Allowance for doubtful
 accounts:              $  861,000 $   574,000    $   (227,000)(A)$ 1,208,000

Product warranty
 reserves:              $8,796,000 $16,467,000    $(16,605,000)(B)$ 8,658,000

Repurchase agreement and
 Corporate guarantee
 loss reserves:         $  403,000 $   (11,000)(C)$    (42,000)   $   350,000

Fiscal year ended
 December 31, 2002:

Allowance for doubtful
 accounts:              $  972,000 $   183,000    $   (294,000)(A)$   861,000

Product warranty
 reserves:              $8,391,000 $16,575,000    $(16,170,000)(B)$ 8,796,000

Repurchase agreement and
 Corporate guarantee
 loss reserves:         $1,169,000 $  (306,000)(C)$   (460,000)   $   403,000

(A)	Write-off of bad debts, less recoveries.
(B)	Claims paid, less recoveries.
(C)	Reflects favorable change in estimate due to improved market conditions within the RV industry during 2002 and 2003.

61

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.

                                                  COACHMEN INDUSTRIES, INC.

Date:  March 10, 2005
                                               /s/ J. P. Tomczak
                                               --------------------------------
                                                      J. P. Tomczak
                                              (Executive Vice President and
                                               Chief Financial Officer)

                                               /s/ Colleen A. Zuhl
                                              ---------------------------------
                                                    Colleen A. Zuhl
                                              (Vice President and Controller)

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 as of March 10, 2005.

/s/ C. C. Skinner                          /s/ W. P. Johnson
- ----------------------------------         ------------------------------------
      C. C. Skinner                               W. P. Johnson
       (Director)                                  (Director)
   (Chief Executive Officer)

/s/ T. H. Corson                           /s/ P. G. Lux
- ----------------------------------         ------------------------------------
      T. H. Corson                                P. G. Lux
       (Director)                                  (Director)


/s/ E. W. Miller                           /s/ G. B. Bloom
- ----------------------------------         ------------------------------------
        E. W. Miller                                 G. B. Bloom
       (Director)                                  (Director)


/s/ R. J. Deputy                           /s/ R. Martin
- ----------------------------------         ------------------------------------
        R. J. Deputy                                R. Martin
       (Director)                                  (Director)


/s/ D. W. Hudler
- ----------------------------------
       D. W. Hudler
       (Director)

62

INDEX TO EXHIBITS

Number Assigned
  In Regulation
  S-K,Item 601                                       Description of Exhibit

(3)(a)(i)	Articles of Incorporation of the Company as amended on May 30, 1995 (incorporated by reference to Exhibit 3(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
(3)(a)(ii)	Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 4.2 to the Company's Form S-3 Registration Statement, File No. 333-14579).
(3)(b)	By-Laws as modified through March 1, 2005 (incorporated by reference to the Company's Form 8-K filed March 4, 2005).
(4)(a)	Credit Agreement dated as of June 30, 2003 among Coachmen Industries, Inc., the Lenders named therein, and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
(4)(b)	Stockholder Rights Agreement (incorporated by reference to Exhibit 1 to Form 8-A dated January 5, 2000).
(4)(c)	Amendment No. 1 to Credit Agreement dated as of October 28, 2003 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A.
(4)(d)	Amendment No. 2 to Credit Agreement dated as of March 11, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A.
(4)(e)	Amendment No. 3 to Credit Agreement dated as of June 30, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A.
(4)(f)	Amendment No. 4 to Credit Agreement dated as of July 30, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(4)(g)	Amendment No. 5 to Credit Agreement dated as of December 1, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed December 8, 2004).

63

(4)(h)	Amendment No. 6 to Credit Agreement dated as of December 30, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed January 4, 2005).
*(10)(a)	Executive Benefit and Estate Accumulation Plan, as amended and restated effective as of September 30, 2000 (incorporated by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
*(10)(b)	2000 Omnibus Stock Incentive Program (incorporated by reference to Exhibit A to the Company's Proxy Statement dated March 27, 2000 for its Annual Meeting in 2000).
*(10)(b)(i)	Resolution regarding Amendment of 2000 Omnibus Stock Incentive Program adopted by the Company's Board of Directors on July 27, 2000 (incorporated by reference to Exhibit 10(b)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
*(10)(c)	Form of Change in Control Agreements for certain executive officers (Tier 1) (incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000).
*(10)(d)	Form of Change in Control Agreements for certain executive officers (Tier 2) (incorporated by reference to Exhibit 10(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000).
*(10)(e)	Coachmen Industries, Inc. Supplemental Deferred Compensation Plan (Amended and Restated as of January 1, 2003).
*(10)(f)	Executive Annual Performance Incentive Plan effective January 1, 2002 (incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002).
*(10)(g)	Long Term Incentives Performance Based Restricted Stock Plan effective January 1, 2003 (incorporated by reference to Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002).
*(10)(h)	Form of Restricted Stock Agreement under the Coachmen Industries, Inc. Long Term Incentives Performance Based Restricted Stock Plan.
(10)(i)	Credit Agreement dated as of June 30, 2003 among Coachmen Industries, Inc., the Lenders named therein, and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 4(a) in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
(10)(j)	Amendment No. 1 to Credit Agreement dated as of October 28, 2003 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (included in Exhibit 4(c)).
(10)(k)	Amendment No. 2 to Credit Agreement dated as of March 11, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (included in Exhibit 4(d)).

64

(10)(l)	Amendment No. 3 to Credit Agreement dated as of June 30, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (included in Exhibit 4(e)).
(10)(m)	Amendment No. 4 to Credit Agreement dated as of July 30, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(10)(n)	Amendment No. 5 to Credit Agreement dated as of December 1, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed December 8, 2004).
(10)(o)	Amendment No. 6 to Credit Agreement dated as of December 30, 2004 among Coachmen Industries, Inc., the Lenders named therein and Bank One, Indiana, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed January 4, 2005).
(10)(p)	Program Agreement and related Repurchase Agreement dated as of May 10, 2004 between Textron Financial Corporation and certain subsidiaries of Coachmen Industries, Inc. (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
*(10)(q)	Summary of Life Insurance and Long Term Disability Benefits for Executives.
*(10)(r)	Description of Non-management Director Compensation.
*(10)(s)	Summary of 2005 Performance Metrics under the Company's Executive Annual Performance Incentive Plan.
(11)	No Exhibit - See Consolidated Statements of Income and Note 8 of Notes to Consolidated Financial Statements, contained herein.
(14)	Code of Ethics (incorporated by reference to Exhibit 14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2004).
(21)	Registrant and Subsidiaries of the Registrant.
(23)	Consent of Ernst & Young LLP.
(31.1)	Rule 13a-14(a) Certification of Chief Executive Officer.
(31.2)	Rule 13a-14(a) Certification of Chief Financial Officer.
(32)	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.

* Management Contract or Compensatory Plan.

65

EX-4

EXHIBIT 4(c)

AMENDMENT NO. 1 TO
CREDIT AGREEMENT

        This Amendment No. 1 (the “Amendment”) is entered into as of October 28, 2003 by and among Coachman Industries, Inc., (the “Borrower”), the undersigned lenders (each a “Lender” and collectively, the “Lenders”) and Bank One, Indiana, N.A., both as one of the Lenders and as Administrative Agent (the “Agent”) on behalf of itself and the other Lenders.

RECITALS:

        WHEREAS, the Borrower, the Agent and National City Bank of Indiana as a Lender, are parties to that certain Credit Agreement dated as of June 30, 2003; and

        WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects more fully described below.

        NOW THEREFORE, in consideration of the premises herein contained and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

        Section 1.     Defined Terms.   Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Credit Agreement.

        Section 2.     Addition of New Lender.  The parties hereto acknowledge and agree that, upon the Amendment Effective Date pursuant to Section 3 hereof, 1^st Source Bank shall become a party, as a “Lender”, to the Credit Agreement as if 1^st Source Bank had executed and delivered the original Credit Agreement by its duly authorized officer and each Lender’s Commitment and Outstanding Exposure shall be that as set forth in the First Amended Schedule 1 attached hereto and 1^st Source Bank shall then and thereafter be deemed to be a Lender for all purposes under and have all rights and obligations prescribed by the Credit Agreement.

        Section 3.     Condition of Effectiveness.  This Amendment shall become and be deemed effective as of the date hereof (the “Amendment Effective Date”) if, and only if, Agent shall have received (i) counterparts of this Amendment duly executed by the Borrower and each of the Lenders, including but not limited to 1^st Source Bank and (ii) such other documents as the Agent or any Lender may reasonably request.

        Section 4.     Reference to and Effect on the Credit Agreement.

        Section 4.01.      Upon the effectiveness of this Amendment pursuant to Section 3 hereof and thereafter, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import and each reference to the Credit Agreement in each Loan Document shall mean and be a reference to the Credit Agreement as modified hereby.

        Section 4.02.  Except as specifically waived or amended herein, all of the terms, conditions and covenants of the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

        Section 4.03.  The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of (i) any right, power or remedy of any Lender or the Agent under the Credit Agreement or any of the other Loan Documents, or (ii) any Default or Unmatured Default under the Credit Agreement.

        Section 5.  CHOICE OF LAW.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF INDIANA.

        Section 6.  Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

        Section 7.  Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purposes.

        IN WITNESS WHEREOF, the Borrower, the Agent and each of the Lenders have caused this Amendment to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

[SIGNATURE PAGES FOLLOW]






2

COACHMEN INDUSTRIES, INC.
 
 

By:  /s/ Thomas J. Martini                         
Name:  Thomas J. Martini
Title:    Treasurer

By:  /s/ Joseph P. Tomczak                         
Name:  Joseph P. Tomczak
Title:    Chief Financial Officer

BANK ONE, INDIANA, N.A., as a Lender,
as the LC Issuer and as Administrative
Agent

By:  /s/ Kurt E. Meibeyer                            
Name:  Kurt E. Meibeyer
Title:    First Vice President

NATIONAL CITY BANK OF INDIANA,
as a Lender

By:  /s/ National City Bank of Indiana        
Name:
Title:

1^st SOURCE BANK,
as a Lender

By:  /s/ 1st Source Bank                               
Name:
Title:

3

FIRST AMENDED
SCHEDULE I

COMMITMENTS

Lender	Commitment	Outstanding Exposure
Bank One, Indiana N.A.	$18,850,000	$23,764,438
National City Bank of Indiana	$  8,075,000	$10,180,015
1st Source Bank	$  8,075,000	$10,180,015
Total	$35,000,000	$44,124,468

ELDS01 MBW 156892v1

4

EX-4

EXHIBIT 4(d)

AMENDMENT NO. 2 TO
CREDIT AGREEMENT

        This Amendment No. 2 (the “Amendment”) is entered into as of March 11, 2004, by and among Coachmen Industries, Inc. (the “Borrower ), the undersigned lenders (each a Lender” and collectively, the “Lenders ) and Bank One, Indiana, N.A., both as one of the Lenders and as Administrative Agent (the “Agent”) on behalf of itself and the other Lenders.

RECITALS:

        WHEREAS, the Borrower, the Agent and the Lenders are parties to that certain Credit

        Agreement dated as of June 30, 2003 , as amended; and

        WHEREAS, Borrower desires Lenders waive Borrower s noncompliance with a certain covenant of the Credit Agreement and Lenders and Borrower desire to amend the Credit Agreement as provided in this Amendment to modify a certain financial covenant of Borrower and further desire to make certain clarifying amendments to the Credit Agreement as more fully described below.

        NOW, THEREFORE, in consideration of the premises herein contained and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged , the parties hereto hereby agree as follows:

        Section 1.   Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Credit Agreement.

      Section 2.   Waiver. The Lenders waive Borrower s non-compliance as of December , 2003 with Section 6.18.1 of Article VI of the Credit Agreement.

        Section 3.   Amendment of the Definition of “Fixed Charge Coverage Ratio. The definition of “Fixed Charge Coverage Ratio” as set fort in Article I of the Credit Agreement is amended to provide in its entirety as follows:

        “Fixed Charge Coverage Ratio” means, with reference to any period, the ratio of (a) the sum of (i) Consolidated EBITDA plus (ii) rentals minus (iii) capital expenditures made in cash plus (iv) the lesser of $10,000,000 or actual capital expenditures made in cash to (b) the sum of (i) cash interest plus (ii) rentals plus (iii) cash taxes (net of tax refunds received) plus (iv) dividends and distributions on, and redemptions and repurchases of, the Borrower s capital stock exclusive, however, of treasury stock that was repurchased and cancelled before March 31 , 2003 plus (v) scheduled payments of principal on all long term Indebtedness, in each case calculated on a consolidated basis for such period.

        Section 4.   Article VII Section Numbers. The paragraphs of Article VII of the Credit Agreement labeled “DEFAULTS” are assigned those Section numbers indicated on Exhibit A hereto for all purposes of reference under, or with respect to, the Credit Agreement.

        Section 5.   Condition of Effectiveness. This Amendment shall become and be deemed effective as of the date set forth in the introductory paragraph above (the “Amendment Effective Date ) if, and only if, Agent shall have received (i) counterparts of this Amendment duly executed by the Borrower and each of the Lenders, and (ii) such other documents as the Agent or any Lender may reasonably request.

        Section 6.   Reference to and Effect on the Credit Agreement.

     Section 6.01. Upon the effectiveness of this Amendment pursuant to Section 3 hereof and thereafter, each reference in the Credit Agreement to “this Agreement hereunder,” “hereof,” “herein” or words of like import and each reference to the Credit Agreement in each Loan Document shall mean and be a reference to the Credit Agreement as modified hereby.

     Section 6.02. Except as specifically waived or amended herein, all of the terms conditions and covenants of the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

     Section 6.03. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of (i) any right, power or remedy of any Lender or the Agent under the Credit Agreement or any of the other Loan Documents, or (ii) any Default or Unmatured Default under the Credit Agreement

        Section 7.   CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF INDIANA.

        Section 8.   Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute one and the same agreement. Delivery of any executed counterpart of this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

        Section 9.   Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a par of this Amendment for any other purposes.

        IN WITNESS WHEREOF, the Borrower, the Agent and each of the Lenders have caused this Amendment to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

[SIGNATURE PAGES FOLLOW]

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COACHMEN INDUSTRIES, INC.
 
 

By:  /s/ Richard M. Lavers                         
Name:  Richard M. Lavers
Title:    Secretary

By:  /s/ Joseph P. Tomczak                         
Name:  Joseph P. Tomczak
Title:    Treasurer

BANK ONE, INDIANA, N.A., as a Lender,
as the LC Issuer and as Administrative Agent

By:  /s/ Kurt E. Meibeyer                            
Name:  Kurt E. Meibeyer
Title:    First Vice President

NATIONAL CITY BANK OF INDIANA,
as a Lender

By:  /s/ National City Bank of Indiana        
Name:
Title:

1^st SOURCE BANK,
as a Lender

By:  /s/ 1st Source Bank                               
Name:
Title:

3

EXHIBIT A
TO AMENDMENT NO. 2 TO CREDIT AGREEMENT

ARTICLE VIII.
DEFAULTS

        The occurrence of anyone or more of the following events shall constitute a Default:

        7.1 Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any Credit Extension, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made.

        7.2 Nonpayment of principal of any Loan when due, nonpayment of any Reimbursement Obligation within one Business Day after the same becomes due, or nonpayment of interest upon any Loan or of any Facility Fee, LC Fee or other obligations under any of the Loan Documents within five days after the same becomes due.

        7.3 The breach by the Borrower of any of the terms or provisions of Sections 6.2 , 6.3 , 6.9 , 6.11 , 6.12 , 6.13, 6.14, 6.15, 6.16, 6.17, 6.18 , 6.19 or 6.20; or the breach by the Borrower of any of the terms or provisions of Section 6. 1 which is not remedied within five Business Days after written notice from the Agent or any Lender.

        7.4 The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article VII of any of the terms or provisions of this Agreement or any other Loan Document which is not remedied within 30 days after written notice from the Agent or any Lender.

        7.5 Failure of the Borrower or any of its Subsidiaries to pay when due any Indebtedness aggregating in excess of $5,000 000 (“Material Indebtedness ); or the default by the Borrower or any of its Subsidiaries in the performance (beyond the applicable grace period with respect thereto, if any) of any term, provision or condition contained in any agreement under which any such Material Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof, or the Borrower or any of its Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due.

        7.6 The Borrower or any of its Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any

Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fall to contest in good faith any appointment or proceeding described in Section 7.7

        7.7 Without the application, approval or consent of the Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or un stayed for a period of 30 consecutive days.

        7.8 Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion.

        7.9 The Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more (i) judgments or orders for the payment of money (except to the extent covered by insurance as to which the insurer has not disclaimed coverage) in excess of $5,000,000 (or the equivalent thereof in currencies other than U. S. Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith.

        7.10 A Reportable Event shall occur that results in or could result in liability of the Borrower, any Subsidiary of the Borrower or their ERISA Affiliates to the PBGC or to any Plan and such Reportable Event is not corrected with ten (10) days after the occurrence thereof, or any Reportable Event shall occur which could constitute grounds for termination of any Plan of the Borrower, its Subsidiaries or their ERISA Affiliates by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer any such Plan and such Reportable Event is not corrected within ten (10) days after the occurrence thereof; or the Borrower, any Subsidiary of the Borrower or any of their ERISA Affiliates shall file a notice of intent to terminate a Plan or other proceedings shall be instituted to terminate a Plan; or the Borrower, any Subsidiary of the Borrower or any of their ERISA Affiliates shall fail to pay when due any liability to the PBGC or to a Plan; or the PBGC shall have instituted proceedings to terminate, or to cause a trustee to be appointed to administer, any Plan of the Borrower, its Subsidiaries or their ERISA Affiliates; or any Person shall engage in a Prohibited Transaction with respect to any Plan which results in or could result in liability of the Borrower, any Subsidiary of the Borrower, any of their ERISA Affiliates, any Plan of the Borrower, its Subsidiaries or their ERISA Affiliates or fiduciary of any such Plan; or the Borrower, any

2

Subsidiary of the Borrower or any of their ERISA Affiliates shall fail to make a required installment or other payment to any Plan within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code, which failure results in or could result in liability of the Borrower, any Subsidiary of the Borrower or any of their ERISA Affiliates to the PBGC or any Plan; or the Borrower, any of its Subsidiaries or any of their ERISA Affiliates shall withdraw from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; or the Borrower, any of its Subsidiaries or any of their ERISA Affiliates shall become an employer with respect to any Multiemployer Plan without the prior written consent of the Required Lenders.

        7.11 The Borrower or any of its Subsidiaries shall (i) be the subject of any proceeding or investigation pertaining to the release by the Borrower, any of its Subsidiaries or any other Person of any toxic or hazardous waste or substance into the environment, or (ii) violate any Environmental Law, which, in the case of an event described in clause (i) or clause (ii), could reasonably be expected to have a Material Adverse Effect and is not remedied within 30 days.

        7.12 Any Change in Control shall occur.

        7.13 The Guaranty shall fail to remain in full force or effect as to any Guarantor or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of the Guaranty, or any Guarantor shall deny that it has any further liability under the Guaranty, or shall give notice to such effect.

        7.14 Any Collateral Document shall for any reason fail to create a valid and perfected first priority security interest in any collateral purported to be covered thereby, except as permitted by the terms of any Collateral Document, or any Collateral Document shall fall remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Collateral Document.

        7.15 Nonpayment by the Borrower or any Subsidiary of any Rate Management Obligation when due or the breach by the Borrower or any Subsidiary of any term, provision or condition contained in any Rate Management Transaction or any transaction of the type described in the definition of “Rate Management Transactions ” whether or not any Lender or Affiliate of a Lender is a par thereto.

        7.16 Borrower or any other Loan Party fails to deliver to Agent, as of the deadline specified therein, the items stated in Section 4. 1(vii).

3

COACHMEN INDUSTRIES, INC.
 
 

By:  /s/ Richard M. Lavers                         
Name:  Richard M. Lavers
Title:    Secretary

By:  /s/ Joseph P. Tomczak                         
Name:  Joseph P. Tomczak
Title:    Treasurer

BANK ONE, INDIANA, N.A., as a Lender,
as the LC Issuer and as Administrative Agent

By:  Bank One, Indiana, N.A.                      
Name:  Kurt E. Meibeyer
Title:    First Vice President

NATIONAL CITY BANK OF INDIANA,
as a Lender

By:  /s/ Robert E. Norell, Jr.                         
Name:   Robert E. Norell, Jr.
Title:  Vice President

1^st SOURCE BANK,
as a Lender

By:/s/ 1st Source Bank                                   
Name:
Title:

3

EX-4

EXHIBIT 4(e)

AMENDMENT NO. 3 TO
CREDIT AGREEMENT

        This Amendment No. 3 (the “Amendment”) is entered into as of June 30, 2004, by and among Coachmen Industries, Inc. (the “Borrower”), the undersigned lenders (each a “Lender” and collectively, the “Lenders”) and Bank One, Indiana, N.A., both as one of the Lenders and as Administrative Agent (the “Agent”) on behalf of itself and the other Lenders.

RECITALS:

        WHEREAS, the Borrower, the Agent and the Lenders are parties to that certain Credit Agreement dated as of June 30, 2003, as amended; and

        WHEREAS, Lenders and Borrower desire to amend the Credit Agreement as provided hereby.

        NOW, THEREFORE, in consideration of the premises herein contained and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

        Section 1.  Defined Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Credit Agreement.

        Section 2.  Amendments.  Effective on the date of the effectiveness of this Amendment pursuant to Section    below (the “Effective Date”), the Credit Agreement shall be amended as set forth in this Section 2.

        2.1     Amendments to Definitions.

        (a)      The definition of “Advance” in Article I is amended in its entirety to read as follows:

“Advance” means a borrowing hereunder (i) made by some or all of the Lenders on the same Borrowing Date, or (ii) converted or continued by the lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same type and, in the case of Eurodollar Loans, for the same Interest Period. The term “Advance” shall include Alternative Line Loans unless otherwise expressly provided.

        (b)       The definition of “Consolidated Total Debt” in Article I is amended in its entirety to read as follows:

“Consolidated Total Debt” means at any time the Indebtedness of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time, including all guaranties of the Indebtedness of Persons other than the Borrower and its Subsidiaries and all Off-Balance Sheet Liabilities of the

Borrower and its Subsidiaries calculated (which for these purposes includes no more than $6,000,000 in guaranteed indebtedness under the Coachmen Financial Services Dealer Wholesale Financing Program with Transamerica) on a consolidated basis as of such time regardless of the treatment of such guaranties or Off-Balance Sheet Liabilities under Agreement Accounting Principles.

        (c)       The definition of “Lenders” in Article I is amended in its entirety to read as follows:

“Lenders” means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. Unless otherwise specified, the term “Lenders” includes Bank One in its capacity as Alternative Line Bank.

        (d)       The definition of “Loan” in Article I is amended in its entirety to read as follows:

“Loan” means a Revolving Loan or an Alternative Line Loan.

        (e)       The definition of “Outstanding Credit Exposure” in Article I is amended in its entirety to read as follows:

“Outstanding Credit Exposure” means, as to any Lender, the sum of (i) the aggregate principal amount of its Revolving Loans outstanding at such time, plus (ii) the aggregate principal amount of its Alternative Line Loans outstanding at any such time, plus (iii) an amount equal to its Pro Rata Share of LC Obligations of certain other issued and outstanding letters of credit described on Schedule III hereto.

        2.2     Additional Definitions.

        The following definitions are added to Article I in the appropriate alphabetical sequence:

“Aggregate Revolving Loan Commitment” means the aggregate of the Revolving Loan Commitments of all the Lenders as reduced from time to time pursuant to the terms hereof. As of the date hereof, the Aggregate Revolving Loan Commitment is Thirty Million and 00/100 Dollars ($30,000,000.00) as of the Effective Date.

“Alternative Line Bank” means Bank One, N.A. or any other Lender as a successor Alternative Line Bank.

“Alternative Line Commitment” means the obligation of the Alternative Line Bank to make Alternative Line Loans up to a maximum principal amount of $5,000,000 at any one time outstanding.

“Alternative Line Loan” means a Loan made available to the Borrower by the Alternative Line Bank pursuant to Section 2.5.

2

“Alternative Line Note” means a promissory note, in substantially the form of Exhibit C-1 hereto, duly executed by the Borrower and payable to the order of the Alternative Line Bank in the amount of its Alternative Line Commitment, including any amendment, restatement, modification, renewal or replacement of such Alternative Line Note.

“Revolving Loan Commitment” means, for each Lender, the obligation of such Lender to make Revolving Loans and to purchase participations in Letters of Credit not exceeding the amount set forth on Schedule I to this Agreement opposite its name thereon under the heading “Revolving Loan Commitment” or the signature page of the assignment and acceptance by which it became a Lender, as such amount may be modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable assignment and acceptance.

“Revolving Loan Pro Rata Share” means, with respect to a Lender, a portion equal to a fraction, the numerator of which is such Lender’s Revolving Loan Commitment and the denominator of which is the Aggregate Revolving Loan Commitment.

        2.3     Deleted Definitions.

        The following definitions are hereby deleted from Article I:

“Swing Line Borrowing Notice” is defined in Section 2.5.2.

“Swing Line Commitment” means the obligation of the Swing Line Lender to make Swing Line Loans up to a maximum principal amount of $5,000,000 at any one time outstanding.

“Swing Line Lender” means Bank One, N.A. or such other Lender which may succeed to its rights and obligations as Swing Line Lender pursuant to the terms of this Agreement.

“Swing Line Loan” means a Loan made available to the Borrower by the Swing Line Bank pursuant to Section 2.5.

        2.4     Amendment to Schedule I.  Schedule I to the Credit Agreement is amended in its entirety to read as set forth in Attachment 1 to this Amendment.

        2.5     Amendment of Exhibit C.  A new Exhibit C-1 is added to the Credit Agreement in that form as set forth in Attachment 2 to this Amendment.

        2.6     Amendment to Section 2.3.  Section 2.3 is amended in its entirety to read as follows:

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        2.3  Ratable Loans.  Each Advance hereunder (other than any Alternative Line Loan) shall consist of Revolving Loans made from the several Lenders ratably according to their Revolving Loan Pro Rata Share.

        2.7     Amendment to Section 2.4.  Section 2.4 is amended in its entirety to read as follows:

        2.4  Types of Advances.  The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Sections 2.9 and 2.10 or Alternative Line Loans selected by the Borrower in accordance with Section 2.5. The Alternative Line Loans shall at all times be Floating Rate Loans.

        2.8     Amendment to Section 2.5.  Section 2.5 is amended in its entirety to read as follows:

        2.5 Alternative Line Loans.

        2.5.1 Amount of Alternative Line Loans. Upon the satisfaction of the conditions precedent set forth in Section 4.1 and 4.2, from and including the date of this Agreement and prior to the Termination Date, the Alternative Line Bank agrees, on the terms and conditions set forth in this Agreement, to make revolving loans to the Borrower from time to time, in Dollars, in an amount not to exceed the Alternative Line Commitment (each, individually, an “Alternative Line Loan” and collectively, the “Alternative Line Loans”). Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Alternative Line Loans at any time prior to the Termination Date. On the Termination Date, the Borrower shall repay in full the outstanding balance of the Alternative Line Loans.

        2.5.2 Borrowing Notice. The Borrower shall deliver to the Agent and the Alternative Line Bank a Borrowing Notice, signed by it, not later than 1:00 p.m. (Elkhart time) on the Borrowing Date of each Alternative Line Loan, specifying (i) the applicable Borrowing Date (which shall be a Business Day), and (ii) the aggregate amount of the requested Alternative Line Loan which shall be in multiples of $1,000 (an “Alternative Line Borrowing Notice”). The Alternative Line Loans shall at all times be Floating Rate Loans.

        2.5.3 Making of Alternative Line Loans. Promptly after receipt of the Alternative Line Borrowing Notice, the Agent shall notify the Alternative Line Bank by telex or telecopy, or other similar form of transmission, of the requested Alternative Line Loan. Not later than 3:00 p.m. (Elkhart time) on the applicable Borrowing Date, the Alternative Line Bank shall make available its Alternative Line Loan, in funds immediately available in Elkhart to the Agent at its address specified pursuant to Article XIII. The Agent will promptly make the funds so received from the Alternative Line Bank available to the Borrower at the Agent’s aforesaid address.

4

        2.5.4 Repayment of Alternative Line Loans. Subject to the provisions of Section 2.14, the Alternative Line Loans may be evidenced by a promissory note (the “Alternative Line Note”). The Borrower may at any time pay, without penalty or premium, all outstanding Alternative Line Loans or, in a minimum amount and increments of $1,000, any portion of the outstanding Alternative Line Loans, upon notice to the Agent and the Alternative Line Bank. If at any time and for any reason the aggregate amount of Alternative Line Loans is greater than the Alternative Line Commitment, the Borrower shall immediately make a mandatory repayment of the Alternative Line Loans in the amount of such excess. On the Termination Date, the Borrower shall repay in full the outstanding principal balance of the Alternative Line Loans.

        2.9     Amendment to Section 2.7.  Minimum Amount of Each Advance.  Section 2.7 is amended to replace the parenthetical which reads “(other than an Advance to repay Swing Line Loans)” with the following parenthetical: “(other than an Advance on the Alternative Line Commitment)".

        2.10     Amendment to Section 2.8.  Section 2.8 is amended in its entirety to read as follows:

        2.8     Optional Principal Payments.  Subjection to the provisions of Section 2.5.4 respecting Alternative Line Loans, the Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, in a minimum amount of $1,000,000 and increments of $100,000 in excess thereof, any portion of the outstanding Floating Rate Advances upon one Business Day’s prior notice to the Agent. The Borrower may from time to time prior to the last day of the Applicable Interest Period pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurodollar Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon three Business Days’ prior notice to the Agent.

        2.11     Amendment to Section 2.9.  Method of Selecting Types and Interest Periods for New Advances.  Section 2.9 is amended to replace the parenthetical which reads “(other than a Swing Line Loan)” with the following parenthetical: “(other than an Alternative Line Loan).”

        2.12     Amendment to Section 2.10.  Conversion and Contribution of Outstanding Advances.  Section 2.10 is amended to replace the two parentheticals which read “(other than Swing Line Loans)” in both instances with the following parenthetical: “(other than an Alternative Line Loan)".

        2.13     Amendment to Section 2.11.  Changes in Interest Rates, Etc.  Section 2.11 is amended to replace “Swing Line Loan” as used in (i) the parenthetical in the first sentence of this Section and (ii) the second sentence of this Section, in both instances, with “Alternative Line Loan.”

5

        2.14     Amendment to Section 2.13.  Method of Payment.  Section 2.13 is amended to replace the term “Swing Line Loan” as used in the parenthetical with “Alternative Line Loan.”

        2.15     Amendment to Section 2.14.  Noteless Agreement: Evidence of Indebtedness.  Section 2.14 (iv) is amended in its entirety to read as follows:

(iv) Any Lender may request that its Loans be evidenced by a promissory note or, in the case of the Alternative Line Lender, promissory notes representing its Revolving Loans and Alternative Line Loans, respectively, substantially in the form of Exhibit C, and C-1, respectively (each a “Note”). In such event, the Borrower shall prepare, execute and deliver to such Lender such Note or Notes payable to the order of such Lender. Thereafter, the Loans evidenced by each such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above.

        2.16     Amendment to Section 2.17.  Notification of Advances, Interest Rates, Prepayments and Commitment Reductions and Increases.  Section 2.17 is amended to replace the term “Swing Line Borrowing Notice” with “Alternative Line Borrowing Notice.”

        2.17     Amendment to Section 2.20.4.  Section 2.20.4 is amended in its entirety to read as follows:

        2.20.4     LC Fees.  The Borrower shall pay to the Agent, for the account of the Lenders ratably in accordance with their respective Pro Rata Shares, with respect to each standby Facility LC, a letter of credit fee at a rate equal to the Applicable Margin for Eurodollar Loans in effect from time to time on the initial stated amount, such standby Facility LC, such fee to be payable quarterly in arrears on the last Business Day of each fiscal quarter, commencing with the quarter ending _________, and, in addition, on the date on which the Aggregate Revolving Loan Commitment and Alternative Line Commitment shall be terminated in whole.

        2.18     Amendment to Section 4.2.  Each Credit Extension.  Section 4.2 is amended (i) to delete in its entirety the parenthetical used in the first paragraph of this Section which reads “(except as otherwise set forth in Section 7.5.4 with respect to Revolving Loans for the purpose of repaying Swing Line Loans)” and (ii) to replace the term “Swing Line Borrowing Notice” used in the last paragraph of this Section with “Alternative Line Borrowing Notice”.

        2.19     Amendment to Section 8.2.  Amendments.  Section 8.2 is amended to replace the second sentence of the final paragraph of this Section, which reads: “No amendment of any provision of this Agreement relating to the Swing Line Lender or any Swing Line Loans shall be effective without the written consent of the Swing Line Lender “with the following sentence, which reads: “No amendment of any provision of this Agreement relating to the Alternative

6

Line Lender or any Alternative Line Loans shall be effective without the written consent of the Alternative Line Lender.”

        Section 3.  Representations and Warranties.  In order to induce the Agent and the Lenders to enter into this Amendment, the Borrower represents and warrants to the Agent and each of the Lenders that the execution and delivery by the Borrower of this Amendment, and the performance by the Borrower of its obligations under the Credit Agreement as amended by this Amendment (the “Amended Credit Agreement”), (i) are within the powers of the Borrower, (ii) have been duly authorized by proper organizational actions and proceedings, and such approvals have not been rescinded and no other actions or proceedings on the part of the Borrower are necessary to consummate such transaction, (iii) do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by any Governmental Authority, or if not made, obtained or given individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect and (iv) do not and will not conflict with any Requirements of Law or Contractual Obligation, except such that could not reasonably be expected to have a Material Adverse Effect, or with the certificate or articles of incorporation and by-laws or the operating agreement of the Borrower or any Subsidiary, and (c) that the Amended Credit Agreement is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms (except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, or similar laws affecting the enforcement of creditors’ rights generally).

        Section 4.  Effectiveness.  The amendments set forth in Section 2 above shall become effective on the date when the Agent shall have received the following, all in a form satisfactory to Agent:

        4.1.     Amendment.  Counterparts of this Amendment signed by the Borrower, and each of the Lenders.

        4.2     Guaranty.  Reaffirmation of Subsidiary Guarantors signed by the Guarantors in favor of the Lenders.

        4.3     Corporate Documents.  A certificate of the Secretary or an Assistant Secretary of the Borrower as to (a) resolutions of the Board of Directors of such entity authorizing the execution and delivery of this Amendment and the other documents contemplated hereby to which such entity is a party, (b) the incumbency and signatures of the officers of such entity which are to sign the documents referenced in clause (a) above, and (c) a certificate of existence certificate issued by the Indiana Secretary of State with respect to the Borrower.

        4.4     Other Documents.  Such other documents as the Agent shall reasonably request.

        Section 5.  Miscellaneous.

        5.1     Continuing Effectiveness, etc.  The Amended Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the effectiveness hereof, all references in the Credit Agreement and each other Loan Document to the “Credit Agreement” or similar terms shall refer to the Credit Agreement as modified hereby. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided

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herein, operate as a waiver of (i) any right, power or remedy of any Lender or the Agent under the Credit Agreement or any of the other Loan Documents, or, (ii) any Default or unmatured Default under the Credit Agreement.

        5.2     Counterparts.  This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment.

        5.3     Expenses.  The Borrower agrees to pay the reasonable costs and expenses of the Agent (including reasonable attorneys’ fees and charges) in connection with the negotiation, preparation, execution and delivery of this Amendment and the other documents contemplated hereby.

        5.4     Governing Law.  THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF INDIANA.

        5.5     Successors and Assigns.  This Amendment shall be binding upon the Borrower, the Lenders and the Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Lenders and the Agent and their respective successors and assigns, as permitted by the provisions of the Amended Credit Agreement.

        5.6     Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purposes.

        IN WITNESS WHEREOF, the Borrower, the Agent and each of the Lenders have caused this Amendment to be duly executed by its officers thereunder duly authorized as of the date first written above.

[SIGNATURE PAGES FOLLOW]

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COACHMEN INDUSTRIES, INC.
 
 

By:  /s/ Richard M. Lavers                         
Name:  Richard M. Lavers
Title:    Secretary

By:  /s/ Gary L. Near                                     
Name:  Gary L. Near
Title:    Treasurer

BANK ONE, INDIANA, N.A., as a Lender,
as the LC Issuer and as Administrative Agent

By:  /s/ Kurt E. Meibeyer                           
Name:  Kurt E. Meibeyer
Title:    First Vice President

NATIONAL CITY BANK OF INDIANA,
as a Lender

By:  /s/ National City Bank of Indiana        
Name:
Title:

1^st SOURCE BANK,
as a Lender

By:  /s/ 1st Source Bank                                 
Name:
Title:

SBDS02 MBW 297690v1

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EX-10

EXHIBIT 10(e)

COACHMEN INDUSTRIES, INC.

SUPPLEMENTAL DEFERRED COMPENSATION PLAN

(Amended and Restated as of

January 1, 2003)

        Coachmen Industries, Inc. established the Coachmen Industries, Inc. Supplemental Deferred Compensation Plan, effective January 1, 2001, for the benefit of a select group of management and other highly compensated employees eligible to participate therein. The Employer has amended from time to time and now completely restates the Plan, effective January 1, 2003, in the form stated herein below.

ARTICLE 1

ESTABLISHMENT/PURPOSE

1.01 Purpose: This Plan is intended to permit the Employer to establish an unfunded, non-qualified deferred compensation plan for a select group of its management or highly compensated employees. Accordingly, it is intended that this Plan be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.

1.02 Adoption of Plan: The Employer, through the Committee, adopts this restatement of the Plan pursuant to a directive of the Board.

ARTICLE 2

DEFINITIONS

When used in this Plan and its Schedules, the following words shall have the meanings defined below, unless the context clearly indicates otherwise:

2.01 Account: The bookkeeping accounts maintained by the Service Provider on behalf of the Employer, with appropriate sub-accounts, to reflect: (i) Salary Deferral Contributions, contributed to the Plan, as may be elected by each Participant; (ii) Employer Contributions (whether Employer Matching Contributions, Employer Basic Contributions or Employer Special Contributions), each as adjusted for Deemed investment experience, transfers, withdrawals and distributions made in accordance with this Plan.

2.02 Affiliate: Any entity which is part of (i) a controlled group of corporations or businesses under common control pursuant to Code §§414(b) or (c); (ii) an affiliated service group pursuant to Code §414(m); or (iii) any other entity required to be aggregated with the Employer for purposes of Code §414(o).

2.03 Beneficiary: Any person who is designated by a Participant to receive payment of benefits under this Plan, to the extent available, after the Participant’s death. The Participant may specify his Beneficiaries on a form approved by the Committee, and may make such changes to his Beneficiary designation at such times as may be allowed by the Committee. Notwithstanding anything in this Plan to the contrary, if the Participant designates his spouse as a Beneficiary of benefits payable hereunder, and the Participant’s marriage to that spouse is later terminated (whether by divorce, annulment, dissolution,

or otherwise), the Participant’s designation of his spouse as a Beneficiary shall be null and void, and the portion of the Participant’s benefits that would, but for this provision, be payable to the Participant’s spouse will be payable as designated in the Participant’s Beneficiary designation, as if the spouse had predeceased the Participant.

2.04 Bonus Compensation: Any item of Compensation that would be payable to a Participant as a bonus but for the existence of a Salary Reduction Agreement executed by a Participant authorizing deferral of Bonus Compensation.

2.05 Bonus Deferral Contributions: A contribution to the Plan made pursuant to Section 4.01 of the Plan, and allocated to the Accounts of Participants entering into a Salary Reduction Agreement authorizing the deferral of Bonus Compensation.

2.06 Board: The Board of Directors (or other governing board) of the Employer.

2.07 Change in Control: A Change in Control shall mean the occurrence of any of the following:

(i) any “person” (as that term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding the Employer, its affiliates, and any qualified or non-qualified plan maintained by the Company or its affiliates) becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under such Act), directly or indirectly, of securities of the Employer representing more than 20% of the combined voting power of the Employer’s then outstanding securities;

(ii) during a period of 24 months, a majority of the Board of Directors of the Employer ceases to consist of the existing membership or successors nominated by the existing membership or their similar successors;

(iii) shareholder approval of a merger or consolidation of the Employer with any other corporation, other than a merger or consolidation which would result in the voting securities of the Employer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty percent (60%) of the combined voting power of the voting securities of the Employer or such surviving entity outstanding immediately after such merger or consolidation; or

(iv) shareholder approval of either (A) a complete liquidation or dissolution of the Employer or (B) a sale or other disposition of all or substantially all of the assets of the Employer, or a transaction having a similar effect.

2.08 COA Holding: That bookkeeping account maintained in the Plan for the purpose of holding contributions that are to be converted to an equivalent of the common stock of the Employer as described in Plan Section 4.04(b)(i).

2.09 Code: The Internal Revenue Code of 1986, and amendments thereto.

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2.10 Committee: The Committee as provided for in this Plan, which shall have the authority to direct the operations of the Plan and such other authority as may be prescribed by the Plan. To the extent that the Employer does not appoint a Committee, the Employer shall have the duties assigned to the Committee by the Plan.

2.11 Compensation: Any Employee’s base salary (unreduced by deferrals made on a pre-tax basis to any plan maintained under Code §§401(k) or 125) plus Bonus Compensation.

2.12 Deemed: When the word “Deemed” modifies any other word, a Participant’s Account shall be adjusted or treated as if such other word actually occurred or existed within or to the Participant’s Account.

2.13 Disability: The inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. The permanence and degree of such impairment shall be supported by medical evidence. The Employer shall determine the existence of a Disability based on its current disability policy, applied on a uniform and nondiscriminatory basis.

2.14 Effective Date: The Effective Date of this restatement is January 1, 2003.

2.15 Eligible Employee: An Employee who has been designated by the Employer to be eligible to be a Participant in this Plan for the Plan Year. Eligible Employees shall be assigned to either Group A or Group B as designated by the Employer.

2.16 Employee: Any employee of the Employer maintaining the Plan.

2.17 Employer: Coachmen Industries, Inc. and any successor to the business of the Employer establishing the Plan. An entity that is related to the Employer by virtue of being a parent-subsidiary or brother-sister controlled group with the Employer, pursuant to Code §§414(b) or (c) may also be an Employer under the Plan with the consent of the Board.

2.18 Employer Basic Contributions: Those contributions to the Plan made pursuant toss.4.01 and allocated to the Accounts of Participants pursuant to Schedule B.

2.19 Employer Contribution: An Employer Basic Contribution, Employer Matching Contribution, or Employer Special Contribution.

2.20 Employer Matching Contributions: Those contributions to the Plan made pursuant toss.4.01 and allocated as a matching contribution to the Salary Reduction Contributions or Bonus Deferral Contributions.

2.21 Employer Special Contribution: Those contributions to the Plan made pursuant toss.4.01 and allocated pursuant to the provisions of an agreement entered into between the Employer and a Participant.

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2.22 Employment Commencement Date: The date on which an Employee first is employed by the Employer.

2.23 ERISA: The Employee Retirement Income Security Act of 1974, as amended.

2.24 Investment Fund: One of the funds provided for in this Plan, as selected by the Employer or the Committee. The common stock of the Employer may be an Investment Fund.

2.25 Normal Retirement Age: The date on which a Participant attains age 65.

2.26 Participant: An Eligible Employee who has been selected to participate in the Plan and who has contributions credited to his or her Account. An individual who has an Account in the Plan shall continue to be a Participant despite no longer being an Eligible Employee.

2.27 Plan: The non-qualified deferred compensation plan established by the Employer, which is intended to be a “top-hat” plan, as defined in Department of Labor Regulation §2520.104-23, and exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.

2.28 Plan Year: The twelve-month period ending each December 31.

2.29 Qualified Plan: The Coachmen Industries, Inc. Retirement Plan and Trust, as amended from time to time.

2.30 Salary Reduction Agreement: An election of the Participant made annually to forego payment of Compensation in exchange for the Employer’s promise to pay benefits pursuant to this Plan. Such Salary Reduction Agreement, to be valid, must (i) be in writing, signed by the Participant prior to the start of the Plan Year to which it relates (except that an Eligible Employee may enter into a Salary Reduction Agreement effective for the remainder of the Plan Year in which the Participant’s participation in the Plan commences, provided that any reduction in Compensation specified in the Salary Reduction Agreement has effect only with respect to Compensation not yet earned or payable); (ii) take effect as of the start of the following Plan Year (or the date the Participant commences participation in the Plan, if later); (iii) be irrevocable during the Plan Year in which it is in effect (except that a Salary Reduction Agreement may be revoked in its entirety with respect to the remainder of the Plan Year upon election of the Participant); and (iv) be on a form and submitted as prescribed by the Committee. A Participant shall be permitted to enter into separate Salary Reduction Agreements for base pay and Bonus Compensation in a Plan Year. Any Salary Reduction Agreement in effect as of the last day of the Plan Year shall be deemed automatically renewed for each succeeding Plan Year unless a proper election modifying or terminating the prior Salary Reduction Agreement is duly filed with the Committee during the period of time prescribed by the Committee.

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2.31 Salary Reduction Contribution: A contribution made to this Plan pursuant to the Employer’s obligation to provide certain benefits in consideration of a Participant entering into a Salary Reduction Agreement.

2.32 Service Provider: That entity appointed by the Committee to perform administrative services in connection with the operation of the Plan.

2.33 Trust: The revocable grantor/rabbi trust established in connection with the Plan. The Employer or the Committee, as the case may be, shall have the discretion to determine whether or not a Trust shall be established in connection with the Plan; provided, however, in the event of a Change in Control, such discretion shall be removed from the Employer and the Committee, and a Trust shall be established (if not already in existence) and fully funded in accordance with Plan Section 4.03.

2.34 Trust Agreement: An agreement entered into between the Trustee and the Employer providing for trust services in connection with a grantor trust that may be established in connection with this Plan. As of the Effective Date, the Trust Agreement is The Amended and Restated Coachmen Industries, Inc. Executive Benefit and Estate Accumulation Trust, as amended effective December 13, 2000, and as may be amended from time to time.

2.35 Trustee: That individual or individuals or corporate entity having trust powers that is appointed by the Committee to perform trust services in connection with the Plan, whose responsibilities shall be governed by the Plan and by the Trust Agreement.

2.36 Year of Service: A consecutive 12-month period of continuous service in the employ of the Employer commencing on the latest of: (i) the Employee’s Employment Commencement Date; (ii) the effective date of the Employer’s establishment of this Plan; or (iii) the date the Employee becomes a Participant in the Plan.

ARTICLE 3

ELIGIBILITY AND PARTICIPATION

3.01 Eligibility: Employees will be designated as Eligible Employees and will be assigned as either Group A or Group B Participants in the sole and absolute discretion of the Board (or its designee). The Board (or its designee) may impose such terms and conditions upon each Eligible Employee prior to becoming a Participant, which shall be communicated to such Eligible Employee, in writing, prior to commencement of participation. An Eligible Employee shall commence Participation as of any date specified by the Board.

3.02 Participation: A Participant shall commence participation in Plan upon completion of an appropriate Salary Reduction Agreement specifying that his or her compensation be reduced, or by being credited with an Employer Contribution to his or her Account.

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ARTICLE 4

CONTRIBUTIONS/ACCOUNTS

4.01 Contributions: In accordance with this Plan and the agreement entered into with the Participant, the Employer shall establish each of the following book entries and credit each Participant’s Account with:

a) Salary Reduction Contributions: The amount of any Salary Reduction Contribution elected by an Eligible Employee in a Salary Reduction Agreement for the Plan Year;

b) Bonus Deferral Contributions: The Amount of any Bonus Deferral Contribution elected by an Eligible Employee in a Salary Reduction Agreement for the Plan Year;

c) Employer Basic Contributions: An amount, as determined in the sole discretion of the Employer, which will be allocated to the Accounts of Participants pursuant to an allocation formula specified by the Board. There shall be no requirement that a Basic Contribution be made, or if made, that it be made in the same amount or for any or all Participants in the Plan;

d) Employer Matching Contributions: A contribution made on account of a Participant’s Salary Reduction Contribution, which amount is described in Schedule A of the Plan.

e) Employer Special Contributions: An amount determined and allocated according to the Board. There is no requirement that any Employer Special Contribution be made, or if made, that it be made in the same amount or for any or all Participants in the Plan.

Benefits payable pursuant to this Plan shall be calculated with reference to the contributions credited to the Participant’s Account, together with any adjustments made thereto pursuant to the provisions of this Plan.

4.02 Participant Accounts: Each Participant shall have established an Account (with sub-accounts as may be appropriate) which shall reflect any contributions credited pursuant to Section 4.01 of this Plan. All contribution credits shall be bookkeeping entries only and shall not constitute an actual allocation of any assets of the Employer, or be deemed to create any trust, custodial account, or deposit with respect to any assets which may be utilized to satisfy the obligation of the Employer to provide the benefits specified in this Plan.

4.03 Rabbi Trust:

a)      Unsecured Obligation: The obligation of the Employer to provide benefits pursuant to this Plan shall be the sole unsecured promise of

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the Employer with respect to this Plan. Notwithstanding the foregoing, the Employer or the Committee may establish a trust, pursuant to a Trust Agreement, for the purpose of setting aside funds to provide for the payment of benefits under this Plan. However, the assets of the Trust shall at all time remain subject to the claims of the general creditors of the Employer, and no Participant or Beneficiary shall have any claim or right with respect to the assets held in the Trust, except to the extent that the Participant or Beneficiary is a general creditor of the Employer.

b)      Springing Trust: Notwithstanding anything in this Plan (or the Trust Agreement) to the contrary, upon a Change in Control, the Employer shall (i) establish a trust (if not already established) as described in Plan Section 2.33, (ii) maintain in the Trust an amount of money which is at all times at least equal to its obligations under this Plan by making sufficient contributions to the Trust, immediately upon such Change in Control in an amount equal to the Plan’s total liabilities; and (iii) direct the Trustee to invest the assets of the Trust proportionally in accordance with investment directions given by each Participant.

4.04 Investments:

a)      Generally: To the extent that the Employer establishes a Trust, such contributions made to the Trust shall be invested in one or more Investment Funds as selected by the Committee. At the discretion of the Employer, a Participant may be entitled to request that his or her Account be adjusted for investment gains and losses, as if invested in one or more Investment Funds in accordance with a Deemed investment election of a Participant. Deemed investment elections may be (i) made with respect to existing Account balances or current contributions to the Participant’s Account, and (ii) shall be subject to any limitations imposed by the Committee from time to time, and made by such means as the Employer and Trustee may agree. The Employer or Service Provider (as the case may be) shall make such adjustments in Participants’ Accounts to reflect any investment gains or losses such Participants’ Accounts would experience if funds were actually invested in one or more Investment Funds pursuant to the Participant’s election.

b)   Rules for Investment Changes: Participants may make changes in Deemed investment elections at such time, and in such manner as may be specified by the Committee. Any Deemed investment election, or changes to Deemed investment elections, shall remain in effect until further changed by the Participant. Notwithstanding the preceding sentence, the following rules shall apply to a Participant for whom a Matching Employer Contributions sub-Account is maintained:

i)      Beginning each calendar quarter on and after January 1, 2003, any contribution that is to be Deemed invested in the common stock of the

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Employer and any Deemed dividends paid on amounts Deemed to be invested in the common stock of the Employer shall be accumulated in COA Holding until the last business day of the calendar quarter. On such last business day, the closing price of one share of the Employer’s common stock on the first business day of the calendar quarter shall be compared with the closing price of one share of the Employer’s common stock on the last business day of the calendar quarter, and amounts tracked on behalf of each Participant in COA Holding shall be converted to Deemed shares of the Employer by dividing the total amount in COA Holding by the lower of the first business day closing price or the last business day closing price and by allocating those shares to each Participant based on his or her contributions. Once allocated to Participants, the Deemed shares are credited to the Participants’ appropriate sub-Accounts and COA Holding is reduced to zero. The closing prices shall be as provided on the New York Stock Exchange Composite Transaction Tape and reported in the Wall Street Journal, Midwest Edition, or as reported in another reputable publication (determined at the sole discretion of the Committee) if the Wall Street Journal is not available for the respective dates. All calculations shall include fractional shares carried to the ninth decimal place.

ii)      A Participant shall not be permitted to redirect the Deemed investment of his Matched Stock Account any time prior to the calendar year in which he attains age fifty-five (55). In the calendar year in which the Participant attains age fifty-five (55), and in any calendar year thereafter until the Participant attains age sixty-five (65), a Participant may redirect the Deemed investment of up to twenty percent (20%) of his or her Matched Stock Account balance among the other Investment Funds available in the Plan.

iii)      Notwithstanding the redirection provisions of this Section 4.04, a Participant may redirect the Deemed investment of his or her Matched Stock Account any time following the attainment of age sixty-five (65) or a Change in Control. A Beneficiary of a Participant shall have the right to redirect the Deemed investment of the Participant’s Matched Stock Account at any time following the Participant’s death.

iv)      A Participant who elects to receive a payment in the form of Employer stock for the amount represented by the Matched Stock Account will receive shares restricting his or her right or ability to sell or transfer such shares until the Participant has attained age fifty-five (55).

v)      For so long as Employer stock is a Deemed investment under the Plan, no Participant shall have the right to direct the vote or tender any Employer stock that is Deemed to be credited to his Account.

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vi)      The Committee may in its sole discretion refuse to recognize participant elections that it determines may cause the Participant’s Accounts to become subject to the short-swing profit provisions of Section 16b of the Securities Exchange Act of 1934 and establish special election procedures for participants subject to Section 16 of such Act.

4.05 Employer Stock: Deemed purchases and allocations of Employer stock to the bookkeeping entry Accounts of Plan Participants shall occur on a quarterly basis. Deemed purchases shall be allocated to such Accounts as of the last business day of each calendar quarter and shall be valued at the lesser of the stock’s closing price on the New York Stock Exchange on either the first business day of the quarter or the last business day of the quarter. Nothing herein shall be deemed to prevent the maintenance in the Participants’ Accounts of fractional shares. All dividends payable on the Employer’s common stock shall be Deemed to be reinvested in additional shares of the Employer’s common stock. Those additional shares attributable to the Matched Stock Account shall be credited to the Matched Stock Account and any other dividends Deemed received will be credited to the respective sub-Account that is not the Matched Stock Account.

4.06 Provisions Upon a Change in Control: If there occurs Change in Control, in addition to other requirements of the Plan, the Board may take any additional actions deemed reasonably necessary or desirable to accomplish the stated purposes of this Plan, and the Committee may cause the contribution by the Employer of any amount equal to up to three (3) years of additional Participant Contributions for select Group “A” Participants as determined by the Plan Sponsor, along with the Employer Matching Contributions to the Plan that would have been paid on such Participant Contributions, as if the Participants in Group “A” had contributed the maximum fifteen percent (15%) of base salary and Bonus Compensation each year.

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ARTICLE 5

VESTING AND FORFEITURE

5.01 Vesting

a)      A Participant’s sub-Account consisting of his or her Salary Reduction Contributions and Bonus Deferral Contributions, adjusted for Deemed earnings and losses thereon, shall always be 100% vested.

b)      A Participant’s sub-Accounts consisting of Employer Contributions, adjusted for Deemed earnings and losses thereon shall be vested according to the vesting schedule prescribed in either Schedule A or Schedule B, as applicable.

c)      Notwithstanding the preceding provisions of this Section 5.01, a Participant shall be 100% vested in the value of his sub-Accounts consisting of Employer Contributions adjusted for Deemed earnings and losses thereon upon the earliest to occur of any of the following: (i) a Change in Control; (ii) termination of employment with the Employer as a result of the Participant’s death or Disability; (iii) termination of employment at or after Normal Retirement Age; or (iv) effective January 1, 2003, a termination of employment as a result of such other extenuating circumstance, as the Committee shall determine, in its sole discretion.

5.02 Forfeitures: The Participant shall forfeit any portion of his or her Account that is not vested at the time the Participant terminates employment with the Employer. Additionally, the Participant shall forfeit all of his or her Account attributable to Employer Contributions and Deemed earnings and losses thereon, regardless of the extent to which such Account is vested under Section 5.01 of the Plan, if the Participant, without the express written consent of the Employer and within six (6) months following his or her termination of employment with the Employer or its Affiliates, works in any capacity for or on behalf of any direct competitor (including the competitor’s affiliates) of the Employer or of any of its Affiliates and during such time violates his or her “Business Protection Agreement” with the Employer or its Affiliates, including the post-termination-of-employment restrictions on competition with the Employer, solicitation of the Employer’s employees, or solicitation of the Employer’s or its Affiliates’ vendors or customers (regardless of the enforceability of any such restrictions).

5.03 Non-vested Amounts: To the extent that the Employer has made a contribution to the Trust in connection with respect to this Plan, the amount of any such contributions held in trust and forfeited pursuant to Section 5.02 shall be returned to the Employer if the Trust is revocable; or if not revocable, then the forfeited amounts shall continue to be held in trust until full satisfaction of all of Employer’s obligations under this Plan.

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ARTICLE 6

BENEFITS/PAYMENTS

6.01 General: A Participant shall be entitled to receive a benefit, when payable pursuant to the terms of this Plan, in an amount equal to the total value of all vested contributions credited to his or her Account, and adjusted for any Deemed investment gains or losses. All benefit payments shall be made by the Employer, except as may be provided for in the Trust Agreement. All appropriate taxes, as determined by the Employer, shall be withheld from any payment distribution, as may be required by law, and remitted to the appropriate taxing authority by the Employer, or its agent.

6.02 Payment Events: A Participant shall be entitled to receive a distribution from the Plan, pursuant to his or her election as to the form of distribution in accordance with the following:

a)      Salary Reduction and Bonus Reduction Accounts: A Participant shall receive the balance of his or her Salary Reduction and Bonus Reduction sub-Accounts, adjusted for Deemed earnings and losses thereon, as soon as practicable following his or her termination of employment, in conformity with the Employer’s payroll practices, but no later than 100 days following the Participant’s termination of employment.

b)      Employer Contribution Sub-Accounts: A Participant shall receive the balance of his or her Employer Contribution sub-Accounts that have not been forfeited under Section 5.02 of the Plan six (6) months following his or termination of employment with the Employer and all of its Affiliates.

c)      Change in Control: Notwithstanding the provisions of paragraphs (a) and (b) above, a Participant shall receive the vested balance of his or her entire Account as soon as practicable following the third anniversary of a Change in Control, regardless of whether such Participant has incurred a termination of employment from the Employer or its Affiliates. If there occurs a Change in Control, the Committee and the Employer shall direct the Trustee to remit to the Employer amounts necessary to pay any taxes that may be due for such payments to the Participant within the time period described herein. After remittance of the tax reimbursement to the Employer, the Trustee shall remit the balance of the remaining account balances maintained on behalf of the Participant directly to the Participant. The Trustee shall not be responsible for the preparation of any tax reporting materials, nor the remittance of any such taxes, to any tax authorities. Such responsibilities shall be exclusively the responsibility of the Employer.

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6.03 Form of Payment:

a)      A Participant shall irrevocably elect to receive a payment of his or her benefits in either a single lump sum payment or annual installment payments over a period that shall not be less than 10 annual installments.

b)      A Participant’s benefits shall be paid to him or her in cash only.

6.04 Death Distributions: To the extent not forfeited pursuant to the terms of this Plan, upon the death of the Participant, any benefit to which the Participant would be entitled to (but for his or her death) shall be paid to the Participant’s Beneficiary or Beneficiaries in a form elected by the Participant. To the extent the Participant has not designated a Beneficiary to receive his or her benefits pursuant to this Plan, the Participant’s benefits (or the portion thereof not so payable to a Beneficiary) shall be paid to the Participant’s estate.

6.05 Valuation of Benefit Payments: Each day that the New York Stock Exchange is open shall be a valuation date for the Plan. For purposes of assigning a value to a distribution to occur under either Sections 6.02 or 6.04 of the Plan, the Committee (or in the case of a Change in Control, the Trustee), shall designate the value of the Participant’s Account as of the date or dates such Account is to be paid out to the Participant.

ARTICLE 7

ADMINISTRATION OF THE PLAN

7.01 Plan Administration: The Plan shall be administered by the Committee. A Participant who also is a member of the Committee shall not participate in any decision involving such individual’s rights, duties and obligations as a Participant under the Plan, if such participation constitutes a conflict of interest. Subject to the limitations of Section 8.01 of the Plan, any action to be taken by the Employer in the Plan may be taken by the Committee.

7.02 Committee Action: A majority of the Committee (if it has more than two members) shall constitute a quorum for the transaction of business. All actions taken by the Committee at a meeting shall be by the vote of a majority of those present at such meeting but any action may be taken by the Committee without a meeting upon written consent signed by all of the members of the Committee. The Committee is expressly authorized to delegate any and all authority granted it under this Plan to any employee of the Company, or to any other person.

7.03 Plan Rules and Regulations: The Committee may from time to time establish rules and regulations for the administration of the Plan and adopt standard forms to be used under the Plan, such as beneficiary designation forms, provided such rules and forms are not inconsistent with the provisions of the Plan. Any duties or responsibilities of the Committee may be delegated to any individual employee or departmental function within the Company.

12

7.04 Determinations by Committee: All determinations of the Committee, irrespective of their character or nature, including, but not limited to, all questions of construction and interpretation, shall be final, binding and conclusive on all parties. The Committee shall have discretionary authority in making all decisions under the Plan, including factual determinations. In construing or applying the provisions of the Plan, the Committee shall have the right to rely upon a written opinion of legal counsel, which may be independent legal counsel or legal counsel regularly employed by the Company, whether or not any question or dispute has arisen as to any distribution from the Plan.

7.05 Plan Records: The Committee shall be responsible for maintaining books and records for the Plan. Each Participant or the Participant’s beneficiary or Representative shall be notified annually of the balance in the Participant’s Account including the vested portion thereof.

7.06 Plan Expenses: The Company shall pay all expenses of administering the Plan.

7.07 Claim Procedure: Any person who believes he or she is being denied rights or benefits under the Plan may file a written claim with the Committee. The Committee will notify the claimant in writing if the claim is denied. The notice will: (i) state the reasons for the denial, (ii) reference pertinent Plan provisions on which the denial is based, (iii) describe any additional material or information needed; and (iv) state the steps to be taken to request review of the decision. The notice will be given within 90 days after the Committee receives the claim (or within 180 days if special circumstances require an extension and written notice of the extension and circumstances is given to the claimant within the initial 90 day period). If the notice is not given within this period, the claim will be considered denied as of the last day of such period and the claimant may request review of the claim.

7.08 Review Procedure: Within 60 days of receipt by the claimant of the written notice of denial of the claim, or within 60 days after the claim is deemed denied, the claimant may file a written request with the Committee for review of the denied claim, including the conducting of a hearing, if deemed necessary by the Committee. The claimant may review pertinent documents and submit issues and comments in writing. The Committee will give its written decision on the claim appeal promptly, but not later than 60 days after the receipt of the claimant’s request for review, unless special circumstances (such as the need to hold a hearing) require an extension of time, in which case the 60 day period may be extended to 120 days. The Committee shall notify the claimant in writing of the extension. The decision on review will: (i) state the reasons for the decision, and (ii) contain references to pertinent Plan provisions upon which the decision is based.

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ARTICLE 8

MISCELLANEOUS

8.01 Amendment or Termination: The Employer reserves the right to amend or terminate this Plan or its Trust (including the ability to revoke the Trust, but subject to Plan Section 4.03) at any time, or from time to time, in any respect, retroactively or prospectively, by written instrument adopted by the Committee, provided, however, that any amendment to the Plan intended to change the level or type of benefits provided under the Plan (whether by increasing or decreasing such benefits) must be approved by a written instrument adopted by the Compensation Committee of the Board. No amendment or termination of the Plan shall reduce, diminish, or otherwise alter the right of a Participant or Beneficiary to benefits to which he or she was entitled, had the Participant terminated employment with the Employer on the day before the effective date of the amendment or termination.

8.02 Spendthrift Provisions: Participants and Beneficiaries shall have no right of anticipation of any benefits hereunder, and may not sell, transfer, assign, pledge, attach, or otherwise alienate any benefits payable hereunder. Any such attempt at alienation shall be void, and not obligate the Employer, Committee, or Trustee, or their agents or designees, except to the extent provided for in this Plan.

8.03 Non-contractual Plan: Nothing contained in this Plan shall be construed as a commitment or agreement on the part of the Employer to continue the employment of any person employed by the Employer; to continue the employment of any person employed by the Employer; to continue employment of any person at any rate of pay or salary; or diminish the right of the Employer to discharge any Employee. The provisions of this Plan shall not operate as a guarantee that sufficient assets will exist for the Employer to pay any benefits pursuant to this Plan. Participants shall be general creditors of the Employer with respect to benefits payable hereunder.

8.04 Severability: To the extent that any provision of this Plan is deemed to be unenforceable, or would in any way cause this Plan to be subject to Parts 2, 3 or 4 of Title I of ERISA, it shall be deemed severed from this Plan, of no further force or effect, and shall not affect any other provision of this Plan which shall continue without the offending provision.

8.05 Governing Law: The provisions of this Plan shall be governed by the laws of the State of Indiana to the extent not preempted by federal law.

8.06 Corporate Successors: This Plan shall not automatically be terminated upon the sale, transfer, merger, or other conveyance of the Employer to, or with, another entity, but shall survive unless amended or terminated pursuant to Section 8.01 of the Plan.

14

        Executed on this the 14th day of March, 2003.

THE COMMITTEE:

Chief Financial Officer

Controller

Treasurer

Sr. Vice President - Human Resources

30271007.1
3/14/03

15

SCHEDULE A

Employees designated to be in the Plan as Group “A” Participants shall be administered within the parameters of this Schedule A. Schedule A is sometimes referred to as the Supplemental Executive Retirement Plan or “SERP”.

1.     Eligibility: Group A Participants are eligible to participate in the Plan effective January 1, 2001. Participants are not required to first contribute to the Qualified Plan to be eligible to defer in this Plan.

2.     Deferral Limits: Group A Participants may elect to defer no less than 1% nor more than 15% of each of his or her base salary and his or her Bonus Compensation into this Plan.

3.     Employer Matching Contribution: Until modified by the Committee or the Board, Group A Participants shall receive an Employer Matching Contribution each pay period in an amount equal to 50% of the amount deferred by the Group A Participant for such week. Fifty percent of the Employer Matching Contribution shall be Deemed to be invested Employer common stock; the remaining 50% shall be Deemed to be invested in accordance with Plan Section 4.04.

4.     Vesting: Employer Contributions for Group A Participants shall vest according to the following, subject to Plan Section 5.01:

Years of Service	Percent Vested
0-4	0%
5 or more	100%

SCHEDULE B

Employees designated to be in the Plan as Group “B” Participants shall be administered within the following parameters of this Schedule B. Schedule B is sometimes referred to as the “Mirror Plan” or Excess Benefit Plan.

1.     Eligibility: Group B Participants are eligible to Participate in the Plan effective January 1, 2001. Group B Participants must participate in the Qualified Plan up to the limitations prescribed by the Qualified Plan.

2.     Deferral Limits: Group B Participants may elect to defer no less than 1% nor more than 15% of each of his or her base salary and his or her Bonus Compensation into this Plan; provided, however, that the combined contributions between the Qualified Plan and this Plan may not exceed 20% of the Participant’s Compensation.

3.     Employer Matching Contribution: Until modified by the Committee or the Board, Group B Participants shall receive an Employer Matching Contribution each pay period in an amount equal to 40% of the amount deferred by such Participant for such pay period, taking into account no more than 6% of such Participant’s Compensation deferred through this Plan and the Qualified Plan for such pay period. Fifty percent of the Employer Matching Contribution shall be Deemed to be invested Employer common stock; the remaining 50% shall be Deemed to be invested in accordance with Plan Section 4.04.

4.     Vesting: Employer Contributions for Group B Participants shall vest according to the following, subject to Plan Section 5.01:

Years of Service	Percent Vested
1	20%
2	40%
3	60%
4	80%
5	100%

TABLE OF CONTENTS

ARTICLE 1....................................................................1

1.01  Purpose................................................................1

1.02  Adoption of Plan.......................................................1


ARTICLE 2....................................................................1

2.01 Account.................................................................1

2.02 Affiliate...............................................................1

2.03 Beneficiary.............................................................1

2.04 Bonus Compensation......................................................2

2.05 Bonus Deferral Contributions............................................2

2.06 Board...................................................................2

2.07 Change of Control.......................................................2

2.08  COA Holding............................................................2

2.09  Code...................................................................3

2.10 Committee...............................................................3

2.11 Compensation............................................................3

2.12 Deemed..................................................................3

2.13 Disability..............................................................3

2.14 Effective Date..........................................................3

2.15 Eligible Employee.......................................................3

2.16 Employee................................................................3

2.17 Employer................................................................3

2.18 Employer Basic Contributions............................................3

2.19 Employer Contribution...................................................3

2.20 Employer Matching Contributions.........................................3

2.21 Employer Special Contribution...........................................4

2.22 Employment Commencement Date............................................4

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2.23 ERISA...................................................................4

2.24 Investment Fund.........................................................4

2.25 Normal Retirement Age...................................................4

2.26 Participant.............................................................4

2.27 Plan....................................................................4

2.28 Plan Year...............................................................4

2.29 Qualified Plan..........................................................4

2.30 Salary Reduction Agreement..............................................4

2.31 Salary Reduction Contribution...........................................5

2.32 Service Provider........................................................5

2.33 Trust...................................................................5

2.34 Trust Agreement.........................................................5

2.35 Trustee.................................................................5

2.36 Year of Service.........................................................5


ARTICLE 3....................................................................5

3.01 Eligibility.............................................................5

3.02 Participation...........................................................6


ARTICLE 4....................................................................6

4.01 Contributions...........................................................6

4.02 Participant Accounts....................................................6

4.03 Rabbi Trust.............................................................7

4.04 Investments.............................................................7

4.05 Employer Stock..........................................................9

4.06 Provisions Upon a Change in Control.....................................9


ARTICLE 5....................................................................10

5.01 Vesting.................................................................10

5.02 Forfeitures.............................................................10

ii

5.03 Non-vested Amounts......................................................10


ARTICLE 6....................................................................11

6.01 General.................................................................11

6.02 Payment Events..........................................................11

6.03 Form of Payment.........................................................12

6.04 Death Distributions.....................................................12

6.05 Valuation of Benefit Payments...........................................12


ARTICLE 7....................................................................12

7.01 Plan Administration.....................................................12

7.02 Committee Action........................................................12

7.03 Plan Rules and Regulations..............................................12

7.04 Determinations by Committee.............................................13

7.05 Plan Records............................................................13

7.06 Plan Expenses...........................................................13

7.07 Claim Procedure.........................................................13


7.08 Review Procedure........................................................13


ARTICLE 8....................................................................14

8.01 Amendment or Termination................................................14

8.02 Spendthrift Provisions..................................................14

8.03 Non-contractual Plan....................................................14

8.04 Severability............................................................14

8.05 Governing Law...........................................................14

8.06 Corporate Successors....................................................14

iii

EX-10

EXHIBIT 10(h)

RESTRICTED STOCK AWARD AGREEMENT

      THIS RESTRICTED STOCK AWARD AGREEMENT ("Agreement") is made and entered into as of this _____ day of _______, 2004, by and between COACHMEN INDUSTRIES, INC., an Indiana corporation (the "Company"), and ____________, an individual (the "Participant").

        WHEREAS, the Company has heretofore adopted the 2000 Omnibus Stock Plan of Coachmen Industries, Inc. (the "Plan");

        WHEREAS, the Company desires to grant an award of restricted stock to the Participant pursuant to the Plan.

        NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the parties do hereby agree as follows:

        1.     Certain Definitions.  When used herein, the following terms shall have the meanings set forth below:

        A.     “Change in Control” of the Company shall mean the occurrence of any of the following:

(i)     any “person” (as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding the Company, its affiliates, any qualified or non-qualified plan maintained by the Company or its affiliates, and any Passive Investor) becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under such Act), directly or indirectly, of securities of the Company representing more than 20% of the combined voting power of the Company’s then outstanding securities;

(ii)     during a period of 24 months, a majority of the Board of Directors of the Company ceases to consist of the existing membership or successors nominated by the existing membership or their similar successors;

(iii)     shareholder approval of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 60% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

(iv)     shareholder approval of either (i) a complete liquidation or dissolution of the Company or (ii) a sale or other disposition of all or substantially all of the assets of the Company, or a transaction having a similar effect.

        B.     “Code” means the Internal Revenue Code of 1986, as amended, or any successor revenue code which may hereafter be adopted in lieu thereof.

        C.     “Committee” means the Management Development/Compensation Committee of the Board of Directors of the Company.

        D.     “Company Stock” means shares of the Company’s common stock.

        E.     “Passive Investor” means any person who becomes a beneficial owner of 20% or more of the combined voting power of the Company’s then outstanding securities solely because (i) of a change in the aggregate number of voting shares outstanding since the last date on which the person acquired beneficial ownership of any voting shares or (ii) (A) the person acquired beneficial ownership of the shares based on calculations correctly performed and using the Company’s most current reports publicly on file with the Securities and Exchange Commission which indicated that acquisition of the shares would not cause the person to become the beneficial owner of 20% or more of the voting shares then outstanding, and (B) the person had no notice or reason to believe that acquisition of the shares would result in the person becoming the beneficial owner of 20% or more of the voting shares then outstanding, and (iii) the person sells a number of shares that reduces the person’s beneficial ownership of the voting shares to less than 20% of the voting shares outstanding within 10 business days after receiving notice from the Company that the 20% threshold had been exceeded.

        F.     “Performance Measurement Period” means the three year period beginning January 1, 2004 and ending December 31, 2006.

        G.     “Performance Measurement Period Actual Net Income” means the sum of the Company’s consolidated net income for each of the three calendar years included in the Performance Measurement Period as set forth in the Company’s audited consolidated financial statements for each such year during the Performance Measurement Period.

        H.     “Performance Measurement Period Target Net Income” means the aggregate consolidated net income target for the Company for the Performance Measurement Period as determined by the Committee prior to the commencement of the Performance Measurement Period.

        I.     “Restricted Stock Award” means the restricted stock award granted pursuant to this Agreement.

        J.     “Target Award” means ________ shares of Company Stock.

        2.     Grant of Award. The Company hereby grants to the Participant a Restricted Stock Award of an aggregate of __________ (______) shares of Company Stock (the “Shares”), on the terms and conditions set forth herein. The Restricted Stock Award will vest as set forth in Section 8.

        3.     Issuance of Shares. The Shares shall be issued in the Participant’s name as soon as reasonably practicable after the date of execution of this Agreement. Certificates

2

for the Shares shall be held in custody by the Company for the account of the Participant until the earlier of (i) the Lapse Date, as defined in Section 6 of this Agreement, or (ii) the date on which the Shares have been forfeited on or before the Lapse Date as provided in Section 6 of this Agreement.

        4.     Rights of Participant. Subject to the restrictions and risks of forfeiture set forth in this Agreement, the Participant shall be entitled to all rights of a stockholder of the Company with respect to the Shares, including the right to vote the Shares and, subject to Section 7 of this Agreement, the right to receive dividends and/or other distributions, if any, declared on such Shares from time to time. Dividends shall be paid into an interest-bearing account and held by the Company, and shall be subject to the general creditor’s of the Company, until paid to the Participant upon delivery of the certificates for the Shares pursuant to which the dividends were paid. Dividends and interest paid pursuant to Shares which are forfeited will be retained by the Company.

        5.     Transfer Restrictions. Until the Lapse Date, the Shares, and the right to vote such Shares or receive dividends on such Shares, shall not be sold, exchanged, assigned, pledged, bequeathed, devised, or otherwise transferred, directly or indirectly, voluntarily or involuntarily, by the Participant, or any person or entity claiming through or on behalf of the Participant, and no Shares may be subject in any manner to attachment, lien, execution, transfer by bankruptcy, judicial order or by operation of law, garnishment or other alienation or encumbrance of any kind, either direct or indirect, voluntarily or involuntarily before the Lapse Date; provided, however, that, subject to the terms of this Agreement, such Shares may be transferred upon the death of the Participant to the legal representative of the estate of the Participant or the person or persons who shall acquire the right to receive the Shares by bequest or inheritance or by reason of the death of the Participant. Any transfer or purported transfer of Shares in violation of the restrictions set forth in this Section 5 shall be null and void and shall result in the forfeiture to the Company, without notice and without consideration to the Participant, of the Shares transferred or purportedly transferred.

        6.     Release of Restrictions. The restrictions set forth in Section 5 shall lapse upon the earlier of the following (the “Lapse Date”): (i) the first day of the year following the end of the Performance Measurement Period (subject to completion of the final accounting and audit of the Company’s financial statements for the third year of the Performance Measurement Period), or (ii) the occurrence of a Change in Control.

        7.     Forfeitures. The Shares shall be forfeited without notice and without consideration immediately in accordance with the following:

        A.     if the Participant’s employment with the Company is terminated during the Performance Measurement Period for any reason other than death, disability or retirement at age 65 or older, the Shares shall forfeit, unless the Committee, in its discretion, determines otherwise in the event the Company terminates the Participant’s employment for other than “cause” or the Participant retires prior to age 65; or

3

        B.     if the Participant transfers the Shares in any manner in violation of Section 5; or

        C.     if the Participant is demoted during the Performance Measurement Period, including, without limitation, in terms of title, position or duties, such that the Participant is no longer an Executive or Senior Manager of the Company, as determined by the Committee in its discretion; or

        D.     if, at any time during the Performance Measurement Period, the Participant has no Business Protection Agreement in effect with the Company; or

        E.     if, at any time during the Performance Measurement Period, the Participant is not in compliance with the Company’s Code of Conduct, as determined by the Committee in its discretion; or

        F.     the Participant will forfeit all Shares granted to him under this Agreement with respect to any Shares that are not vested pursuant to Section 8 of this Agreement.

Any Shares forfeited under this Section 7 shall be returned to the Company. Any dividends previously paid with respect to any forfeited Shares shall also be forfeited and returned with the Shares so forfeited.

        8.     Vesting of Shares. The restrictions on the Shares set forth in Section 5 shall lapse, and certificates for such Shares held for the Participant shall be distributed to the Participant as described in this Section 8. The Restricted Stock Award shall vest, if at all, as of the first day of the year following the end of the Performance Measure Period. The portion of the Restricted Stock Award that vests shall be equal to the product obtained by multiplying (i) the Target Award by (ii) the percentage obtained (the “Vesting Percentage”) as a result of dividing the Performance Measurement Period Actual Net Income by the Performance Measurement Period Target Net Income; provided, however, that, notwithstanding the foregoing, (a) no portion of the Restricted Stock Award shall vest unless the Vesting Percentage is at least 85% (the “Threshold Percentage”), and (b) the maximum Vesting Percentage shall be 115% (the “Maximum Percentage”). A certificate for the number of Shares which vest in accordance with this Section 7 shall be delivered to the Participant within thirty (30) days after the filing of the Company’s Form 10-K with the Securities and Exchange Commission for the third year of the Performance Measurement Period.

        9.     Termination of Employment Upon Death, Disability or Retirement. If the Participant’s employment is terminated during the Performance Measurement Period by reason of the Participant’s death, disability or retirement at age 65 or older, the Restricted Stock Award will be prorated based on the date of death, disability or retirement and the number of months the Participant was actively employed during the Performance Measurement Period. The Restricted Stock Award, as so prorated, which shall vest shall be determined in accordance with Section 8 as of the first day of the year following the end of the Performance Measurement Period.

4

        10.     Code Section 162(m) Limitation. Notwithstanding anything in this Agreement to the contrary, to the extent that Code Section 162(m) would operate to limit the Company’s federal income tax deduction for remuneration with respect to a Participant, resulting in federal income tax liability to the Company, the Participant’s receipt of Shares shall be deferred until Section 162(m) no longer operates to result in such federal income tax liability to the Company. The determination of whether Code Section 162(m) operates to limit the Company’s deduction in a manner resulting in federal income tax liability to the Company will be determined by the Committee. Payment of the Shares shall occur in the following calendar year (or, if necessary, each subsequent calendar year) to the extent such payment, when added to other remuneration subject to the Section 162(m) limit for such year, does not result in federal income tax liability to the Company. Shares deferred hereunder shall be fully vested and shall not be forfeited for any reason, including, without limitation, termination of employment.

        11.     Change in Control. Notwithstanding anything in this Agreement to the contrary, upon a Change in Control during any Performance Measurement Period, the Participant will immediately vest all in of the Shares, at the 115% level, regardless of whether the Participant continues to be employed by the Company or any successor to the Company. All certificates for shares shall be immediately delivered to the Participant.

        12.     Section 83(b) Election. The Participant may make an election in accordance with Section 83(b) of the Internal Revenue Code of 1986, as amended, within 30 days of the grant of the Shares, even though the Shares will not vest, if at all, until the Lapse Date. Such election must be filed by the Participant with the Internal Revenue Service Center where the Participant files his or her federal income tax return and attach a copy of the election to his or her income tax return for the year the Restricted Stock Award is made. If such election is made, the Participant will incur ordinary income tax on the fair market value of the Shares on the date of the grant, even though the Participant’s rights to the Shares do not vest until the Lapse Date, and, under current law, subsequent appreciation in the value of the stock will be taxed to the Participant when the Participant sells the Shares at capital gains tax rates. A sample Section 83(b) election is attached to this Agreement as Appendix A. If the Participant declines to make the Section 83(b) election, the Participant will incur ordinary income tax on the fair market value of the Shares on the Lapse Date, provided the Shares have not been forfeited before the Lapse Date, and, under current law, any subsequent gain or loss when the Participant sells the Shares will be taxed to the Participant at capital gains tax rates. If the Participant decides to make a Section 83(b) election, it is irrevocable and the Participant will not be able to take a deduction if the Restricted Stock Award does not vest or the Shares are subsequently forfeited or the value of the Shares declines.

        The Company shall have the right to require the Participant to pay the Company the amount of any taxes which the Company is or will be required to withhold with respect to such Shares before the certificates for such Shares are delivered to the Participant in accordance with this Agreement; provided, however, that the Participant may elect to meet the tax withholding requirement by requesting the Company to withhold from the Restricted Stock Award the appropriate number of Shares, rounded up to the next whole number, which would result in proceeds equal to the tax withholding

5

requirement. The Participant may make such election by completing an election form in the form attached to this Agreement as Appendix B and delivering it to the Company on or before the date on which certificates for the Shares are delivered to the Participant. If the amount of any required tax withholding is not paid in cash or by the Participant’s election to withhold shares from the Restricted Stock Award, the Company may elect to deduct such taxes from any other amounts then payable in cash or in Shares or from any other amounts payable any time thereafter to the Participant or take such other action it deems appropriate, including voiding the Restricted Stock Award. The Company shall not deliver certificates for any Shares subject to the Restricted Stock Award until the tax withholding obligation is satisfied as provided in this Section 10.

        13.     Provisions of the Plan. All of the provisions of the Plan pursuant to which this Agreement is made are hereby incorporated by reference and made a part hereof as if specifically set forth herein, and to the extent of any conflict between this Agreement and the terms in the aforesaid Plan, the Plan shall control. To the extent any capitalized terms are not otherwise defined herein, they shall have the meaning set forth in the Plan.

6

        14.     Adjustments Upon changes in Capitalization. In the event of changes in all of the outstanding Company Stock by reason of stock dividends, stock splits, reclassifications, recapitalizations, mergers, consolidations, combinations or exchanges of shares, reorganizations or liquidations or similar event, the number and class of Shares subject to a Restricted Stock Award shall be equitably adjusted by the Committee. Any such adjustment may provide for the elimination of any fractional shares which might otherwise become subject to a Restricted Stock Award.

        15.     Parties in Interest; Section Headings. This Agreement shall inure to the benefit of the Company, its successors and assigns, and shall be binding on the Participant and the Participant’s heirs, personal representatives, successors and assigns. The Company may assign its rights under this Agreement. The Participant may not assign his/her rights hereunder. The section headings contained in this Agreement are inserted as a matter of convenience and shall not be considered in interpreting or construing this Agreement.

        16.     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana.

        17.     Entire Agreement; Waiver. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede all prior agreements, written and oral, between the parties hereto with respect to the subject matter hereof. The waiver of a breach of any term or condition of this Agreement must be in writing signed by the party sought to be charged with such waiver, and such waiver shall not be deemed to constitute the waiver of any other breach of the same or of any other term or condition of this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remaining provisions.

        18.     Amendment. This Agreement may be amended only by a writing signed by each of the parties hereto; provided, however, that the Committee may modify the Performance Measurement Period Target Net Income as it deems reasonable in the event of any circumstance (including without limitation unusual or nonrecurring events, changes in tax laws or accounting principles or practices or changed business or economic conditions) that cause such Target Net Income to be inappropriate.

7

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COACHMEN INDUSTRIES, INC.
 

 
By________________________________

 
Title______________________________

"PARTICIPANT"
 

__________________________________

15149842.1

8

Appendix A

ELECTION UNDER SECTION 83(b) OF
THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (the “Code”)

        Pursuant to Section 83(b) of the Code and Treasury Regulation §1.83-2 the undersigned hereby makes the election described in Section 83 (b) of the Code and states as follows:

        The name, address and taxpayer identification number of the taxpayer is

        The property with respect to which the election is made is: ___ shares of Common Stock of Coachmen Industries, Inc.

        The date or dates on which the property was transferred is ________, 2004 and the taxable year for which such election was made is December 31, 2004.

        The nature of the restriction or restrictions to which the property is subject is as follows: Shares are restricted and may not be transferred or sold until three years from the date of grant and then vest only upon satisfaction of certain performance criteria.

        The fair market value at the time of transfer (determined without regard to any lapse restriction, as defined in Treasury Regulation §1.83-3(i)) of each property with respect to which the election is being made is $         .

        The amount paid for such property is $0.00.

        Copies of this election statement have been furnished to other persons as required by Treasury Regulation §1.83-2(d).

_____________________________________

                               (Signature)

Dated:___________________, 2004

9

Appendix B

Election To Withhold Shares From Restricted Stock Award
to Satisfy Withholding Obligations

        The undersigned Participant in the Coachmen Industries, Inc. Performance Based Restricted Stock Plan has received a Restricted Stock Award under the Plan as evidenced by the Restricted Stock Award Agreement dated _________, 200_ by and between the undersigned and Coachmen Industries, Inc. (the “Company”).

        The undersigned hereby requests the Company to withhold from the Restricted Stock Award the appropriate number of shares of Common Stock, rounded up to the nearest whole share, which would result in proceeds equal to all applicable tax withholding requirements with respect to such Restricted Stock Award. The appropriate number of shares to be withheld shall be determined based on the closing sales price of the Common Stock on the NYSE Composite Transactions Tape, as reported in the Wall Street Journal, Midwest Edition, on the first trading day following the Lapse Date . The under signed understands that the election made herein is irrevocable.

___________________________________
Signature of Participant

Name:_____________________________

 
Date:______________________________

10

EX-10

EXHIBIT 10(q)

Summary of Life Insurance and Long Term Disability Benefits for Executives

        The Company has established as an executive benefit a split dollar life insurance program for certain of the Company’s executive officers. In connection with the split dollar life insurance program, the Company agreed to make premium payments on life insurance policies purchased for the benefit of certain of its executives. The executive officer has the right to elect coverage of $1,000,000, $500,000 or $250,000 if he or she participates in the Company’s Executive Savings Plan or coverage of $500,000 or $250,000 for certain senior management employees. The executive officer has the right to designate the beneficiary under the policies. Upon the death of an insured executive, the Company is entitled to receive, out of the proceeds of the policy, the amount of its cash investment in the policies.

        The Company owns corporate owned life insurance policies on the lives of the Company’s executive officers. Using the corporate owned life insurance policies, the Company has established as an executive benefit an endorsement split dollar life insurance program for certain of the Company’s executive officers. The executive has the right to elect coverage of $1,000,000, $500,000 or $250,000 if he or she participates in the Company’s Executive Savings Plan or coverage of $500,000 or $250,000 for certain senior management employees if he or she participates in the Company’s Mirror Savings Plan. The executive officer has the right to designate the beneficiary under the policies. Upon the death of the insured executive, the Company is entitled to receive, out of the proceeds of the policy, all amounts in excess of the amounts under the endorsement agreement. The Company pays all premiums associated with corporate owned life insurance policies.

EX-10

EXHIBIT 10(r)

RESOLUTION OF THE BOARD OF DIRECTORS OF
COACHMEN INDUSTRIES, INC.
REGARDING
NON-MANAGEMENT DIRECTOR COMPENSATION

RESOLVED, that effective with the election of the Board of Directors for the 2004-2005 service year to begin in May, 2004, each Non-Management Director of the Company shall be entitled to the following annual compensation for his or her services on the Board of Directors of Coachmen Industries, Inc., as follows:

a) A Board Retainer of twenty-two thousand dollars ($22,000), payable half ($11,000) in cash, and half ($11,000) in common stock;

b) A Committee Fee for each committee on which the Director serves as a Member, in the cash amount of: $5,500 for the Audit Committee and $3,500 for the Management Development/Compensation Committee and $3,500 for the Governance Committee;

c) A Committee Chairman’s Fee, in lieu of (b) above, for each committee on which the Director serves as the Chairman, in the cash amount of: $7,500 for the Audit Committee and $5,500 for the Management Development/Compensation Committee and $5,500 for the Governance Committee; and

d) A grant of one thousand (1,000) shares of restricted common stock.

The above compensation will be promptly paid once each calendar year immediately following the Annual Shareholders Meeting.

The value of each element of compensation in common stock shall be equal to the closing price of the common stock on the NYSE Composite Transactions Tape, as reported in the Wall Street Journal, Midwest Edition on the first day of the said directors’ meeting.

FURTHER RESOLVED, that at least fifteen (15) days prior to each annual shareholders’ meeting, each Director may irrevocably elect in writing to receive any portion of his or her cash compensation instead as: in unrestricted common stock valued at one hundred ten percent (110%) of the cash amount elected, plus an amount calculated by the Company necessary to gross up the Director’s income to cover the Director’s federal income taxes for that year for the additional 10% of stock; or, in restricted common stock valued at one hundred forty percent (140%) of the cash amount elected.

FURTHER RESOLVED, that all stock delivered hereunder are authorized under the Coachmen Industries, Inc. 2000 Omnibus Stock Incentive Program (“Program”), as amended; and, all restricted common stock shall be deposited with the Company until the completion of two (2) years of service from the applicable annual shareholders’ meeting

and shall be subject to the following restrictions: (a) deposited stock shall be non-transferable until the completion of that two (2) year period of service; and, (b) the shares shall be forfeited to the Company without any payments to the Director in the event of a termination of the Director’s service on the Board prior to the completion of the two (2) year period of service for any reason other than death, disability or mandatory retirement; except that, in the event of a Change in Control, as defined in the Program, all such stock shall be delivered to the Director without any restrictions.

Date of Action:                       8/5/2004                            

Action Taken:             Approved Unanimously               

EX-10

EXHIBIT 10(s)

Summary of 2005 Performance Metrics under the Company’s Executive Annual Performance Incentive Plan

        The Company has established the Executive Annual Performance Incentive Plan, a copy of which is included as an exhibit to the Company’s Form 10-K. Participants are selected each year based on recommendations of the Executive Management Committee and approved by the Management Development/Compensation Committee of the Board of Directors. A participant may be awarded a cash bonus for the successful performance of his or her business unit, and may also be awarded a cash bonus based on consolidated group performance.

        For 2005, a participant’s performance will be measured based on the following metrics: revenue, pre-tax profit, and net operating working capital, with varying weights assigned to each metric. Bonuses are payable based on the achievement of specific performance goals for each metric; provided, however, that the pre-tax profit metric must be met in order for any bonus to be paid. Threshold, target and maximum bonuses, equal to a percentage of the participant’s base salary, are payable upon achievement of a minimum percentage (generally 50%), 100% or up to 200%, respectively, of all performance goals. For 2005, the percentage of base salary that may be paid as bonus to the Company’s executive officers ranges from 30% to 100%. For 2005, the following named executive officers are eligible to receive a bonus of up to the following percentages of their respective base salary: Skinner — 100%; Schafer — 85%; Tomczak — 65%; Lavers — 65%; and Terlep — 98%.

EX-21

EXHIBIT 21

Registrant and Subsidiaries of the Registrant

                                                              Percent of Voting
                                                 State of     Securities Owned
                                                Organization  By the Registrant
                                                ------------  -----------------

Coachmen Industries, Inc.  (Registrant)         Indiana            100%
Coachmen Operations, Inc.                       Indiana            100%
Consolidated Leisure Industries, LLC            Indiana            100%
Consolidated Building Industries, LLC           Indiana            100%
Coachmen Recreational Vehicle Company, LLC      Indiana            100%
Coachmen RV Company of Georgia, LLC             Georgia            100%
Coachmen RV Licensed Products Division, LLC     Indiana            100%
Coachmen RV Group West Coast Regional
  Operations Center, LLC                        California         100%
Georgie Boy Mfg, LLC                            Indiana            100%
Viking Recreational Vehicles, LLC               Michigan           100%
Michiana Easy Livin' Country, LLC               Indiana            100%
All American Building Systems, LLC              Indiana            100%
All American Homes, LLC                         Indiana            100%
All American Homes of Colorado, LLC             Colorado           100%
All American Homes of Florida, LLC              Florida            100%
All American Homes of Indiana, LLC              Indiana            100%
All American Homes of Ohio, LLC                   Ohio             100%
All American Homes of Iowa, LLC                   Iowa             100%
All American Homes of Kansas, LLC                Kansas            100%
All American Homes of North Carolina, LLC    North Carolina        100%
All American Homes of Tennessee, LLC           Tennessee           100%
The All American Homes Store of Indiana, LLC    Indiana            100%
The All American Homes Store of Colorado, LLC   Colorado           100%
The All American Homes Store of Tennessee, LLC Tennessee           100%
Mod-U-Kraf Homes, LLC                           Virginia           100%
The All American Homes Store of Kansas, LLC      Kansas            100%
Miller Building Systems, Inc.                   Delaware           100%
Miller Building Systems of Indiana, Inc.        Indiana            100%
Miller Building Systems of New York, Inc.       New York           100%
Miller Building Systems of Pennsylvania, Inc.   Indiana            100%
Miller Construction Services, Inc.              Indiana            100%
Carp Construction Management Services, LLC      Indiana             50%
Consolidated Business Development, LLC          Indiana            100%
Prodesign, LLC                                  Indiana            100%
Coachmen Technology Services, Inc.              Indiana            100%
Coachmen Administrative Services, Inc.          Indiana            100%
COA Financial Services, Inc.                    Delaware           100%
COA Finance Company, LTD                        Bermuda            100%
Coachmen Properties, Inc.                       Indiana            100%
Coachmen Industries of Texas, Inc.               Texas             100%
Coachmen Industries of California, Inc.        California          100%
Rover Industries, Inc.                            Ohio             100%
Gulf Coast Easy Livin' Country, Inc. (Inactive) Florida            100%
Coachmen Properties of Georgia, Inc.            Georgia            100%

66

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
Coachmen Industries, Inc.

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-52378) pertaining to the Retirement Plan and Trust of Coachmen Industries, Inc., 2000 Omnibus Stock Incentive Program and Supplemental Deferred Compensation Plan, Registration Statement (Form S-8 No. 333-59251) pertaining to the 1994 Omnibus Stock Incentive Program, Registration Statement (Form S-8 No. 2-64572) pertaining to the Employee Stock Purchase Plan of Coachmen Industries, Inc. and in the related Prospectus of our reports dated March 4, 2005, with respect to the consolidated financial statements and financial statement schedule of Coachmen Industries, Inc., and subsidiaries, Coachmen management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Coachmen Industries, Inc. and subsidiaries included in this Annual Report (Form 10-K) of Coachmen Industries, Inc. for the year ended December 31, 2004.

/s/ Ernst & Young, LLP

Grand Rapids, MI
March 10, 2005

67

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Claire C. Skinner, certify that:

1. I have reviewed this annual report on Form 10-K of Coachmen Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

               Date: March 10, 2005

                    By:  /s/ Claire C. Skinner                           

Claire C. Skinner    

                                                    Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Joseph P. Tomczak, certify that:

1. I have reviewed this annual report on Form 10-K of Coachmen Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

        Date: March 10, 2005

                 By: /s/ Joseph P. Tomczak                 

Joseph P. Tomczak

                                                       Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
Pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act, as amended.

In connection with the Annual Report on Form 10-K of Coachmen Industries, Inc. (the “Company”) for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each, I, Claire C. Skinner, Chairman of the Board and Chief Executive Officer of the Company and Joseph P. Tomczak, Executive Vice President and Chief Financial Officer, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, based on their knowledge:

        (1)     The Annual Report on Form 10-K of Coachmen Industries, Inc. for the annual period ended December 31, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

                    By:  /s/ Claire C. Skinner                           

Claire C. Skinner    

                                                   Chairman of the Board and Chief Executive Officer

                 By: /s/ Joseph P. Tomczak                 

Joseph P. Tomczak

                                                     Executive Vice President and Chief Financial Officer

Date: March 10, 2005

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Coachmen Industries, Inc. and will be retained by Coachmen Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.