HOLIDAY RV SUPERSTORES INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-16448

HOLIDAY RV SUPERSTORES, INCORPORATED

IRS Employer ID No. Sand Lake West Executive Park State of Incorporation:
59-1834763 7851 Greenbriar Parkway Florida
Orlando, Florida 32819
(407) 363-9211

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

- None -

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

COMMON STOCK

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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of voting stock held by non-affiliates as of January
15, 1999, was approximately $6,015,000. As of January 15, 1999, Holiday RV
Superstores, Incorporated had outstanding 7,173,100 shares of Common Stock.

(See page 37 for index of exhibits)

TABLE OF CONTENTS

ITEM PAGE
- ---- ----
PART I

1. Business..................................................................3

2. Properties................................................................9

3. Legal Proceedings........................................................11

4. Submission of Matters to a Vote of Security Holders......................11

PART II

5. Market for Registrant's Common Equity and Related Stockholder Matters....12

6. Selected Financial Data..................................................13

7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.......................................15

8. Financial Statements and Supplementary Data..............................24

9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................................24

PART III

10. Directors and Executive Officers of the Registrant.......................25

11. Executive Compensation...................................................28

12. Security Ownership of Certain Beneficial Owners and Management...........34

13. Certain Relationships and Related Party Transactions.....................36

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........37

2

HOLIDAY RV SUPERSTORES, INC.
PART I

ITEM 1. BUSINESS

GENERAL

The Registrant ("Company") is a multi-store retail chain engaged in the retail
sales and service of recreation vehicles ("RVs") and recreation boats. The
Company currently operates seven sales and service retail centers, one in the
heart of the Walt Disney World tourist area in Orlando, Florida, two in the Gulf
Coast tourist areas of Tampa and Ft. Myers, Florida, one in Greer, South
Carolina adjacent to Interstate 85, two in California's central valley cities of
Sacramento and Bakersfield and one adjacent to Interstate 10 in Las Cruces, New
Mexico.

All centers offer a full line of both new and used recreation vehicles and
maintain full parts and service facilities, body repair shops and are equipped
to repair virtually any type of recreational vehicle. The Greer and Las Cruces
centers sell and service boats and related marine products.

RECREATIONAL VEHICLE INDUSTRY

The recreation vehicle industry is approximately a $16 billion dollar a year
industry in the United States (Recreational Vehicle Industry Association,
"RVIA", Reston, Virginia), catering to the travel and leisure-time needs of the
estimated 25 million RV enthusiasts through the sale and service of recreation
vehicles. According to the RVIA, (RV NEWS, November 1998) 438,800 new RVs were
shipped by manufacturers to dealers in 1997 compared to 466,800 RVs in 1996,
475,200 in 1995, and 518,800 in 1994. Industry shipment peaked in 1976 through
1978 with 526,000 to 534,000 units.

One in ten American families own a recreation vehicle in the United States,
amounting to nearly nine million owners, according to RVIA, (THE RV CONSUMER,
1997 SURVEY, April, 1997) and an estimated 25 million Americans travel in RVs
(RVIA). There are approximately 170 vehicle manufacturers, 295 suppliers and in
excess of 3,000 RV dealers (RVIA).

The types of recreation vehicles sold by the company consist primarily of travel
trailers and fifth wheels (towables), designed to be towed by another vehicle,
and motorized self-propelled units, built on automotive chassis (motorized
vehicles), powered by gasoline or diesel motors.

Towable recreation vehicles consist of travel trailers, including fifth wheel
travel trailers, folding camping trailers and truck campers (a recreation
camping unit designed to be loaded on

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to, or affixed to, the bed or chassis of a truck). Motorized recreation vehicles
consist of conventional motor homes (Class "A"), van campers (Class "B"), mini
motor homes, low profile motor homes and compact motor homes (all referred to as
Class "C") and van conversions. Class "A" motor homes are constructed by the
recreation vehicle manufacturer on chassis that already have the engine and
drive components. Van campers (Class "B") are panel type vans to which the
recreation vehicle manufacturer adds sleeping facilities, kitchen and toilet
facilities, fresh water storage, 110 volt hook up and other items. Class "C"
units are built on an automotive manufactured van frame with an attached cab
section, or on an automotive manufactured cab and chassis. The recreation
vehicle manufacturer completes the body section containing the living area and
attaches it to the cab section. For the van conversion, the recreation vehicle
manufacturer modifies a completed van chassis aesthetically or decoratively in
appearance for transportation and recreational purposes.

Currently, there are many manufacturers of both towable and motorized recreation
vehicles. Although there are several sources for manufactured conventional vans
including Ford, GMC, and Chrysler, and other foreign manufacturers, there are
only four major manufacturers in the United States supplying chassis with engine
and drive components to the recreational vehicle manufacturers: General Motors
Company, Ford Motor Company, Freightliner Corporation and Spartan Motors
Corporation. Ford Motor Company is the largest supplier of chassis to RV
manufacturers.

Fuel consumption for motorized recreation vehicles has improved substantially
over the last several years. Diesel engines are growing in popularity over
gasoline engines, primarily in the larger bus type vehicles.

INDUSTRY OUTLOOK

The long term prospects for the recreation vehicle industry appear to be bright,
according to the FOURTH ANNUAL RECREATION VEHICLE OUTLOOK (November, 1998),
published by the CIT Group Economic Research Department (CIT). "In the years to
come, the recreation vehicle industry will benefit from the confluence of forces
including demographics and the industry's effort to promote the RV lifestyle",
reports CIT. THE CIT OUTLOOK concludes, " The first group of baby boomers
(boomers were born between 1946 and 1964) will enter the 55-64 age bracket as
early as 2001. By 2010, the number of households in this age group will have
reached eight million, a 65% increase from current levels."

The CIT OUTLOOK concludes they are a bit guarded in their optimistic outlook for
various reasons, among them being; formidable education expenses, the need to
work long before retiring, and other leisure pursuits competing for these
consumer's dollars.

The RV industry recognized the baby boomers opportunity and embarked, in the
spring of 1997, on a highly publicized $18 million national market expansion
program, over a three year period, aimed at showing the lifestyle appeal of
RVing to the baby boomers. The campaign slogan "Go RVing" accurately portrays
the industry in a very favorable light, offering solitude, family time and the
opportunity to slow down and reconnect with the world around us.

4

MARKETING

ADVERTISING AND PROMOTIONS. The Company has a year around advertising campaign
utilizing newspaper, direct mail, billboards, yellow pages, an extensive
Internet website and consumer magazine advertising. The advertising program is
supplemented by on-lot promotions and off-lot consumer shows, organized by trade
groups and private companies, primarily during the peak selling season. The
Company participates in 35 to 40 consumer RV shows and rally's annually,
attended by up to 40,000 consumers each. Smaller product shows are also promoted
by the company at RV parks whereby existing RV owners are targeted. The Company
also promotes off-site product shows in connection with well-known mass
merchandisers in most of its markets. The Company utilizes the services of
professional marketing and public relations firms to assist in implementing the
advertising promotion and public relations campaigns.

E-COMMERCE. The Company's management believes the company has one of the most
comprehensive Internet web pages, (HolidayRV.com) containing the industry's only
web page where a prospective RV buyer can receive a price quote on a new or used
RV or boat and/or complete a confidential credit application. Sales leads are
retrieved daily and electronically forwarded to the Company's dealership
offering the requested product or service closest to the prospect's home.

The Company's management believes its web page and other types of electronic
marketing campaigns will be critical to the total advertising and promotions
effort for the Company in the future.

CUSTOMER BASE. The Company's customer base demographic characteristics vary from
dealership to dealership but primarily are represented as the following. The age
group of 35 years and older represent 82% of the customers, with ages 45 and
older representing 58%. Eighty six percent (86%) are married, 49% are retired,
21% have "blue collar" occupations, and 30% are "white collar" and
professionals. The primary income group is $20,000 to $40,000 comprising 53%.
Twenty six percent (26%) earn $40,000 to $60,000, and 10% earn over $60,000.
Sixty two percent (62%) of the customers are prior owners of RVs, and 63% need
to trade their RV, automobile or boat to make a purchase.

In summary, the Company's primary customer base is 45 years old or older,
retired, earns between $20,000 and $40,000 annually, is a previous owner of an
RV needing to trade to make a purchase.

RETAIL OPERATIONS

The Company, previously Holiday of Orlando, Inc., was incorporated in July 1978,
in the State of Florida. In 1984, a second retail center was opened in Tampa,
Florida. In 1988, the Company opened three new sales and service retail centers,
one in Ft. Myers, Florida, one in Jacksonville, Florida and the third in
Atlanta, Georgia. The Atlanta retail center ceased doing business in December,
1998 when the dealership facility was sold.

5

In February 1990, the Company formed Holiday RV Superstores of South Carolina,
Inc. which acquired an existing retail center in Greer, South Carolina formally,
operating as Ledford's RV and Marine World.

From October, 1992 through January 1993 the Company operated a temporary sales
location in Homestead, Florida, marketing travel trailers to the victims of
Hurricane Andrew needing temporary housing. In December of 1992, the
Jacksonville, Florida dealership was closed.

In January 1994, the Company formed Holiday RV Superstores West, Inc. which
acquired two existing retail centers located in Bakersfield and Roseville
(Sacramento), California, formerly operating as Venture Out, with a corporate
office location in Campbell, California. The Campbell office closed in November,
1995.

In September 1995, the Company formed Holiday RV Superstores of New Mexico, Inc.
which acquired a vacant RV retail facility in Las Cruces, New Mexico. The retail
center began operations in November 1995.

The Company currently markets approximately 60 brands of recreational vehicles
and 10 brands of recreational boats. The Company purchases 58% or more of its
new recreational vehicles from Fleetwood Enterprises Inc., and Thor Industries,
Inc. In addition, the Company sells new recreational vehicles and recreational
boats purchased from a number of other manufacturers including Winnebago
Industries, National RV Holdings, Inc., SMC Corporation, Western Recreational
Vehicles, Inc., Forest River, Inc., Rexall Industries, Inc., Bayliner Marine
Corporation and Sea Ray Boats, Inc. In the opinion of management, the loss of
any one brand of new recreational vehicle would not materially affect the
Company. However, the loss of all the brands sold by the three largest
manufacturers, i.e., Fleetwood Enterprises, Inc., Thor Industries, Inc., or
Winnebago Industries, would have a material effect on the Company's sales. The
Company's management feels the loss of all brands from any of these three
manufacturers to be highly unlikely. Dealer representation decisions for
manufactured brands are made at the manufacturer's plants on a brand-by-brand
basis, rather than centrally at each respective company's corporate
headquarters.

Detailed information on all vehicles, boats and parts inventory at each retail
center, is maintained in the Company's computerized database. Management at each
retail center has "real time" access to this information at anytime for any
dealership owned by the Company.

MANUFACTURERS REPURCHASE AGREEMENTS TO COMPANY'S FLOOR PLAN CREDITORS

Substantially all new vehicles and boats held in inventory for sale are pledged
as security under floor plan contracts with financial institutions. Under such
contracts, the sale of a pledged vehicle to a consumer requires payment to the
lender of the amount attributable to such vehicle under the floor plan contract.
Manufacturers have their respective repurchase agreements in force with the
financial institutions with limited repurchase indemnification to the lenders
against any Company default under the floor plan contracts.

6

SERVICE AND PARTS

The Company maintains fully equipped service facilities equipped to handle
virtually any type of recreation vehicle. The Company is a factory designated
chassis warranty service center for Gillig, Chevrolet Division of General
Motors, Freightliner Motors and Spartan Motors, who reimburse the Company for
such warranty services. The Greer and Las Cruces facilities are fully equipped
to repair all brands of boats and motors it sells.

The Company's service facilities are equipped to make engine and drive train
repairs, as well as repairs to refrigerators, ovens and ranges, air conditioning
systems, plumbing and electrical systems of each recreation vehicle it sells. In
addition, the Company is an authorized service center for most manufacturers of
recreation vehicle components.

The Company maintains service agreements with most companies whose new
recreational vehicles and marine products it sells. These service agreements
allow the Company to purchase parts and obtain technical assistance needed to
repair and service vehicles, boats and equipment manufactured by these
companies. The Company also has a supply of propane gas for resale at all
locations, and provides sewage dump stations for RV waste evacuation.

The parts departments of each retail center supports the Company's sales and
service functions. In addition , each retail center stocks accessory items,
usually sold to recreation vehicle owners, and maintains a computerized
point-of-purchase inventory control and customer tracking system. The Greer and
Las Cruces centers maintain inventories of marine parts and accessories for
marine products sold.

PRINCIPAL PRODUCTS AND SERVICES

The Company's principal products and services for the last three years are
listed below, by major revenue source, as a percentage of total revenue.

Principal Products or Services as a Percentage of Total Revenue

FISCAL YEAR
--------------------------
PRINCIPAL PRODUCT OR SERVICE 1998 1997 1996
- ---------------------------- ---- ---- ----

New and used Vehicles and Boats 87.0% 85.7% 86.9%
Service, Parts and Accessories 9.3 10.5 9.3
Other, Net 3.7 3.8 3.8
----- ----- -----
Total Revenue 100.0% 100.0% 100.0%
===== ===== =====

EMPLOYEE RELATIONS

As of October 31, 1998 and 1997, the Company had 193 and 206 full time
employees, respectively. The Company has no contracts or collective bargaining
agreements with labor unions and has never experienced work stoppages. The
Company's management considers its

7

relations with employees to be good. The Company maintains internal training
programs at every level and has a well developed internal quality control
program and customer satisfaction feedback system for all its dealerships. The
Company maintains a nation-wide recruitment program for sales, service and
management personnel. Support personnel are usually hired from the local labor
force. Factory training programs are available to the employees of the Company
and the Company generally takes full advantage of these programs by sending its
employees to manufacturer supervised schools. Most full time employees are
provided with paid annual vacations, medical and hospitalization insurance
premium reimbursement, sick leave, paid holidays, stock grants and other fringe
benefits. After one year of employment, employees are eligible to participate in
the profit sharing and 401(k) investment plan.

BUSINESS EXPANSION AND DIVERSIFICATION

The Company intends to continue its primary expansion by acquisition of existing
compatible businesses. Existing RV and/or marine retail centers with a minimum
annual revenue of $5 million will be considered for acquisition. The Company's
primary focus is the Sunbelt areas of the U.S. and the western states.
Availability of key product lines and dealership locations on major interstate
highways are two of the primary criteria for screening potential acquisitions.

SEASONALITY

Although the recreation vehicle business is a year round business in the
Company's markets, the recreation vehicle industry is seasonal. The Company has
significantly higher sales in the second and third quarter of its fiscal year,
and significantly lower sales in its first and fourth quarters. During slack
seasons at a particular retail center, the Company reduces inventory of both new
and used RVs and introduces other cutbacks in operations minimizing the impact
of the seasonality on the results of operations. Because a substantial portion
of the Company's expenses are fixed, operating income tends to be lower in the
first quarter and fourth quarter of the Company's Fiscal Year and higher in the
second and third quarters.

COMPETITION AND BUSINESS RISK

Based upon statistics supplied by the Recreation Vehicle Industry Association,
the recreation vehicle industry in North America includes approximately 3,000 RV
dealers and 170 vehicle manufacturers. Competition in the sale of new and used
recreational vehicles is intense. The Company competes with a large number of
retailers, some of which operate in more than one location, although most of the
Company's competitors operate from a single location. The Company believes it is
one of the most competitive RV dealers in the nation offering approximately 70
brands of new recreation vehicles and new boats, supported by extensive coast to
coast service network of facilities that is unique in the industries it serves.

Significant competitive factors in the recreation vehicle sales and service
industry include: vehicle availability, price, service, reliability, quality of
service and convenience. The Company's management is of the opinion that it is
competitive in all factors listed above. Nevertheless, the Company's management
anticipates it will continue to face strong competition in the future.

8

The recreation vehicle business is heavily dependent upon the availability and
terms of financing for the retail purchase of its products. Consequently,
changes in interest rates and the tightening or loosening of credit by
government agencies and financial institutions have dramatically affected the
Company's business in the past and are likely to do so in the future.

INSURANCE COVERAGE

The Company has had little difficulty in obtaining insurance coverage for its
dealership operations. Such insurance has been obtained by the Company annually
on a competitive bid basis, at what it believes to be reasonable premium rates.
The applicable premium rates have been increasing slightly, however, Management
does not believe that such increases will have a material adverse effect on the
business of the Company for the foreseeable future.

GOVERNMENT REGULATIONS

The Company's service facilities are subject to federal, state and local laws
and regulations concerning environmental matters. These laws and regulations
affect the storing, dispensing and discharge of petroleum based products and
other waste, and affect the Company in the securing of permits for its full
service dealership operations and in the ongoing conduct of such operations. The
securing of permits and compliance with all laws and regulations can be costly,
and could affect the Company's earnings. Further, each dealership of the Company
must comply with the requirements of local governmental bodies concerning
zoning, land use, and environmental factors. State and local laws and
regulations also require each dealership to obtain licenses to operate as a
dealer in recreational vehicles. The Company has obtained all necessary licenses
and permits and Management believes the Company is in full compliance with all
federal, state and local laws and regulations. Furthermore, Management is not
aware of any material capital expenditures necessary for compliance with any
federal, state or local laws and regulations.

ITEM 2. PROPERTIES

The Company leases the Orlando, Florida center from its principal stockholders,
officers, and directors, Newton C. Kindlund and Joanne M. Kindlund. The Orlando
dealership is located one half mile from Interstate 4, on Sand Lake Road and is
approximately 2.5 miles from the Interstate 4 entrance to Walt Disney World.
These facilities include 30,000 square feet of buildings on approximately 4
acres of land.

The Tampa, Florida center is owned by the Company and is approximately 3.5 miles
from the intersection of Interstate 4 and Interstate 75, on Highway 301. These
facilities include 5.2 acres of land with a 13,000 square foot building.

The Ft. Myers, Florida center is located on Highway 41, approximately 3 miles
North of the City, and includes 17,300 square feet of building on 3.6 acres of
land. The property is leased from a property trust for which the beneficiaries
are Mr. Kindlund's heirs.

9

The Greer, South Carolina center is leased from a non-affiliated party. The
facility is located adjacent to Interstate 85 between Greenville and
Spartanburg, South Carolina. The facility includes a 31,000 square foot building
on 9 acres of land.

The Roseville, California center is subleased from a non-affiliated party. The
facility is located adjacent to Interstate 80 and includes 24,000 square feet of
buildings on 3.6 acres of land.

The Bakersfield, California center is owned by the Company and is located
adjacent to State Road 99 and includes 17,400 square feet of building on 5.9
acres of land.

The Las Cruces, New Mexico center is owned by the Company and is located
adjacent to Interstate 10. The facility includes 14,000 square feet of building
on 7 acres of land.

The corporate office is leased from a non-affiliated party and is located
approximately one quarter of a mile from the Orlando center on Sand Lake Road.
The facilities include 3,750 square feet of office and conference room
accommodations.

FACILITY AND LOCATION

APPROXIMATE APPROXIMATE
BUILDING SIZE PREMISE SIZE
RETAIL OPERATIONS SQUARE FEET ACRES
- ------------------ ------------- ------------
Owned by Company
Tampa, Florida 13,000 5.2
Bakersfield, California 17,400 5.9
Las Cruces, New Mexico 14,000 7.0

Leased
Orlando, Florida 30,000 4.0
Ft. Myers, Florida 17,300 3.6
Greer, South Carolina 31,000 9.0
Roseville, California 24,000 3.6

EXECUTIVE OFFICES

Leased
Orlando, Florida 3,750 --

The Company believes that its facilities are adequate for the foreseeable future
for the business carried on at each location. Properties in Orlando, Tampa, Fort
Myers, Roseville and Bakersfield are being fully utilized. Properties at Greer
and Las Cruces are not being fully utilized and have area for limited expansion.

10

ITEM 3. LEGAL PROCEEDINGS

The Company is a party to various legal proceedings arising from its ordinary
course of operations. The Company's management believes, based upon the opinion
of the Company's legal counsel, none of these proceedings, individually or in
the aggregate, will result in a material adverse effect on the Company's
consolidated financial position.

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

No matters were submitted, during the fourth quarter of the fiscal year covered
by this report, to a vote of security holders through the solicitation of
proxies or otherwise.

11

PART II

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

MARKET INFORMATION ON COMMON STOCK

The Company's common stock trades on National Market tier of "The Nasdaq Stock
Market", under the symbol RVEE. "The Nasdaq Stock Market" or "Nasdaq" is
highly-regulated electronic securities market comprised of competing Market
Makers whose trading is supported by a communications network linking them to
quotation dissemination, trade reporting, and order execution systems. This
market also provides specialized automation services for screen-based
negotiations of transactions, on-line comparison of transactions, and a range of
informational services tailored to the needs of the securities industry,
investors and issuers. The Nasdaq Stock Market is operated by The Nasdaq-AMEX
Market Group, a newly formed subsidiary of the National Association of
Securities Dealers, Inc. The Nasdaq-AMEX Market Group is the parent of both the
Nasdaq Stock Market and the American Stock Exchange.

The table below gives the market high and low sales prices of the Company's
common stock for the quarters in the fiscal years ended October 31, 1998 and
1997. The prices were furnished by the Nasdaq Stock Market.

MARKET PRICE
----------------------------------
1998 1997
QUARTER ------------- --------------
ENDED HIGH LOW HIGH LOW
------- ---- --- ---- ---
January 31................. 2 1/4 1 1/2 2 1/8 1 17/32

April 30 .................. 2 5/16 1 13/16 2 1/16 1 3/4

July 31 ................... 2 11/16 2 1 31/32 1 25/32

October 31 ................ 2 1/4 1 7/8 1 13/16 1 1/2

DIVIDENDS

No cash dividends have been paid by the Company nor does the Company anticipate
paying cash dividends in the near future.

HOLDERS OF RECORD

As of January 15, 1999, there were 490 holders of record and approximately 2,700
beneficial shareholders of the Company's Common Stock.

12

ITEM 6. SELECTED FINANCIAL DATA:

FISCAL YEAR ENDED OCTOBER 31 (1)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
SELECTED STATEMENT --------------------------------------------------------
OF INCOME DATA: 1998 1997 1996(3) 1995(2) 1994
------- ------- ------- ------- -------

Revenue................................ $74,293 $67,988 $74,764 $70,029 $53,205

Cost of sales.......................... 61,099 55,260 61,562 56,872 44,650
------- ------- ------- ------- -------

Gross profit........................... 13,194 12,728 13,202 13,157 8,555

Selling, general and
administrative expenses.............. 9,611 9,548 9,929 9,758 6,866
------- ------- ------- ------- -------

Income from operations................. 3,583 3,180 3,273 3,399 1,689

Interest income........................ 517 480 393 376 265
Interest expense....................... (1,363) (1,381) (1,505) (1,336) (717)
------- ------- ------- ------- -------
Income before income taxes............. 2,737 2,279 2,161 2,439 1,237

Income taxes........................... 1,044 892 829 980 480
------- ------- ------- ------- -------

Net income............................. $ 1,693 $ 1,387 $ 1,332 $ 1,459 $ 757
======= ======= ======= ======= =======

Basic and diluted Earnings per
common share......................... $ .23 $ .19 $ .18 $ .20 $ .10
======= ======= ======= ======= =======

Weighted average number of
common shares outstanding (basic).... 7,302 7,434 7,524 7,437 7,325

Cash dividends paid per common share... $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======

13

AS OF OCTOBER 31(1)
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
SELECTED BALANCE --------------------------------------------------------
SHEET DATA: 1998 1997 1996(3) 1995(2) 1994
------- ------- ------- ------- -------

Working capital........................ $13,381 $11,932 $10,449 $ 9,408 $ 9,322

Inventories............................ 23,952 20,713 23,171 19,396 17,194

Total assets........................... 37,717 33,979 34,411 29,717 26,925

Floor Plan Contracts................... 18,083 15,805 17,504 13,967 13,170

Long term debt (capital leases)........ 221 286 346 343 --

Total liabilities...................... 20,209 17,796 19,639 16,301 14,975

Total stockholder's equity............. 17,507 16,183 14,773 13,416 11,950

Tangible net worth..................... 17,319 15,925 14,446 13,020 11,467

Book value per common share............ 2.40 2.17 1.99 1.80 1.62

OPERATING DATA:

Number of dealerships(4)............... 8 8 8 8 7

Number of RVs and Boats sold........... 2,380 2,565 2,954 2,714 2,002

- ------------
(1) See Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(2) Includes first full year of operating results from two dealerships acquired
in August, 1994 in California.
(3) Includes first full year of operating results from new dealership acquired
in October, 1995 in New Mexico.
(4) The Atlanta, GA. Dealership ceased doing business in December, 1998,
reducing the number of dealerships to 7.

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

LIQUIDITY AND CAPITAL RESOURCES

The Company continued to maintain a strong financial position and high liquidity
throughout Fiscal 1998. Cash generated from net income of $1.7 million and
non-cash expenses, amortization and depreciation, of $355,000 were reduced by
increases in normal fluctuating short term receivables of $641,000 and increased
inventories not financed by floor plan (used inventory), of $961,000. The net
results of all operating activities was an increase in cash of $565,000.

In Fiscal 1997 $1.8 million cash was generated from net income and non-cash
expenses, amortization and depreciation, and $759,000 cash from reduced
inventories not financed by floor plan, (used inventory). These increases were
reduced by increased accounts receivables of $362,000 and decreased non-cash
accrued expenses of $187,000. The net results of all operating activities was an
increase in cash of $2.1 million.

The Company used $116,000 cash for investing activities in Fiscal 1998,
primarily to improve property in Bakersfield and for the purchase of equipment.
In Fiscal 1997, $253,000 was used primarily for dealership additions and
improvements in Bakersfield and the new leased facility in Ft. Myers.

Cash used for financing activities in Fiscal 1998 increased to $439,000 from
$54,000 in 1997, as a result of the Company's stock repurchase program. The
Company announced in January, 1998 a program to repurchase up to $1 million of
it's common stock, and expanded the program in December, 1998 to $2 million. The
Company's management expects to continue the repurchase program throughout
Fiscal 1999.

The results of all activities in Fiscal 1998 was a $10,000 increase in the
Company's cash position. Cash remained at $7.4 million as of October 31, 1998.

Net working capital increased to $13.4 million as of the end of Fiscal 1998
compared to $11.9 million as of the end of Fiscal 1997.

The Company's liquidity ratios continue to compare favorably to the recreational
vehicle dealers industry averages, as reported by 1998 ANNUAL STATEMENT STUDIES,
Robert Morris Associates, Philadelphia, PA. ("RMA"). The Company's current ratio
as of the end of Fiscal 1998 and Fiscal 1997, was 1.67 and 1.68 with the
industry average of 1.2 and 1.3 respectively.

The Company's quick ratio, as of the end of Fiscal 1998, and Fiscal 1997, was
0.47 and 0.50 respectively. The Company's quick ratio at the end of Fiscal 1998,
a measure of the ability to pay off current liabilities without relying on the
sale of inventories, was approximately 5 times greater than the industry average
(RMA) of 0.1 as of the end of Fiscal 1998.

15

The Company's debt to worth ratio, a measure of the financing provided by the
Company's creditors as compared to the contribution by shareholders, as of the
end of Fiscal 1998 was 1.2. The industry average (RMA) was 3.9 for 1998.

The Company's principal long term commitments, as of the end of Fiscal 1998,
consist of obligations under operating leases. The Company also has a contingent
liability to repay a portion of agency commission (referral fees) received
principally from some lending institutions whereby the Company referred
customers to one or more third party financing sources and earned referral fees
(agency commissions) if the lender consummated a loan contract with the
customer. In some cases, the Company could be required to pay back (chargeback)
the referral fee to the lender if the loan is paid off or foreclosed in a
specific period of time, usually limited to the first six months of the term, if
the charge back amount exceeds reserves retained by the lender. The Company
records commission income based upon the amount earned less allowances for
chargebacks. In determining the allowance, the Company takes into consideration
the total customer loans outstanding and estimates the exposure for potential
chargebacks associated with these loans. The Company estimates the probability
for loan payoffs and the potential chargebacks to the Company related thereto.
The Company also considers the current and predicted future economic conditions,
the effects of changes in consumer interest rates and the aging of all its
customer loans outstanding representing potential chargebacks to the Company.

The Company's chargeback allowance was $93,000, $106,000 and $135,000 as of the
end of Fiscal 1998, Fiscal 1997 and Fiscal 1996 respectively. Chargebacks were
$42,000, $57,000 and $58,000 for Fiscal 1998, Fiscal 1997 and Fiscal 1996,
respectively. Management expects the current allowance for chargebacks to be
sufficient to repay this contingency and does not expect the ultimate liability
to have a significant impact on the liquidity of the Company.

The Company's Board of Directors, set specific strategic targets for the
expansion and/or diversification of the Company's operations, primarily through
acquisition, with the ultimate goal of increasing the Company's value to its
shareholders.

The Company's management is currently evaluating alternative sources of capital,
its cost and its ultimate effect on the capitalization of the Company. The
Company had $29 million maximum borrowing under floor plan contracts of which
$11 million was not used as of the end of Fiscal 1998.

The Company's management feels it can obtain additional debt financing at
reasonable interest rates for expansion and/or diversification of its
operations. None of the Company's real properties are mortgaged. In the opinion
of management, mortgage financing could be obtained at reasonable interest
rates, for which the proceeds could be used for expansion and the
diversification of the Company's operations.

Currently, Management has no expansion or diversification prospects requiring a
secondary stock offering or a conversion of the financing debt to common stock.
Management does intend to continue to issue common stock and/or options on
common stock as a partial payment for acquisitions when cost effective. However,
management expects the dilutive effect on the

16

common stockholders of the Company resulting from issuing such common stock or
options not to be material.

Management believes that during the next twelve months cash generated by
operating activities, cash and cash equivalents on deposit with financial
institutions and financing currently available from floor plan financing
companies will be sufficient for its capital and operating needs of its existing
operations. The Company received gross cash proceeds of $1.1 million in
December, 1998 as a result of the sale of the real property and selected assets
at it's Atlanta Dealership. As a result of the sale, the Company discontinued
operations at the dealership.

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR FISCAL 1998 COMPARED TO FISCAL 1997.

Sales and service revenue increased 9.3% to $74.3 million for Fiscal 1998 from
$68.0 million in Fiscal 1997, primarily due to a 22% increase in the average
selling price of new vehicles. The Company's management focused on increasing
the sales of higher priced motorhomes, and targeting diesel motorhomes with
greater potential for higher gross profits. This increase, in the new unit
average selling price, offset the lost revenue due to a 7% decrease in the
number of new units sold. The majority of the unit sale decrease was in the low
priced folding tent trailers that management reduced the stocking level due to
low gross profits. Excluding the tent trailer, new units sales were down 2%. New
motorized unit sales were up 10%; new towable units sales were down 16%.

Used sales increased 5% due to an increased average selling price. Parts and
service revenue decreased slightly.

Management expects the Company's same store revenue to continue increasing, but
to a lesser degree, in Fiscal 1999, primarily as a result of an increase in the
average selling price of new RVs. This trend will follow the forecast for the
recreation vehicle industry. According to CIT Group Economic Research
Department's FOURTH ANNUAL RECREATION VEHICLE OUTLOOK (November 1998),
recreation vehicles average unit cost should increase 3.1% in 1999 and 4.0 % in
2000.

Cost of sales and service, as a percentage of revenue, increased to 82.2% in
Fiscal 1998 from 81.3% in Fiscal 1997.

Gross profit increased 3.7% to $13.2 million in Fiscal 1998 from $12.7 million
in Fiscal 1997. As a percentage of revenue, gross profit decreased to 17.8% in
Fiscal 1998 from 18.7% in Fiscal 1997, due to a decrease in the gross margins
from the sale of higher priced new and used vehicles. Although the dollar gross
profits increased for new and used vehicle sales, gross profits as a percentage
of sales decreased. Typically, as vehicle sales prices increase, gross margins
decrease.

17

Agency commissions (referral fees) are paid to the Company if financing or
insurance is provided for the customer's purchases from the Company, as a result
of referring the customer to a financial institution or insurance agency. Agency
commissions represented 18% of the Company's total gross profit in Fiscal 1998,
as compared to 17% in Fiscal 1997. Agency commissions and gross profit result
from the sale of new and used vehicles and boats, and in the aggregate,
represented 72% of the Company's total gross profit in Fiscal 1998, as compared
to 71% in Fiscal 1997. In both Fiscal years, agency commissions and gross profit
from the sale of new and used vehicles and boats, in the aggregate, represented
the majority of the Company's net pretax income.

Margins for the other major sources of revenue remained approximately the same
in Fiscal 1998 as in Fiscal 1997.

Selling, general and administrative expenses (SG&A) increased 1.0% to $9.6
million in Fiscal 1998 from $9.5 million in Fiscal 1997. Small increases in
expenses that vary with the change in revenue, were offset by decreases in
personnel expenses. As a percentage of revenue, SG&A decreased to 12.9% in
Fiscal 1998 from 14.0% in Fiscal 1997.

Income from operations increased 12.7% to $3.6 million in Fiscal 1998 from $3.2
million in Fiscal 1997. As a percentage of revenue, income from operations
increased to 4.8% in Fiscal 1998 from 4.7% in Fiscal 1997.

Interest income increased 8% to $517,000 in Fiscal 1998 from $480,000 in Fiscal
1997. Interest expense decreased slightly to $1.36 million in Fiscal 1998 from
$1.38 million due to a slight reduction in the average outstanding floor plan
balance and a decrease in the average interest rate paid for floor plan
borrowing.

Income before income taxes increased 20.1% to $2.74 million in Fiscal 1998, from
$2.28 million in Fiscal 97. As a percentage of revenue, income before income
taxes increased to 3.7% in Fiscal 1998 from 3.4% in Fiscal 1997.

The combined Federal and State effective income tax rate was 38.1 % in Fiscal
1998 compared to 39.2% in Fiscal 1997. Income tax rates varied from statutory
rates due to state income taxes. See Note 9 of the notes to the consolidated
financial statements for components of the income taxes and the reconciliation
of the provision for income taxes to the federal statutory rates.

Net income increased 22.1% to $1,693,116 in Fiscal 1998 from $1,386,597 in
Fiscal 1997. As a percentage of revenue, net income increased to 2.2% in Fiscal
1998 compared to 2.0% in Fiscal 1997.

Earnings per share were 23 cents in Fiscal 1998, basic and diluted, compared to
19 cents in Fiscal 1997, basic and diluted.

18

RESULTS OF OPERATIONS FOR FISCAL 1997 COMPARED TO FISCAL 1996.

Sales and service revenue decreased 9.1% to $68.0 million for Fiscal 1997 from
$74.8 million in Fiscal 1996 reflecting the national trend. According to the
Recreation Vehicle Industry Association (RV TRADE DIGEST, December 1997)
recreation vehicle deliveries to retailers from manufacturers for the nine
months ended September, 1997 were down 5.6%, as compared to the same period last
year.

Sales and service revenue in the eastern dealerships declined 21% due to a
decrease in the number of units sold, accounting for all the decrease in revenue
for the Company. This decrease was due to two primary factors, the decline in
overall sales for the RV Industry nationwide, and increased competition in the
Southeastern states. Consequently the Company's management is continuing to make
a number of strategical changes in store management and marketing strategy in
the Southeastern stores. The Western dealership's revenue increased 12% due to
additional units sold.

Management expects the Company's same store revenue to increase in Fiscal 1998,
and follow the forecast for the recreation vehicle industry. According to the
CIT Group Economic Research Department's THIRD ANNUAL RECREATION VEHICLE OUTLOOK
(October 1997), "We look for growth to return in 1998 and 1999 with deliveries
increasing 3.7% and 3.4 % respectively".

Cost of sales and service, as a percentage of revenue, decreased to 81.3% in
Fiscal 1997 from 82.3% in Fiscal 1996.

Gross profit decreased 3.6% to $12.7 million in Fiscal 97 from $13.2 million in
Fiscal 1996. As a percentage of revenue, gross profit increased to 18.7% in
Fiscal 97 from 17.7% in Fiscal 1996. This increase was primarily the result of
increased gross margins on the sale of used RVs. Margins in the other major
sources of revenue remained approximately the same in Fiscal 97, an improvement
from decreasing margins experienced in Fiscal 1996.

Selling, general and administrative expenses (SG&A) decreased 3.8% to $9.55
million in Fiscal 1997 from $9.93 million in Fiscal 1996. This decrease resulted
primarily from decreased personnel expenses. As a percentage of revenue, SG&A
increased to 14% in Fiscal 1997 from 13.3% in Fiscal 1996, due to the fixed cost
components of the Company's expenses.

Income from operations decreased 2.8% to $3.18 million in Fiscal 1997 from $3.27
million in Fiscal 1996. As a percentage of revenue, income from operations
increased to 4.7% in Fiscal 1997 from 4.4% in Fiscal 1996.

Interest income increased 22% to $480,000 in Fiscal 1997 from $393,000 in Fiscal
1996 due to more cash available to invest. Interest expense decreased 8.2% to
$1.38 million in Fiscal 1997 from $1.50 million in Fiscal 1996 primarily due to
a 38 basis points reduction in the weighted average interest rate for Fiscal 97
compared to Fiscal 96.

19

Income before income taxes increased 5.5% to $2.28 million in Fiscal 1997, from
$2.16 million in Fiscal 96. As a percentage of revenue, income before income
taxes increased to 3.4% in Fiscal 1997 from 2.9% in Fiscal 1996.

The combined Federal and State effective income tax rate was 39.2 % in Fiscal
1997 compared to 38.3% in Fiscal 1996. Income tax rates varied from statutory
rates due to state income taxes. See Note 9 of the notes to the consolidated
financial statements for components of the income taxes and the reconciliation
of the provision for income taxes to the federal statutory rates.

Net income increased 4.1% to $1,386,597 in Fiscal 1997 from $1,331,932 in Fiscal
1996. As a percentage of revenue, net income increased to 2.0% in Fiscal 1997
compared to 1.8% in Fiscal 1996.

Earnings per share were 19 cents in Fiscal 1997 compared to 18 cents in Fiscal
1996.

INFLATION

The Company's management believes that increases in the cost of new vehicles and
boats that may result from increases in cost of products purchased from
manufacturers can be offset by higher resale prices for used retail vehicles and
boats as well as higher retail prices for new vehicles and boats although there
may be a lag in the ability of the Company to pass such increases on to its
customers.

Historically, increases in operating costs are passed on to the consumer when
the market allows. The Company's management believes that its business has not
been significantly affected by inflation despite increased chassis and
manufacture conversion costs experienced.

RECENT ACCOUNTING PRONOUNCEMENTS

During 1997, the Financial Accounting Standards Board(FASB) issued SFAS No. 130,
Reporting of Comprehensive Income, which is effective for fiscal years beginning
after December 15, 1997. This statement requires the reporting of net income and
all other changes in equity during the period, except those resulting from
investments by owners and distributions to owners, in a separate statement that
begins with net income or in the consolidated statement of operations below net
income. This pronouncement will not be effective for the Company until the
fiscal year ending October 31, 1999. For the fiscal years ended October 31,
1998, 1997 and 1996, comprehensive income and net income would not differ.

In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, which is effective for fiscal years
beginning after December 15, 1997. This statement establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments. The Company will be required to
adopt the provisions of SFAS No. 131 during the fiscal year ended October 31,
1999. The Company

20

does not expect this new statement to significantly effect how it presently
defines and reports its business.

In June, 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for the Company in the
fiscal year ended October 31, 2000. This statement establishes a new model for
accounting for derivatives and hedging activities. Upon initial application, all
derivatives are required to be recognized in the balance sheet as either assets
or liabilities and measured at fair value. Currently, the Company's financial
position and results of operations would not be impacted by this statement, as
the Company does not utilize derivative instruments.

YEAR 2000 READINESS

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. In recognition of this
potential problem, the Company began in 1997 to assess and evaluate its
business systems and hardware, personal computers and software, equipment,
security systems, communication equipment and other software relied upon by the
Company.

The Company's principle management information system software, the ERA2
Advantage, provided and maintained by Reynolds & Reynolds, Dayton, OH, has been
recently upgraded and is Year 2000 certified.

A recent assessment of various off the shelf software applications throughout
the Company on personal computers, on which the Company's management is
dependent upon for day to day operations, has been tested for Year 2000
potential problems, and no system failure or miscalculations were found.

The Company has initiated formal communications with all of its significant
suppliers to determine the extent to which the Company is vulnerable to those
third parties failure to remedy their own Year 2000 potential problems.
Responses to date have been satisfactory, and the company's management
anticipates this process will be successfully completed by mid-year 1999.

The Company's total cost for Year 2000 readiness is expected to be not material.
The Company does not anticipate it's suppliers cost to obtain Year 2000
compliance to be passed on to the company. However, there is no guarantee that
these systems of the Company's significant suppliers, on which the Company
relies on, will be timely converted and would not have a material adverse effect
on the Company.

The Company has determined that it has no exposure to contingencies related to
the Year 2000 issue, for products it has sold.

21

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

The Company wishes to take advantage of the new "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is filing this cautionary
statement in connection with such safe harbor legislation. The Company's Form
10-Q, this Form 10-K, any Form 8-K, or any other written or oral statements made
by or on behalf of the Company may include forward looking statements which
reflect the Company's current views with respect to future events and financial
performance. The words "believe", "project", "anticipates", "estimates",
"expects", "most likely", "intends" and similar expressions identify forward
looking statements.

The Company wishes to caution investors that any forward looking statements made
by or on behalf of the Company are subject to uncertainties and other factors
that could cause actual results to differ materially from such statements. The
uncertainties and other factors include, but are not limited to, the factors
listed below (many of which have been discussed in prior SEC filings by the
Company.) Though the Company has attempted to list the factors it believes to be
important to its business, the Company wishes to caution investors that other
factors may prove to be important in affecting the Company's results of
operations. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from forward looking
statements.

Investors are further cautioned not to place undue reliance on any forward
looking statements as they speak only of the Company's view as of the date the
statement was made. The Company undertakes no obligation to publicly update or
revise any forward looking statements, whether as a result of new information,
future events, or otherwise.

FACTORS

GENERAL ECONOMIC CONDITIONS

The Company's sales are affected by general economic conditions, including
employment rates, prevailing interest rates, inflation, and other economic
conditions affecting disposable consumer income generally. Weakness in the
economy could have a material adverse effect on the Company's business. The
majority of the Company's customers purchasing vehicles and boats finance their
purchase. Increases in consumer interest rates could have an adverse effect on
the Company's ability to sell vehicles and boats. Furthermore, a general
increase in commercial interest rates would increase the rates paid by the
Company on its floor plan contracts, thereby adversely effecting the Company's
operating income.

COMPETITION

The Company competes with a large number of dealers, some of which operate in
more than one location, although most of the competitors operate from a single
location. Significant competitive factors include price, service, reliability,
quality of service and convenience. Among other things, increased competition
could cause downward pressure on sales prices and lower margins.

22

SATELLITE OPERATIONS

The Company depends on all of its revenue and most of its income from satellite
retail sales and service centers. These centers are geographically widespread
throughout the continental U.S. making it difficult for the Company's top
management to have a presence in all the centers on a regular basis. As a
result, the Company is highly dependent upon each center's management for the
on-going operation of each respective center. Turnover of managerial personnel
at any center usually has an adverse effect on the sales and profitability of
the center. Turnover of managerial personnel at several of the Company's centers
could have a material adverse effect on the Company's sales and profitability.

DEPENDENCE UPON MANUFACTURERS FOR SUPPLY OF PRODUCT

The Company markets approximately 60 brands of vehicles and 10 brands of boats.
The Company maintains "dealer agreements" with most of the manufacturers of the
vehicles and boats specifying certain terms and conditions necessary for the
Company to continue representation of the specific brand in a specified
geographic market area. The loss of any one brand would not materially affect
the Company, however, the loss of all brands of anyone of the two largest
manufacturers, i.e. Fleetwood Enterprises, Inc. or Thor Industries, Inc., would
have a material, adverse effect on the Company's sales.

FUEL PRICING AND AVAILABILITY

The Company's business is automotive in nature and as such is dependent upon the
availability of fuel. A decrease in the availability of gasoline and the
inability of the Company to convert its vehicles to alternative fuels could have
a material adverse effect on the Company's business. Historically, increases in
the price of gasoline have not had a material impact on the Company's business,
as long as there was no concurrent decline in availability. However, future
significant increases in the price of gasoline or decreases in availability
would have a material effect on the Company's business.

REGULATION, SUPERVISION, AND LICENSING

The Company's operations are subject to ongoing regulation, supervision and
licensing under various federal, state, and local statutes, ordinances and
regulations. The adoption of more stringent statutes and regulations, changes in
the interpretation of existing statutes and regulations, or the Company's
entrance into jurisdictions with more stringent regulatory requirements could
curtail some of the Company's operations, deny the Company the opportunity to
operate in certain locations, or restrict products or services offered by the
Company.

The Company's customers and potential customers are subject to federal, state
and local statutes, ordinances and regulations regarding the ownership of
recreation vehicles and boats. The adoption of more stringent statutes,
ordinances and regulations effecting the consumer ownership of recreation
vehicles or boats, could have an adverse effect on the Company's ability to sell
its products.

23

ENVIRONMENTAL RISKS

The nature of any automotive business involves the handling of hazardous wastes
such as motor oil, fuel, paint and other chemicals. Noncompliance with or
changes to environmental regulations could adversely affect the Company's
business.

CONTINUING GROWTH

The Company's growth has been fueled principally by the acquisition of retail RV
sales and service centers similar to those currently operated by the Company.
The Company's continued growth materially depends on its ability to continue to
expand its operations through acquiring retail RV sales and service centers. The
Company's expansion is subject to a number of factors, including but not limited
to, the adequacy of the Company's capital resources, the Company's ability to
locate suitable acquisition candidates and negotiate acceptable purchase terms,
to hire, train and integrate employees, and to adapt its selling system and
other operations systems.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to Part II, Item 8, is submitted as a separate section of this Form
10-K.

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

There has been no change of accountants or reported disagreement on any matter
of accounting principles or procedures or financial statement disclosure in
Fiscal 1998.

24

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company as of January 16, 1999 were
as follows:

OFFICER
AND/OR
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
Newton C. Kindlund 58 President, Chairman of the Board, 1978
Chief Executive Officer

Joanne M. Kindlund 49 Executive Vice President- 1978
Administration, Secretary/
Treasurer and Director

W. Hardee McAlhaney 51 Vice President, 1998
Chief Financial Officer
and Director

James P. Williams 59 Director 1987

Paul G. Clubbe 56 Director 1987

Roy W. Parker 54 Director 1993

Harvey M. Alper 52 Director 1996

All Directors hold office until the next annual meeting of the Company's
shareholders and until their successors are elected and qualified. Executive
officers serve at the discretion of the Board of Directors.

25

DIRECTORS AND EXECUTIVE OFFICERS' BUSINESS EXPERIENCE

The following is a brief account of the educational and business experience of
each Director and Officer of the Company:

NEWTON C. KINDLUND

Mr. Kindlund and his wife, Joanne M. Kindlund, are co-founders of the Company.
He has served as President and Chairman since its inception in July, 1978, and
is a graduate of Michigan State University having received his BA in 1963. He
has done postgraduate studies at the Wharton School of the University of
Pennsylvania, Boston College and Indiana University. From 1975 to 1977 he was a
regional Vice President of Recreation Vehicle Industry Association, Elkhart,
Indiana. He was a founder of the Florida RV Trade Association and served on the
Board of Directors of the National Recreation Vehicle Rental Dealers Association
and the Central Florida World Trade Council. Recently Mr. Kindlund has served a
four year term as an Executive Board member and on the Executive Committee of
the Greater Orlando Florida Chamber of Commerce. Currently, Mr. Kindlund is a
member of the National Dealer Advisory Council for Airstream, Inc., Spartan
Motors, Inc., and is a past Chairman of the Board of Directors of the Recreation
Vehicle Rental Dealers Association. Mr. Kindlund was recognized as the RV NEWS
RV Executive of the Year for 1995.

JOANNE M. KINDLUND

Mrs. Kindlund, a co-founder of the Company, has served as Executive Vice
President, Secretary and Treasurer and as a Director since its inception in
July, 1978. She graduated from the University of Florida in 1971 with a B.S.
Degree in Advertising and has done postgraduate work at the University of
Florida in accounting and finance. From 1984 to 1985, she assisted Gorman
Planning and Associates, Virginia Beach, Virginia with the creation of software
managerial systems including accounting systems and inventory control systems
for retail recreational vehicle sales dealerships. Mrs. Kindlund was honored by
WORKING WOMEN MAGAZINE as one of the top women executives in 1998.

W. HARDEE MCALHANEY

Mr. McAlhaney joined the Company as Corporate Comptroller in 1988 and is
currently a Vice President and Chief Financial Officer of the Company. He
graduated from the University of Tennessee in 1970 with a B.S.B.A. Degree, and
from the University of Florida in 1972 with an M.B.A. Mr. McAlhaney served as
Chief Financial Officer for two national retail chains; The Athletic Attic and
The Athlete's Foot, prior to joining Drexel, Burnham, Lambert as an investment
consultant.

26

JAMES P. WILLIAMS

Mr. Williams has served on the Board of Directors of the Company since August of
1987. He received his Bachelor of Science Degree in Business in 1961 from
Stetson University. Mr. Williams, since graduation from college has been a
practicing accountant having become a Certified Public Accountant in 1967. He is
the owner of Williams and Company, CPAs and Consultants, and Chief Financial
Officer of Shield Enterprises, Inc., a wealth building and preservation services
company.

PAUL G. CLUBBE

Mr. Clubbe attended St. Dunstans College, England, Lisgar Collegiate, Ottawa,
Ontario Canada and Pickering College, Toronto, Ontario Canada. From 1982 to
1995, Mr. Clubbe served as Executive Officer of Rotex Canada, Inc. From 1964 to
1982, Mr. Clubbe was the Senior partner in Poly-Converters Limited, Oakville,
Ontario, Canada. He presently is President of P.C.M. Limited, Toronto, Canada,
an outsourcing Company with manufacturing facilities in Dongoing, China. He also
serves as a member of the Board of Directors of Flesherton Concrete Products,
Inc., Paulaurier Sales, Inc., Rocan Office Products, Inc. and Dongoing Shahowez
Mfg. LTD. China.

ROY W. PARKER

Mr. Parker is Chief Executive Officer and Owner of Parker Boat Company,
Incorporated, the Sea Ray boat dealer for Orlando, Florida. Parker Boats was
founded in 1927. Mr. Parker joined the business in 1964, and became the sole
owner in 1980. Parker Boats has ranked consistently as a top 25 dealer in sales
nationally for Sea Ray. Mr. Parker received the Hall of Fame Award in 1993,
presented by the Marine Retailers Association of America. Mr. Parker also is
past President of the Central Florida Marine Trade Association, and is on the
Lakes Advisory Board for the City of Maitland, Florida.

HARVEY M. ALPER

Mr. Alper is a partner of the law firm, Alper, Walden, Crichton and Miller,
Altamonte Springs, Florida. He earned his B.S.J.M. degree (1968) and his JD
(1971) from the University of Florida and has continued his professional
education with several certifications including a certificate in "Comparative
Law" from Oxford University in 1979. Mr. Alper has been engaged in the private
practice of law since 1971, after serving as Assistant General Counsel for the
City of Jacksonville, Florida. Mr. Alper serves as general counsel to the
Company as a partner of the law firm, Alper ,Walden, Crichton and Miller.

27

ITEM 11. EXECUTIVE COMPENSATION

The table below sets forth the cash compensation including salaries, bonuses,
contributions to retirement plans, premium paid on health and dental insurance
plans and disability insurance plans, paid by the Company for the years ended
October 31, 1998, 1997, and 1996, to, or for the benefit of, each executive
officer whose total annual salary and bonus exceeded $100,000, and the CEO
regardless of compensation level.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION AWARDS LONG-TERM COMPENSATION AWARDS
NAME AND --------------------------------------------- --------------------------------
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OTHER STOCK OPTIONS OTHER(3)
- ------------------ ---- --------- -------- ----- ----- ------- --------

Newton C. Kindlund 1998 $108,847 -- -- -- -- --
Chairman, President 1997 $107,581 -- -- -- -- --
and Chief Executive 1996 $107,564 -- -- -- -- --
Officer

W. Hardee McAlhaney 1998 $ 84,196 $75,002 -- -- -- $597
Vice President and 1997 $ 81,437 $52,477 -- -- -- $597
Chief Financial Officer 1996 $ 80,850 $53,785 -- -- -- $597

- ------------
(1) Includes contributions by the Company pursuant to an employee benefit plan
established under Section 401(k) of the Internal Revenue Code in the amounts
of $2,859, $3,181 and $3,167 for Mr. Kindlund for 1998, 1997 and 1996
respectively, and $4,549, $4,027 and $3,450, for Mr. McAlhaney for 1998,
1997 and 1996 respectively. Also includes $2,400 for health insurance
reimbursement each year for both Mr. Kindlund and Mr. McAlhaney.
(2) Mr. McAlhaney's bonus is based on the Company's net income before taxes.
(3) The Company pays a part of the premium on a term life insurance policy for
Mr. McAlhaney whose sole beneficiary is designated by the insured. The
policy has no cash surrender value provision.

28

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning stock option grants made
in the fiscal year ended October 31, 1998, to the individuals named in the
Summary Compensation Table. There were no grants of options or SARs to said
individuals during the year.

INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
-------------------------------------------------- ASSUME ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION FOR OPTION
SECURITIES OPTIONS EXERCISE ------------------------------
UNDERLYING GRANTED TO OR BASE TERM
OPTIONS EMPLOYEE PRICE EXPIRATION ------------------------------
NAME GRANTED(#) IN FY ($/SH) DATE 5%($) 10%
- ---- ---------- ----------- -------- ---------- ----------- ---------

Newton C. Kindlund -- -- -- -- -- --

W. Hardee McAlhaney -- -- -- -- -- --

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

The following table sets forth information concerning the number and value
realized as to options exercised during Fiscal 1998 and options held at October
31, 1998, by the individuals named in the Summary Compensation Table and the
value of those options held at such date. There were no options exercised during
Fiscal 1998 and no SARs were held at year end.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT FY-END(#) FY-END($)(1)
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE(#) $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------- ----------- ------------- ----------- -------------

Newton C. Kindlund -- -- -- -- -- --
W. Hardee McAlhaney -- -- 125,000 -- 59,200 --

- ------------
(1) Based on a price of $2.25 per share, being the closing price of Common Stock
on October 31, 1998.

DISCRETIONARY AND INCENTIVE BONUSES

The Board of Directors awards discretionary cash bonuses to executive officers
and other employees each year. Bonuses have been paid under various informal
arrangements that have provided for the payment of stipulated amounts to certain
executive officers ratably during the fiscal year, fiscal year end bonuses to
certain executive officers and to marketing and sales support personnel.

29

The Company has established an incentive bonus program for its employees with
bonuses generally paid monthly or annually. Bonuses are primarily based upon net
pre-tax profits from the various profit centers within each retail center and is
contingent upon continued employment with the company.

DIRECTORS FEES

Directors, who are not salaried employees of the Company, receive $500 for their
attendance at each meeting of the Board of Directors, Annual Shareholders
Meeting and $175 for each committee meeting . The Directors are reimbursed for
their travel, lodging and food expense incurred when attending such meetings, if
such meetings are held in a location in excess of twenty five (25) miles from
the principal place of business of the Company in Orlando, Florida. Directors
are also reimbursed for their travel, lodging and food expenses incurred when
traveling on behalf of the Company when requested to do so by an officer of the
Company or by the Board of Directors.

DIRECTORS OPTIONS

Each outside Director, serving on the board as of February 20, 1993, was granted
an option for 10,000 shares of common stock of the Company, exercisable after
February 20, 1995. The shares underlying these options were registered by the
Company. The exercise price is $1.81 per share, the price of the Company's
common stock at the time of the grant. A total of five options were granted, one
to each of the then serving outside Directors (total of 50,000 shares).

EMPLOYEE BENEFIT PLANS

The Company maintains a tax qualified, Profit Sharing and 401(k) Employee
Investment Plan ("Plan"). All employees who have attained 21 years of age and
complete one year of service are eligible to participate in the Plan. Plan
participants must complete at least eighteen (18) months of service to begin
partial vesting with total vesting occurring when a Plan participant has
completed five and one half (5 1/2) years of service to the Company. Normal
retirement age under the retirement Plan is 65 years. The Plan fiscal year ends
October 31st.

In Fiscal 1998, $98,427 was contributed to the Plan for the benefit of 140 Plan
participants. In Fiscal 1997, $86,349 was contributed to the Plan for the
benefit of 115 Plan participants.

Prudential Bank and Trust Company (One Ravinia Drive, Ste. 1000, Atlanta, GA
30346, 770-551-6700), is the trustee. The Company is the plan administrator.

The Plan document provide for contributions at the discretion of the Board of
Directors, to be allocated to each Plan participant in an amount not greater
than 10% of each participant's compensation subject to the annual contribution
(1) limitation of the top heavy rules and; (2) matching 25% of each participants
401(k) contribution up to 6% of the participants compensation. Under the Plan,
compensation is broadly defined to include wages, salaries, bonuses, overtime,
stock grants and commissions. Amounts contributed to the Plan by the

30

Company for the 1998, 1997 and 1996 Plan years, on behalf of the named
individuals, are included in the Executive Compensation Table of this report.

1987 INCENTIVE STOCK OPTION PLAN

In August 1987, the Board of Directors of the Company adopted the 1987 Incentive
Stock Option Plan (the " ISO Plan") which provided the Company may grant to
officers and managerial employees of the Company and its subsidiaries incentive
stock options. The purpose of the ISO Plan was to provide the Company with a
means of attracting, retaining and increasing the incentive of officers and
managerial employees by offering them the opportunity to invest in, or increase
their investment in, the Company. Options under the ISO Plan were designed to
qualify under Section 422A of the Internal Revenue Code of 1986. The ISO Plan
terminated in August, 1997.

The ISO Plan was administered by the Compensation Advisory Committee of the
Board of Directors (the "Committee") which could have granted options to
purchase up to an aggregate of 280,000 shares of Common Stock. The option
exercise price was at least 100% of the fair market value per share of Common
Stock on the date of grant. The options are exercisable, as determined by the
Committee, over a period of time, but not more than ten years from the date of
grant. Any option granted to an employee shall lapse following his termination
of employment; provided, however, that in the discretion of the Committee, the
employee shall have up to three (3) months following his termination of
employment to exercise his options and provided, further, that upon the
employee's permanent and total disability, any option granted to him may be
exercised within twelve months following his termination of employment because
of such disability. The ISO Plan provided for certain anti-dilution adjustments
upon the occurrence of certain events.

Five separate options for 25,000 shares each were granted under the ISO Plan to
an Officer of the Company, the Vice President and Chief Financial Officer, Mr.
McAlhaney. The options were approved by the Board of Directors on the following
dates and at the following option exercise prices:

DATE SHARES EXERCISE PRICE
---- ------ --------------
May 23, 1994 25,000 $1.819
February 20, 1993 25,000 $1.813
March 24, 1992 25,000 $1.375
November 17, 1990 25,000 $1.625
May 14, 1990 25,000 $2.500
-------
125,000
=======

31

BONUS STOCK

In September 1987, the Company issued 250,000 Shares of Common Stock to various
individuals including officers, directors and employees of the Company for
services rendered. These shares have certain restrictions and forfeiture
provisions attached to them. Since September 1987, a number of recipients of
such shares have terminated their employment with the Company resulting in their
bonus shares of Common Stock being forfeited to the Company. After September
1987, the Company made additional awards of bonus shares to employees; however,
no shares in excess of the initial 250,000 shares have been issued since
forfeited shares equaled or exceeded the number of bonus shares issued by the
Company to employees subsequent to such date.

The amount of shares awarded and fair market value assigned to the shares for
the last three Fiscal years are as follows:

BONUS STOCK
-------------------------------------------------------------
NUMBER SHARES FAIR MARKET VALUE
FISCAL YEAR AWARDED AT TIME OF AWARD
-------------------------------------------------------------
1998 -- $ --
1997 5,000 $11,250
1996 7,500 $14,063
-------------------------------------------------------------

The bonus stock awards listed above require a two (2) year vesting and
employment period. As of October 31, 1998, 218,700 shares had been granted
pursuant to the plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Board of Directors Compensation Advisory Committee membership for
Fiscal 1998 included Messrs. W. Hardee McAlhaney, James P. Williams and Roy W.
Parker. Mr. McAlhaney is the Vice President and Chief Financial Officer of the
Company.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of the registered class of the Company's equity securities, to file
reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange Commission (Section 16(a)) and the exchange on which the
Company's securities trade. Such officers and directors and ten percent

32

(10%) shareholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.

Based solely on its review of copies of such reports received from certain
reporting persons, the Company believes that its directors, executive officers
and ten percent (10%) stockholders complied with all Section 16(a) filing
requirements during the fiscal year ended October 31, 1998.

BOARD COMPENSATION ADVISORY COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Advisory Committee of the Board of Directors of Holiday RV
Superstores, Inc. consists of two outside Directors and the Chief Financial
Officer of the Company. The Committee has the responsibility to recommend to the
Board how to administer the Company's Incentive Stock Option Plan, awarding the
Company's bonus shares of Common Stock and determining the compensation of the
Company's three executive officers. This report focuses primarily on the
Company's philosophy with respect to the executive officers compensation and
approach the Committee has taken thus far and intends to take in the future with
respect to relating compensation to performance of the Company.

From the inception of the Company, its corporate philosophy concerning
compensation has been to minimize guaranteed fixed compensation in favor of
incentive compensation, which increases when the Company's performance is strong
and declines when it is poor. Incentive compensation, or bonuses tied to
prescribed formulas, is pervasive throughout the Company's managerial structure.
Such bonuses can be as much as 100% or more of any employee's base salary.
Dealership general managers and departmental managers receive an incentive bonus
based on the profitability of their respective dealerships or departments. In
addition, dealership general managers are paid a year end bonus based on their
respective stores achieving a pre determined agreed upon annual income target,
usually the budgeted net pretax income for their dealership.

The corporate officers receive a base salary, which is expected to be sufficient
to support a reasonable minimal managerial lifestyle. The President has a
guaranteed base annual salary of $102,000. The other two executive officers
being the Secretary, and the Vice President and CFO, each receive a base
guaranteed annual salary of $75,000. There is also an incentive quarterly bonus
for the Vice President and CFO, based on the Company's net pretax income. The
President and Secretary have historically elected not to accept any incentive
compensation offered by the Committee because of their positions as the two
principal shareholders of the Company's common stock and their desire to
minimize the Company's executive officers compensation expense.

The Committee recently reviewed the compensation for all the executive officers
and will recommend to the Board, at it's next meeting, increases in the
President's and Secretary's compensation in order to more fairly compensate them
for their respective levels of authority and contribution to the Company.

33

The Board of Directors has viewed its incentive stock option program as
providing its executive officers, who have the greatest degree of control over
the Company's marketing cost control and long range planning, with the
opportunity to received additional compensation if the price of the Company's
common stock appreciates significantly over the long term.

To date, the Board of Directors has awarded only the Vice President and CFO of
the Company five (5) incentive stock options under the Company's Incentive Stock
Option Plan. Each option exercise price was at 100% of the fair market value per
share of the common stock on the date of grant.

The Board of Directors has viewed its awarding of the Company's bonus stock as a
means to help recipients of the stock to focus on the performance of its common
stock and afford its bonus stock recipients the opportunity for financial
rewards as the stock appreciates. To date, the Committee has awarded in excess
of 200,000 shares of bonus stock to more than ninety recipients.

The Committee's role will be to continue to recommend to the Board how to
administer both the Incentive Stock Option Plan and the Bonus Stock Plan, to
select participants and recommend to the Board of Directors awards, in all cases
based on recommendations from the executive management of the Company. The
Committee will periodically review the various compensation plans to insure the
plans are consistent with the Company's overall philosophy and to continue to
make recommendations to the Board of Directors on such plans. The Committee will
focus primarily on the Company's executive officers compensation plans, leaving
the compensation of the store managerial personnel to the executive officers of
the Company.

Respectfully submitted,

James P. Williams, Chairman January 7, 1999
Roy W. Parker
W. Hardee McAlhaney

CUMULATIVE TOTAL SHAREHOLDER RETURN

The cumulative total shareholder return performance graph as of October 31,
1994, 1995, 1996, 1997, and 1998, for the Company, the S&P 500 Index, and for
the Company's peer group, is submitted as a separate section at the end of this
Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of January 15, 1999, the number of shares, of
Common Stock of the Company, owned and the percent so owned by (i) each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director and/or officer of the Company, and
(iii) all directors and officers of the Company as a group.

34

The number of shares owned are those "beneficially owned" as determined under
the rules of the Securities and Exchange Commission, including any shares of
Common Stock as to which a person has sole or shared voting power or investment
power and any shares of Common Stock which the person has the right to acquire
within 60 days through the exercise of any option, warrant or right.

AMOUNT AND
NAME AND ADDRESS NATURE OF BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------- --------------------- ----------
Newton C. Kindlund(1) 2,223,414 29.6%
7851 Greenbriar Parkway
Orlando, Florida 32819

Joanne M. Kindlund(1) 2,223,414 29.6%
7851 Greenbriar Parkway
Orlando, Florida 32819

W. Hardee McAlhaney 135,000(2) 1.8%
3701 Sedgewick Place
Orlando, Florida 32806

James P. Williams 11,500(3) *
615 North Wymore Road
Winter Park, Florida 32789

Paul G. Clubbe 50,000(3) *
R.R. #4, Stouffville
Ontario, Canada L4A 7X5

Roy W. Parker - 0 - *
455 South Lake Destiny Road
Orlando, Florida 32810

Harvey M. Alper 1,500 *
112 W. Citrus Street
Altamonte Springs, Florida 32714

All Directors and Officers --------- ----
as a group (7 persons) 4,644,828 61.8%

35

- ------------
(1) Newton C. Kindlund and Joanne M. Kindlund, husband and wife, each disclaims
any right to control the others exercise of shareholders' rights, with
respect to the shares, including voting the shares of the Common Stock of
the Company set out in the above Table.
(2) Includes options exercisable for 125,000 shares of Common Stock granted
pursuant to the 1987 Incentive Stock Option Plan.
(3) Includes an option exercisable for 10,000 shares of Common Stock, granted
February 20, 1993.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In November 1994, the Company renewed a five year lease agreement with Newton C.
Kindlund and Joanne M. Kindlund, husband and wife, whereby the Company leases
the real property upon which its retail center is located in Orlando, Florida.
The annual rent is currently $144,000 and, in addition thereto, the Company pays
the real estate taxes, insures the interest of Mr. and Mrs. Kindlund against
casualty loss, pays for all repairs to the property and names Mr. and Mrs.
Kindlund as co-insureds under its general liability insurance policy. The lease
provides for a cost of living increase for each year of the lease beginning with
the second lease year. The term of the lease agreement expires on October 31,
1999. In fiscal year 1998, the Company paid to or for the benefit of Mr. and
Mrs. Kindlund $144,000 for the use of these premises.

In May 1997, the Company signed a five year lease agreement with a property
trust for which the beneficiaries are Mr. Kindlund's heirs, whereby the Company
leases the real property upon which its retail center is located in Ft. Myers,
Florida. The annual rent is $59,375 and, in addition thereto, the Company pays
the real estate taxes, insures the interest of the trust against casualty loss,
pays for all repairs to the property and names the property trust as the insured
under its general liability insurance policy. The term of the lease expires on
April 30, 2002. In Fiscal 1998, the Company paid to or for the benefit of the
property trust $59,375 for the use of the premises.

Based on current market rates for properties similar to those listed above,
transactions with Mr. and Mrs. Kindlund related to the lease for the Orlando
property and transactions with the property trust related to the lease for the
Ft. Myers property, were on terms comparable to those which would have been
reached with unaffiliated parties.

Harvey M. Alper, a director of the company serves as general counsel of the
Company as a partner of the law firm, Alper, Walden, Crichton and Miller. In
1998 the Company paid $62,223 to Mr. Alper's firm for legal services.

36

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8 K

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT

a(1)and The financial statements are filed as a separate section of
a(2) this Form 10-K.

a(3) Exhibits required to be filed by Item 601 of Regulation S-K.

1(a) Form of Underwriting Agreement.

1(b) Form of Seller's Agreement.

3(a) Articles of Incorporation.

3(b) Amendment to Articles of Incorporation.

3(c) Amendment to Articles of Incorporation.

3(d) By-Laws.

3(e) Amendment in the Entirety of By-Laws.

3(f) Amendment to By-Laws.

4(a) Form of Common Stock Certificate of the Company.

4(b) Underwriter's Warrant of Thomas James Associates, Inc. dated
November 10, 1987.

10(a) Material contracts numbers 10(a) through 10(bbbbb), were filed
with Registrants' 10-K Annual Report for the year October 31,
1996, and by this reference is incorporated herein.

10(ccccc) Lease agreement between Newton C. Kindlund Revocable Property
Trust and the Registrant, dated May 1, 1997, for the lease of
real property in Ft. Myers, Florida.

21 Holiday R.V. Rental/Leasing, Inc. is a subsidiary of the
Registrant. This

37

subsidiary, which is wholly owned by Registrant, was
incorporated under the Laws of the State of Florida and is in
good standing. The Subsidiary does business only under the name
of Holiday R.V. Rental/Leasing, Inc. Holiday RV Superstores of
South Atlanta, Inc. is a subsidiary of the Registrant. This
subsidiary, which is wholly owned by Registrant, was
incorporated under the Laws of the State of Georgia and is in
good standing. The subsidiary does business under the name of
Holiday RV Superstores and Holiday RV Superstores of South
Atlanta, Inc. Holiday RV Superstores of South Carolina, Inc. is
a subsidiary of the Registrant. This subsidiary, which is wholly
owned by Registrant, was incorporated under the Laws of the
State of South Carolina and is in good standing. The subsidiary
does business under the name of Holiday RV Superstores and
Holiday RV Superstores of South Carolina, Inc. Holiday RV
Superstores West, Inc. is a wholly-owned subsidiary of the
Registrant, incorporated in the State of California and is in
good standing. The Subsidiary does business under the names of
Holiday RV Superstores and Holiday RV Superstores West, Inc.
Holiday RV Superstores of New Mexico, Inc., is a wholly owned
subsidiary of the Registrant. This subsidiary was incorporated
under the laws of the State of New Mexico and is in good
standing. This subsidiary does business under the name of
Holiday RV Superstores and Holiday RV Superstores of New Mexico,
Inc. Holiday RV Assurance Service, Inc., is a wholly owned
subsidiary of the Registrant and is incorporated under the laws
of Arizona as an insurance agency.

b The Company filed no reports on Form 8-K during the fourth
quarter of Fiscal 1998.

c(1) Exhibits Numbering a(3)1(a) through and including a(3)10(llll),
are contained in the Exhibits to the Registration Statement on
Form S-18 filed by the Company on September 14, 1987, and which
became effective on October 27, 1987, (SEC Registration No.
33-17190-A) which Exhibits to said Registration Statement are
incorporated by reference herein. Exhibits a(3)3(c) and a(3)3(f)
are contained in the Exhibits to Form 8-A Registration Statement
pursuant to Section 12(g) of the Securities Exchange Act filed
by the Company on December 22, 1987, and which became effective
December 28, 1987, which Exhibits to said Registration Statement
are incorporated by reference herein.

c(2) Exhibit 27, Financial Data Schedule, filed electronically via
EDGAR, deleted from this copy of the Form.

38

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, thereto duly authorized.

HOLIDAY RV SUPERSTORES, INCORPORATED
Registrant

By: /s/ NEWTON C. KINDLUND, PRESIDENT
---------------------------------
Newton C. Kindlund, President and
Chairman

DATED: JANUARY 25, 1999

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

SIGNATURE TITLE DATE
- --------- ----- ----

/s/ NEWTON C. KINDLUND President, Chairman of January 25, 1999
- --------------------------------- the Board of Directors
President and Chairman Chief Executive Officer
Principal Executive Officer
Newton C. Kindlund

/s/ JOANNE M. KINDLUND Executive Vice President- January 25, 1999
- --------------------------------- Administration, Secretary/
Principal Administrative Officer Treasurer and Director
Joanne M. Kindlund

/s/ W. HARDEE McALHANEY Vice President, January 25, 1999
- --------------------------------- Chief Financial Officer and
Principal Financial Director
and Accounting Officer
W. Hardee McAlhaney

39

SIGNATURE TITLE DATE
- --------- ----- ----

/s/ JAMES P. WILLIAMS Director January 25, 1999
- ---------------------------------
James P. Williams

/s/ ROY W. PARKER Director January 25, 1999
- ---------------------------------
Roy W. Parker

/s/ HARVEY M. ALPER Director January 25, 1999
- ---------------------------------
Harvey M. Alper

40

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 14(a)(1) and (2)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

LIST OF FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULES

AS OF OCTOBER 31, 1998 AND 1997

AND FOR THE YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

HOLIDAY RV SUPERSTORES, INCORPORATED

AND SUBSIDIARIES

ORLANDO, FLORIDA

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

CONTENTS

PAGE
----
Report of Independent Accountants F-2

Report of Independent Certified Public Accountants F-3

Consolidated Financial Statements:

Balance Sheets F-4

Statements of Income F-5

Statements of Stockholders' Equity F-6

Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-9

F-1

PRICEWATERHOUSECOOPERS [LOGO]

REPORT OF INDEPENDENT ACCOUNTANTS

December 10, 1998

To the Shareholders of
Holiday RV Superstores, Incorporated
Orlando, Florida

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Holiday RV
Superstores, Incorporated and Subsidiaries at October 31, 1998 and 1997, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PRICEWATERHOUSECOOPERS LLP

F-2

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of
Holiday RV Superstores, Incorporated
Orlando, Florida

We have audited the consolidated statements of income, stockholders' equity, and
cash flows of Holiday RV Superstores, Incorporated and subsidiaries for the year
ended October 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of their operations and their
cash flows of Holiday RV Superstores, Incorporated and subsidiaries for the year
ended October 31, 1996 in conformity with generally accepted accounting
principles.

/s/ BDO SEIDMAN, LLP

Orlando, Florida
December 20, 1996

F-3

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

OCTOBER 31,
ASSETS 1998 1997
------------ ------------

Current Assets:
Cash and cash equivalents $ 7,441,806 $ 7,431,318
Accounts receivable:
Trade and contracts in transit 1,415,930 841,212
Other 373,700 307,530
Inventories 23,951,720 20,712,744
Refundable income taxes 27,363 --
Deferred income taxes 159,000 149,000
------------ ------------
Total current assets 33,369,519 29,441,804

Property and Equipment, less accumulated depreciation 4,038,377 4,209,371

Other Assets, principally covenant not to compete 200,184 261,090

Noncurrent Deferred Income Taxes 109,000 67,000
------------ ------------

$ 37,717,080 $ 33,979,265
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Floor plan contracts $ 18,083,481 $ 15,805,446
Accounts payable 878,226 579,023
Customer deposits 185,370 141,586
Accrued expenses 779,656 830,939
Current portion of capital lease obligation 61,963 55,514
Income tax payable -- 97,693
------------ ------------
Total current liabilities 19,988,696 17,510,201

Long-Term Capital Lease Obligation, less current portion 220,676 286,051
------------ ------------
Total liabilities 20,209,372 17,796,252
------------ ------------

Stockholders' Equity:
Common stock, $.01 par; shares authorized 10,000,000;
issued 7,465,000 74,650 74,650
Additional paid-in capital 5,112,271 5,112,271
Retained earnings 12,751,822 11,058,706
Treasury stock, at cost, 251,700 and 31,300 shares (430,098) (50,193)
Deferred compensation (937) (12,421)
------------ ------------
Total stockholders' equity 17,507,708 16,183,013
------------ ------------

$ 37,717,080 $ 33,979,265
============ ============

See accompanying notes to consolidated financial statements.

F-4

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED OCTOBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------

Sales and Service Revenue:
Vehicle and marine $ 64,605,771 $ 58,235,084 $ 64,949,268
Service, parts and accessories 6,929,335 7,140,752 6,964,895
Other, net 2,757,536 2,612,434 2,849,817
------------ ------------ ------------
Total sales and service revenue 74,292,642 67,988,270 74,763,980
------------ ------------ ------------

Cost of Sales and Service:
Vehicle and marine 57,448,166 51,441,813 57,776,518
Service, parts and accessories 3,650,216 3,818,515 3,785,152
------------ ------------ ------------
Total cost of sales and service 61,098,382 55,260,328 61,561,670
------------ ------------ ------------

Gross Profit 13,194,260 12,727,942 13,202,310

Selling, General and Administrative Expenses 9,611,398 9,547,758 9,929,170
------------ ------------ ------------

Income from Operations 3,582,862 3,180,184 3,273,140

Interest Income 517,200 479,644 392,652

Interest Expense (1,362,946) (1,381,231) (1,504,860)
------------ ------------ ------------

Income Before Income Taxes 2,737,116 2,278,597 2,160,932

Income Taxes 1,044,000 892,000 829,000
------------ ------------ ------------

Net Income $ 1,693,116 $ 1,386,597 $ 1,331,932
============ ============ ============

Basic and Diluted Earnings Per Common Share $ 0.23 $ 0.19 $ 0.18
============ ============ ============

See accompanying notes to consolidated financial statements.

F-5

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

COMMON STOCK ADDITIONAL TREASURY
------------------------ PAID-IN RETAINED ------------------------- DEFERRED
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT COMPENSATION
----------- ----------- ----------- ----------- ----------- ----------- ------------

Balance, October 31, 1995 7,465,000 $ 74,650 $ 5,103,052 $ 8,340,177 15,300 $ (18,193) $ (83,677)
Net income for the year -- -- -- 1,331,932 -- -- --
Restricted bonus stock
issued from treasury -- -- 6,019 -- (7,500) 8,044 (14,063)
Return of unvested restricted
bonus stock -- -- -- -- 21,500 (36,281) 36,281
Amortization of deferred
compensation -- -- -- -- -- -- 24,696
----------- ----------- ----------- ----------- ----------- ----------- -----------

Balance, October 31, 1996 7,465,000 74,650 5,109,071 9,672,109 29,300 (46,430) (36,763)
Net income for the year -- -- -- 1,386,597 -- -- --
Restricted bonus stock
issued from treasury -- -- 3,200 -- (5,000) 8,050 (1,250)
Return of unvested restricted
bonus stock -- -- -- -- 7,000 (11,813) 11,813
Amortization of deferred
compensation -- -- -- -- -- -- 23,779
----------- ----------- ----------- ----------- ----------- ----------- -----------

Balance, October 31, 1997 7,465,000 74,650 5,112,271 11,058,706 31,300 (50,193) (12,421)
Net income for the year -- -- -- 1,693,116 -- -- --
Treasury shares repurchased -- -- -- -- 220,400 (379,905) --
Amortization of deferred
compensation -- -- -- -- -- -- 11,484
----------- ----------- ----------- ----------- ----------- ----------- -----------

Balance, October 31, 1998 7,465,000 $ 74,650 $ 5,112,271 $12,751,822 251,700 $ (43,098) $ (937)
=========== =========== =========== =========== =========== =========== ===========

See accompanying notes to consolidated financial statements.

F-6

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED OCTOBER 31,
1998 1997 1996
--------------- --------------- ---------------

Cash Flows from Operating Activities:
Cash received from customers $ 73,696,488 $ 70,333,325 $ 75,888,882
Cash paid to suppliers and employees (71,061,594) (66,430,978) (71,513,828)
Interest received 517,200 479,644 392,652
Interest paid (1,366,031) (1,392,926) (1,493,695)
Income taxes paid (1,221,056) (880,561) (977,904)
--------------- -------------- --------------
Net cash provided by operating activities 565,007 2,108,504 2,296,107
--------------- -------------- --------------

Cash Flows from Investing Activities:
Purchase of property and equipment (116,188) (252,569) (668,133)
Proceeds from the sale of property and equipment 500 11,810 16,230
--------------- -------------- --------------
Net cash used in investing activities (115,688) (240,759) (651,903)
--------------- -------------- --------------

Cash Flows from Financing Activities:
Treasury stock purchases (379,905) - -
Repayment of capital lease obligations (58,926) (54,134) (39,357)
--------------- -------------- --------------
Net cash used in financing activities (438,831) (54,134) (39,357)
--------------- -------------- --------------
Net Increase in Cash and Cash Equivalents 10,488 1,813,611 1,604,847

Cash and Cash Equivalents, beginning of year 7,431,318 5,617,707 4,012,860
--------------- -------------- --------------
Cash and Cash Equivalents, end of year $ 7,441,806 $ 7,431,318 $ 5,617,707
=============== ============== ==============

See accompanying notes to consolidated financial statements.

F-7

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

YEAR ENDED OCTOBER 31,
1998 1997 1996
--------------- -------------- --------------

Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
Net income $ 1,693,116 $ 1,386,597 $ 1,331,932
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 354,612 431,696 351,271
Amortization of deferred compensation 11,484 23,779 24,696
Deferred income taxes (53,000) (84,000) (92,000)
Loss on disposal of property and equipment 950 19,221 22,913
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (640,887) (362,092) 1,101,989
Refundable income taxes (27,363) 7,919 31,414
Inventories (3,238,976) (2,458,278) (3,799,938)
Other assets (7,974) 230 9,400
Increase (decrease) in:
Floor plan contracts 2,278,035 (1,698,856) 3,537,379
Accounts payable 5,539 (36,051) (354,536)
Customer deposits 43,784 65,181 (25,256)
Accrued expenses 47,994 (186,918) 142,670
Income tax payable 97,693 83,520 14,173
--------------- -------------- --------------

Net Cash Provided by Operating Activities $ 565,007 $ 2,108,504 $ 2,296,107
=============== ============== =============

See accompanying notes to consolidated financial statements.

F-8

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

1. ORGANIZATION AND NATURE OF BUSINESS:

The Company is a multi-state retail chain of dealerships engaged in the
retail sales and service of recreational vehicles and recreational
boats in the Southeastern United States, New Mexico and California.
Each dealership offers a full line of new and used recreational
vehicles, and each dealership maintains a parts, service and body
repair facility. Recreational boat sales are carried at selected
dealerships. The Company also has a subsidiary, Holiday RV Assurance
Corporation, an insurance agency that will receive commissions on the
sale of insurance policies to recreational vehicle owners from a
variety of insurance companies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of Holiday RV Superstores, Incorporated and its
Subsidiaries (the "Company"), which include Holiday RV Rental/Leasing,
Inc.; Holiday RV Superstores of South Carolina, Inc.; Holiday RV
Superstores West, Inc.; Holiday RV Superstores of New Mexico, Inc.; and
Holiday RV Assurance Corporation. All material intercompany accounts
and transactions have been eliminated.

CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
debt instruments with a maturity of three months or less at time of
purchase to be cash equivalents. Cash and cash equivalents consist of
checking accounts, money market funds and overnight repurchase
agreements.

INVENTORIES - Inventories are valued at the lower of cost or market.
New and used vehicles are accounted for using specific identification.
Cost of parts and accessory inventories is determined by the first-in,
first-out (FIFO) method.

PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Depreciation is computed over the estimated useful lives of the assets
by the straight-line method for financial reporting. Amortization of
leasehold improvements is computed by the straight-line method over the
estimated useful lives of the assets or the term of the lease,
whichever is shorter. The estimated useful lives of the property and
equipment range from 3 to 31 years. Maintenance and repairs are charged
to expense as incurred. The carrying amount and accumulated
depreciation of assets which are sold or retired are removed from the
accounts in the year of disposal and any resulting gain or loss is
included in the results of operations.

F-9

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

COVENANT NOT TO COMPETE - The covenant not to compete is being
amortized over its contractual life using the straight-line method. At
each balance sheet date, management assesses whether there has been any
permanent impairment in the value of the agreement. Accumulated
amortization totalled $292,880 and $224,000 as of October 31, 1998 and
1997, respectively.

INCOME TAXES - Income taxes are provided for the tax effects of
transactions reported in the financial statements and consist of taxes
currently due plus deferred taxes resulting from temporary differences.
Such temporary differences result from differences in the carrying
value of assets and liabilities for tax and financial reporting
purposes. The deferred tax assets and liabilities represent the future
tax consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.

REVENUE RECOGNITION - Retail sales and related costs of vehicles, parts
and service are recognized in operations upon delivery of products or
services to customers or, in the case of recreational vehicles, when
title passes to the customer.

EARNINGS PER COMMON SHARE - Basic earnings per common share is
calculated by dividing net income by the weighted average number of
shares outstanding. Diluted earnings per common share is based upon the
weighted average number of shares outstanding, plus the effects of
potentially dilutive common shares consisting of stock options (Note
7).

Average common shares used in the calculation of earnings per share are
as follows:

YEAR BASIC DILUTED
--------- ------------- ------------
1998 7,301,500 7,347,700
1997 7,433,700 7,439,316
1996 7,451,100 7,503,800

ADVERTISING - Advertising costs, included in selling, general and
administrative expenses, are expensed as incurred.

F-10

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

FAIR VALUE OF FINANCIAL INSTRUMENTS - Statement of Financial Accounting
Standards (SFAS) No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
INSTRUMENTS, requires disclosure of fair value information about
financial instruments. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of October 31, 1998.

The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash, trade receivables, accounts payable, floor plan payables
and accrued expenses. Fair values were assumed to approximate carrying
values for these financial instruments since they are relatively short
term in nature and their carrying amounts approximate fair values or
they are receivable or payable on demand.

USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

RECLASSIFICATIONS - Certain prior year amounts have been reclassified
from previous presentations to conform to 1998 presentation.

RECENT ACCOUNTING PRONOUNCEMENTS - During 1997, the Financial
Accounting Standards Board (FASB) issued SFAS No. 130, Reporting of
Comprehensive Income, which is effective for fiscal years beginning
after December 15, 1997. This statement requires the reporting of net
income and all other changes in equity during the period, except those
resulting from investments by owners and distributions to owners, in a
separate statement that begins with net income or in the consolidated
statement of operations below net income. This pronouncement will not
be effective for the Company until the fiscal year ending October 31,
1999. For the fiscal years ended October 31, 1998, 1997 and 1996,
comprehensive income and net income would not differ.

F-11

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

RECENT ACCOUNTING PRONOUNCEMENTS - Continued - In June, 1997, the FASB
issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
RELATED INFORMATION, which is effective for fiscal years beginning
after December 15, 1997. This statement establishes standards for the
way that public business enterprises report information about operating
segments in annual financial statements and requires that those
enterprises report selected information about operating segments. The
Company will be required to adopt the provisions of SFAS No. 131 during
the fiscal year ended October 31, 1999. The Company does not expect
this new statement to significantly effect how it presently defines and
reports its business.

In June, 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which is effective for the Company
in the fiscal year ended October 31, 2000. This statement establishes a
new model for accounting for derivatives and hedging activities. Upon
initial application, all derivatives are required to be recognized in
the balance sheet as either assets or liabilities and measured at fair
value. Currently, the Company's financial position and results of
operations would not be impacted by the statement, as the Company does
not utilize derivative instruments.

3. SUPPLEMENTAL CASH FLOW INFORMATION:

The following table summarizes the Company's noncash investing and
financing transactions:

OCTOBER 31,
1998 1997 1996
-------------- -------------- --------------

Capital lease incurred to purchase
equipment $ - $ - $ 56,649

Increase in deferred compensation
from stock issuance - 11,250 14,063

Decrease in deferred compensation
from return of unvested restricted
bonus stock - 11,813 36,281

F-12

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

4. INVENTORIES:

Inventories are summarized as follows:

OCTOBER 31,
1998 1997
-------------- ---------------

New vehicles $ 16,952,586 $ 15,276,085
New marine 897,415 617,067
Used vehicles 4,296,247 3,214,149
Used marine 145,862 135,377
Parts and accessories 1,659,610 1,470,066
-------------- ---------------

$ 23,951,720 $ 20,712,744
============== ===============

5. PROPERTY AND EQUIPMENT:

Property and equipment are summarized as follows:

OCTOBER 31,
1998 1997
-------------- ---------------

Land $ 1,955,948 $ 1,955,948
Buildings and leasehold improvements 2,367,743 2,287,644
Machinery and shop equipment 202,878 197,226
Office equipment and furniture 865,030 925,376
Vehicles 177,988 178,488
-------------- ---------------
5,569,587 5,544,682
Less accumulated depreciation and
amortization (1,531,210) (1,335,311)
-------------- ---------------

$ 4,038,377 $ 4,209,371
============== ==============

Depreciation expense for the years ended October 31, 1998, 1997 and
1996 was $285,732, $362,816 and $282,391, respectively.

F-13

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

6. FLOOR PLAN CONTRACTS:

Substantially all inventories, accounts receivable and equipment are
pledged as security under floor plan contracts. Floor plan contracts
are due upon sale of the related vehicle.

Interest rates and interest expense are as follows for the years ended
October 31:

INTEREST
INTEREST RATE EXPENSE
----------------- --------------

1998 6.78 - 8.50% $ 1,328,367
1997 7.69 - 9.25% $ 1,381,231
1996 8.25 - 9.00% $ 1,504,860

Maximum borrowings available under the contracts were $29,000,000 as of
October 31, 1998. The following summarizes certain information about
the borrowings under the floor plan contracts:

OCTOBER 31,
1998 1997
-------------- ---------------

Maximum amount outstanding at
any month end $ 18,142,185 $ 19,893,081

Average amount outstanding during the period $ 16,654,957 $ 16,977,374

Weighted average interest rate during the period 7.59% 8.12%

Weighted average interest rate at the
end of the period 7.50% 8.05%

F-14

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

7. STOCK OPTION PLANS:

The Company has an Incentive Stock Option Plan (the "Plan") which
provides for the issuance of up to 280,000 shares of common stock. The
option exercise price must be at least 100% of the fair market value
per share of common stock on the date of grant, except that such price
must be at least 110% of the fair market value per share for employees
who own more than 10% of the outstanding shares of the Company. The
options are exercisable, as determined by the Compensation Committee,
over a period of time, but not more than ten years from the date of
grant, and will be subject to such other terms and conditions as the
Committee may determine. There have been no additional options issued
under this plan for the fiscal years ended 1996 through 1998.

During 1993, under a separate plan, the Company made available and
granted 50,000 shares to certain directors to purchase shares of its
common stock at the market price on the date of the grant.

In August, 1994, as part of the California acquisition, the Company
granted options for 125,000 shares at an exercise price equal to the
average closing price of the Company's common stock for the 30 days
prior to the acquisition, $1.70 per share. These options expire on
September 30, 2004.

The following table summarizes the combined stock options activity for
the years ended October 31, 1998, 1997 and 1996:

NUMBER OF WEIGHTED
SHARES AVERAGE
UNDER OPTION OPTION PRICE
-------------- ------------

Balance, October 31, 1996 300,000 $ 1.77
==============
Balance, October 31, 1997 300,000 $ 1.77
==============
Balance, October 31, 1998 300,000 $ 1.77
==============

F-15

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

7. STOCK OPTION PLANS - CONTINUED:

At October 31, 1998, the 300,000 options outstanding under all stock
option plans are summarized in the following table:

OPTION RANGE OF WEIGHTED AVERAGE WEIGHTED AVERAGE
SHARES EXERCISE PRICES EXERCISE PRICE REMAINING LIFE
------------ --------------------- --------------------- ---------------------

275,000 $1.38 - $2.05 $1.71 4.2
25,000 $2.50 $2.50 1.6

All of the 300,000 options are exercisable at October 31, 1998.

The Company applies the disclosure-only provisions of Statement of
Financial Standards (SFAS) No. 123, but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for its
plans. No compensation expense has been recorded as there have been no
options granted during the last three fiscal years. Thus, there is no
proforma effects to calculate on net income or earnings per share
during that period.

8. DEFERRED COMPENSATION:

The Company has a restrictive stock bonus plan in place, whereby, at
the Board of Directors discretion, shares of the Company's stock are
awarded to certain individuals, including employees of the Company. The
stock awards vest upon the meeting of all the restrictions of the
agreement. Deferred compensation consists of the unamortized portion of
the value of shares of common stock which have been awarded to various
individuals. The awards provide for vesting of the shares over the
two-year restriction period. Amortization of the deferred compensation
is computed by the straight-line method over the vesting periods.
Unvested shares forfeited to the Company are recorded as treasury stock
based on the value of the shares at their original issuance date.

Consistent with the Company's stock option plans, the Company applies
the disclosure-only provisions of SFAS No. 123, but applies APB No. 25
and related interpretations in accounting for its deferred compensation
plan. The Company has recorded compensation expense of $11,484, $23,779
and $24,696 for the fiscal years ended October 31, 1998, 1997 and 1996,
respectively. If the Company had elected to recognize compensation
expense consistent with the methods prescribed by SFAS No. 123, there
would have been an immaterial effect on the reported net income and
earnings per share.

F-16

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

9. INCOME TAXES:

The components of income taxes are as follows:

OCTOBER 31,
1998 1997 1996
-------------- -------------- --------------

Current:
Federal $ 913,000 $ 790,000 $ 775,000
State 184,000 186,000 146,000
-------------- -------------- --------------
1,097,000 976,000 921,000
-------------- -------------- --------------
Deferred:
Federal (34,000) (70,000) (78,000)
State (19,000) (14,000) (14,000)
-------------- -------------- --------------
(53,000) (84,000) (92,000)
-------------- -------------- --------------
Total income taxes $ 1,044,000 $ 892,000 $ 829,000
============== ============== ==============

The components of deferred tax assets and liabilities consist of the
following:

OCTOBER 31,
1998 1997
--------------- ---------------

Deferred tax assets:
Property and equipment $ 50,000 $ 22,000
Deferred compensation 9,000 19,000
Noncompete agreement 60,000 43,000
Inventory 98,000 71,000
Deferred finance income 36,000 39,000
Accrued vacation 19,000 21,000
Other 3,000 8,000
--------------- ---------------
Total deferred income tax assets 275,000 223,000
--------------- ---------------
Deferred tax liabilities:
Rental fleet (7,000) (7,000)
--------------- ---------------
Total deferred tax liabilities (7,000) (7,000)
--------------- ---------------
Total net deferred tax assets 268,000 216,000

Less current deferred tax assets (159,000) (149,000)
--------------- ---------------

Long-term deferred tax assets $ 109,000 $ 67,000
=============== ===============

F-17

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

9. INCOME TAXES - CONTINUED:

The following summary reconciles differences from taxes at the federal
statutory rate with the effective rate:

1998 1997 1996
----------------------- --------------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------ -------- ---------- ------- ---------- --------

Income taxes at statutory $ 931,000 34.0% $ 774,000 34.0% 735,000 34.0%
rate

State income taxes, net of
federal benefit 109,000 3.8 114,000 5.0 104,000 4.8

Other 4,000 0.3 4,000 0.2 (10,000) (0.5)
------------ -------- ---------- ------- ---------- --------
Income taxes at effective
rates $ 1,044,000 38.1% $ 892,000 39.2% $ 829,000 38.3%
============ ======== ========== ======= ========== ========

At October 31, 1998, the Company has net operating loss carryforwards
of approximately $230,000 for state income tax purposes that expire
beginning in 2004.

10. EMPLOYEE BENEFIT PLANS:

The Company has a Profit-Sharing and Employee Investment Plan which
covers substantially all employees meeting certain minimum age and
service requirements. Employee contributions to the investment plan
may, at the Company's discretion, be matched 25% up to a maximum
employee contribution of 6% of the employee's compensation. Also at the
Company's discretion, a profit-sharing contribution may be made.
Company contributions to the plan, included in selling, general and
administrative expenses, were approximately $98,000, $86,000 and
$95,000 for the years ended October 31, 1998, 1997 and 1996,
respectively.

11. CAPITAL AND OPERATING LEASE COMMITMENTS:

CAPITAL LEASE - The Company leases computer equipment under an
agreement which is classified as a capital lease. The lease expires in
2002, at which time the Company will have an option to purchase the
computer equipment for a nominal amount. The equipment is included in
property and equipment in the amount of approximately $448,000 with
related accumulated amortization of $269,000 and $224,000 at October
31, 1998 and 1997, respectively.

F-18

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

11. CAPITAL AND OPERATING LEASE COMMITMENTS - CONTINUED:

OPERATING LEASES - The Company conducts its operations from leased
facilities including land and buildings in Orlando and Fort Myers,
Florida; Greer, South Carolina; and Roseville, California. The Florida
facilities (with the exception of the corporate office) are leased from
related parties (see Note 12). The leases expire on various dates from
1998 through 2002, with some including renewal options.

As of October 31, 1998, future minimum lease payments under
noncancellable capital and operating leases with initial or remaining
terms of one year or more are as follows:

CAPITAL OPERATING
LEASE LEASES
-------------- ---------------

1999 $ 90,558 $ 475,743
2000 90,558 133,518
2001 90,558 86,910
2002 78,798 29,688
2003 - -
-------------- ---------------
Total minimum lease payments 350,472 $ 725,859
===============
Less amount representing interest (67,833)
--------------

Present value of minimum lease payments 282 639
Less current portion (61,963)
--------------
Long-term capital lease obligation $ 220,676
============

The Company's rental expense under operating leases for the fiscal
years ended October 31, 1998, 1997 and 1996 was $527,645, $529,307 and
$570,470, respectively.

12. RELATED-PARTY TRANSACTIONS:

As noted in Note 11, the Company currently leases the Orlando, Florida
facility from the principal stockholders and the Fort Myers, Florida
facility from a trust whose beneficiaries are the heirs of one of the
principal stockholders. The Company paid $203,000, $179,000 and
$144,000 to these related parties for the years ended October 31, 1998,
1997 and 1996, respectively.

The Company also paid legal fees of approximately $62,000, $25,000 and
$78,000 to a law firm owned in part by a member of the Company's Board
of Directors during the years ended October 31, 1998, 1997 and 1996,
respectively.

F-19

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

13. ADVERTISING COSTS:

The Company promotes its product lines through various advertising
sources. Advertising expenses were approximately $1,003,000, $1,035,000
and $1,034,000 for the years ended October 31, 1998, 1997 and 1996,
respectively.

14. COMMITMENTS AND CONTINGENCIES:

CONCENTRATION OF RISK - The Company's financial instruments that are
exposed to concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company places its funds
with high credit quality institutions. At times, such monies may be in
excess of the FDIC or other insurance limits. With regard to
receivables, the Company routinely assesses the financial strength and
collectibility of its customers and, as a consequence, believes that
its accounts receivable credit risk is limited.

The Company relies on several manufacturers as suppliers for its
product lines. Approximately 58%, 69% and 76% of the Company's new
vehicle sales for the years ended October 31, 1998, 1997 and 1996,
respectively, consists of vehicles purchased from the same two
manufacturers. In the opinion of management, the loss of any one brand
of new recreational vehicle would not materially affect the Company.
However, the loss of all the brands sold by either of the two largest
manufacturers would have a material effect on the Company's sales. The
Company's management feels the loss of all brands from either of these
two manufacturers to be highly unlikely.

THIRD-PARTY FINANCING - The Company uses third-party banks and/or
finance companies to assist its customers in locating financing for
vehicle purchases. The Company refers customers to one or more of these
third-party financing sources and earns a referral fee if the
third-party lender consummates a loan contract with the customer. These
contracts represent third-party financing, and the Company provides no
underwriting or credit approval services for the lender. The Company's
referral fees are in fact a commission and are typically based upon the
difference between the interest rate the customer pays under the
contract with the lender and an interest rate designated by the lender.
At no time does the Company service or guarantee the collection of
these loans or receivables. The Company could be charged back the
commission by the lender if the loan is paid off or foreclosed in a
specified period of time, usually limited to the first six months of
the term, and if the chargeback exceeds reserves retained by the
lender.

F-20

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

14. COMMITMENTS AND CONTINGENCIES - CONTINUED:

THIRD-PARTY FINANCING - Continued - The Company records this commission
income based upon the amount earned less allowances for chargebacks. In
determining the allowances for chargebacks, the Company takes into
consideration total customer loans outstanding and estimates the
exposure for potential chargebacks associated with foreclosure and
early payoffs of these loans. The Company also considers current and
future economic conditions, the effects of the change in consumer
interest rates and the aging of all loans outstanding. The chargeback
allowance was approximately $93,500, $105,700 and $135,000 at October
31, 1998, 1997 and 1996, respectively. Finance chargebacks were
approximately $42,000, $57,000 and $58,000 for 1998, 1997 and 1996,
respectively.

COMMON STOCK REPURCHASE - On November 15, 1997, the Company's Board of
Directors approved a plan to repurchase up to $1 million of common
stock of the Company. On December 9, 1998, the Company's Board of
Directors approved an increase in its common share repurchase program
from the initial $1 million to $2 million and extended the repurchase
period through the year 1999. The timing of the stock purchases are
made at the discretion of management. At October 31, 1998, the Company
has repurchased $379,905 of the total authorized shares to be
repurchased.

15. SUBSEQUENT EVENTS:

In December, 1998, the Company sold its real property previously
operating as a recreational vehicle dealership in Atlanta, Georgia for
approximately $1.2 million. As a result of the sale, the Company ceased
doing business at that location.

F-21

PRICEWATERHOUSECOOPERS [LOGO]

REPORT OF INDEPENDENT ACCOUNTANTS

December 10, 1998

Holiday RV Superstores, Incorporated
Orlando, Florida

Our report on the consolidated financial statements of Holiday RV Superstores,
Incorporated and Subsidiaries is included on page F-2 of this Form 10-K In
connection with our audit of such financial statements, we have also audited the
related financial statement schedule for the fiscal years ended October 31, 1997
and 1998 included at page S-1 of this Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

/s/ PRICEWATERHOUSECOOPERS LLP

Report of Independent Certified Public Accountants

To the Shareholders of
Holiday RV Superstores, Incorporated
Orlando, Florida

The audits referred to in our report dated December 20, 1996 relating to the
consolidated financial statements of Holiday RV Superstores, Incorporated, which
is contained in Item 8 of this Form 10-K, included the audit of the financial
statement Schedule II. This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement based on our audits.

In our opinion, such financial statement schedule presents fairly, in all
material respects, information set forth therein.

/s/ BDO SEIDMAN, LLP
-------------------------------
BDO SEIDMAN, LLP
Orlando, Florida
December 20, 1996

SCHEDULE II

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

FOR THE FISCAL YEARS ENDED OCTOBER 31, 1998, 1997, 1996

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

CHARGES OTHER
BALANCE AT TO COST CHARGES CHARGES- BALANCE
BEGINNING AND TO OTHER ADDITIONS AT END OF
YEAR DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (DEDUCTIONS) PERIOD
(a)
- ------------------------------------------------------------------------------------------------

1998 Finance Commissions
Chargeback Reserves $ 105,849 $ 42,365 $ -- (54,716) $ 93,498

1997 Finance Commissions 135,260 57,362 -- (86,773) $ 105,849
Chargeback Reserves

1996 Finance Commissions
Chargeback Reserves 152,092 58,425 -- (75,257) 135,260

- ----------
(a) Finance income chargebacks paid.

ANNUAL REPORT ON FORM 10-K

ITEM 11

CUMULATIVE TOTAL SHAREHOLDER RETURN

PERFORMANCE GRAPH AS OF OCTOBER 31,

1994, 1995, 1996, 1997 AND 1998

FOR

HOLIDAY RV SUPERSTORES, INC., THE S&P 500 INDEX, AND

INDEX OF HOLIDAY RV SUPERSTORES, INC.'S PEER GROUP

DISCLOSURE REQUIRED FOR
ITEM 402(l) FOR FORM 10-K (ANNUAL REPORT)
PERFORMANCE GRAPH

Here in displays a line graph plotting three (3) series of
points, whereby the Y axis is the total cumulative shareholder
return, and the X axis is the year, being 1993 thru 1998. The
plotted points (cumulative shareholder return by year) are
listed in the table below.

1993 1994 1995 1996 1997 1998
------------------------------------------------------------------------------------------------------

RVEE 100.00 63.16 126.32 76.29 64.46 94.74
------------------------------------------------------------------------------------------------------
S&P Small Cap 600 Index 100.00 96.58 117.02 140.96 186.02 165.45
------------------------------------------------------------------------------------------------------
PEER GROUP 100.00 98.83 78.17 80.57 75.98 96.39
------------------------------------------------------------------------------------------------------

The performance graph above illustrates the cumulative yearly
shareholder return for the past five years, assuming a $100 investment on
October 31, 1993, in (1) the Company; (RVEE) (2) The Standard and Poor's Small
Cap 600 index, assuming reinvestment of dividends; (3) a Company determined
Market Capitalization Peer Group composite index, assuming reinvestment of
dividends.

The Company changed, effective with the 1998 graph, the board-market
index from the Standard and Poor's 500 composite index to the Standard and
Poor's Small Cap 600 index. The Company believes the Small Cap index is more
comparable than the 500 composite index to the Company's business sector and
market capitalization size.

The Peer Group consist of twenty publicly owned retail companies with
similar market capitalization as Holiday RV Superstores, Inc., whose common
stocks are traded on exchanges. The market capitalization criteria in
determining a peer group was selected by the Company for shareholder return
comparative purposes, as there is no published industry or line-of-business
index comparable to the industry or line-of-business as that of the Company.

The peer group consist of the following companies:

Audio King Corp., Brendles Inc., Chariot Entertainment Inc. (no longer
files as of 9/18/95), Evans Inc., FFP Partners LP-CL,A., Foodarama Supermarkets,
Harold's Stores Inc., Hills Department Stores Inc., Holiday RV Superstores,
Inc., Huffman Koos Inc., (acquired by Bruener's Home Furn Co., Oct. '95), Pubco
Corp., Seaway Food Town Inc., Siebert Financial Corp., Sound Advice Inc., Spec's
Music Inc., Strober Organization Inc. (acquired by Hamilton NY, March '97),
Sunshine-Jr Stores (acquired by E-Z Serve Corp. July `95), Uni-Marts Inc. CL A,
Village Super Market CL A, Warehouse Club Inc. (no longer files as of 3/18/96).

S-1

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
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27 Financial Data Schedule