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

FORM 10-Q

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 27, 2002 or

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

For the transition period from _____ to _____

Commission File Number: 0-21204

SOUTHERN ENERGY HOMES, INC.


(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 63-1083246                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|144 Corporate Way, P.O. Box 390, Addison, Alabama              |  | 35540                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

(256) 747-8589

(Registrants telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

12,133,865 shares of Common Stock, $.0001 par value, as of November 8, 2002





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TABLE OF CONTENTS



|                                                  |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|I. FINANCIAL INFORMATION                         
|                                                  | Item 1. Financial Statements                                                                 
|                                                  |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                                                  |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                                                  |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                                                  |                                                                                               | NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                                                  | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                  | Item 3. Quantitative and Qualitative Disclosures of Market Risk.                             
|                                                  | Item 4. CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION                      
|                                                  | Item 1. Legal Proceedings                                                                    
|                                                  | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                       
|EX-99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER 
|EX-99.2 CERTIFICATION OF CHIEF ACCOUNTING OFFICER



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##### Table of Contents



SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES

INDEX

|        |  |                                                                                       |  |                                                                                                                                                                                        |    |      |    | 
|------- |  | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|        |  |                                                                                       |  |                                                                                                                                                                                        |    | Page
|PART I  |  | FINANCIAL INFORMATION:                                                                |  |                                                                                                                                                                                        |    |     
|Item 1  |  | Financial Statements (Unaudited)                                                      |  |                                                                                                                                                                                        |    |     
|        |  |                                                                                       |  | Consolidated Condensed Balance Sheets,
September 27, 2002 and December 28, 2001                                                                                                        |    |      | 3  | 
|        |  |                                                                                       |  | Consolidated Condensed Statements of Operations  Thirteen Weeks
Ended September 27, 2002 and September 28, 2001 and Thirty-nine Weeks
Ended September 27, 2002 and September 28, 2001 |    |      | 4  | 
|        |  |                                                                                       |  | Consolidated Condensed Statements of Cash Flows  Thirty-nine
Weeks Ended September 27, 2002 and September 28, 2001                                                                    |    |      | 5  | 
|        |  |                                                                                       |  | Notes to Consolidated Condensed Financial Statements                                                                                                                                   |    |      | 6  | 
|Item 2  |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  |                                                                                                                                                                                        | 11 |     
|Item 3  |  | Quantitative and Qualitative Disclosure of Market Risk                                |  |                                                                                                                                                                                        | 15 |     
|Item 4  |  | Controls and Procedures                                                               |  |                                                                                                                                                                                        | 16 |     
|PART II |  | OTHER INFORMATION:                                                                    |  |                                                                                                                                                                                        |    |     
|Item 1  |  | Legal Proceedings                                                                     |  |                                                                                                                                                                                        | 17 |     
|Item 6  |  | Exhibits and Reports on Form 8-K                                                      |  |                                                                                                                                                                                        | 17 |     
|        |  |                                                                                       |  | SIGNATURES                                                                                                                                                                             |    |      | 18 | 
|        |  |                                                                                       |  | CERTIFICATIONS                                                                                                                                                                         |    |      | 18 | 

2



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##### Table of Contents









I. FINANCIAL INFORMATION

Item 1. Financial Statements




SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | ----------- | ------------ | - | ---------- | ----------- | -
|                                     |                                                                                                                                                |   | September 27, |             | December 28,
|                                     |                                                                                                                                                |   | 2002          |             | 2001        
|                                     |                                                                                                                                                |   |               |             |             
|                                     |                                                                                                                                                |   | (Unaudited)   |             | (Note 1)    
|ASSETS                               |                                                                                                                                                |   |               |             |              |   |            |            
|Current Assets:                      |                                                                                                                                                |   |               |             |              |   |            |            
|                                     | Cash and cash equivalents                                                                                                                      |   | $             |            |              |   | $          | 354,000     |  
|                                     | Accounts receivable (less allowance for doubtful accounts of
$343,000 and $160,000, respectively)                                              |   |               | 9,473,000   |              |   |            | 7,089,000   |  
|                                     | Inventories                                                                                                                                    |   |               | 12,282,000  |              |   |            | 19,639,000  |  
|                                     | Refundable and deferred income taxes                                                                                                           |   |               | 2,099,000   |              |   |            | 349,000     |  
|                                     | Prepayments and other                                                                                                                          |   |               | 526,000     |              |   |            | 903,000     |  
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   | 24,380,000    |             |              |   | 28,334,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |            
|Property and equipment:              |                                                                                                                                                |   |               |             |              |   |            |            
|                                     | Property and equipment, at cost                                                                                                                |   |               | 32,082,000  |              |   |            | 34,765,000  |  
|                                     | Less  accumulated depreciation                                                                                                                |   |               | (15,771,000 | )            |   |            | (15,496,000 | )
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   | 16,311,000    |             |              |   | 19,269,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |            
|Intangibles and other assets:        |                                                                                                                                                |   |               |             |              |   |            |            
|                                     | Installment contracts receivable (less allowance for credit
losses of $1,150,000 )                                                             |   |               | 11,890,000  |              |   |            | 13,543,000  |  
|                                     | Goodwill                                                                                                                                       |   |               | 3,305,000   |              |   |            | 3,305,000   |  
|                                     | Investment in joint ventures                                                                                                                   |   |               | 4,160,000   |              |   |            | 4,908,000   |  
|                                     | Other assets                                                                                                                                   |   |               | 2,939,000   |              |   |            | 3,192,000   |  
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   | 22,294,000    |             |              |   | 24,948,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                | $ | 62,985,000    |             |              | $ | 72,551,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   |               |             |              |   |            |            
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                |   |               |             |              |   |            |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |            
|Current liabilities:                 |                                                                                                                                                |   |               |             |              |   |            |            
|                                     | Notes payable                                                                                                                                  |   | $             | 4,215,000   |              |   | $          | 10,964,000  |  
|                                     | Accounts payable                                                                                                                               |   |               | 1,963,000   |              |   |            | 1,369,000   |  
|                                     | Accrued liabilities                                                                                                                            |   |               | 13,616,000  |              |   |            | 13,617,000  |  
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   | 19,794,000    |             |              |   | 25,950,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   |               |             |              |   |            |            
|Stockholders equity:                |                                                                                                                                                |   |               |             |              |   |            |            
|                                     | Preferred stock, $.0001 par value, 1,000,000 shares authorized,
none outstanding                                                               |   |               |            |              |   |            |            |  
|                                     | Common stock, $.0001 par value, 40,000,000 shares authorized,
12,133,865 issued and outstanding at September 27, 2002 and at
December 28, 2001 |   |               | 1,000       |              |   |            | 1,000       |  
|                                     | Capital in excess of par                                                                                                                       |   |               | 8,330,000   |              |   |            | 8,330,000   |  
|                                     | Retained earnings                                                                                                                              |   |               | 34,860,000  |              |   |            | 38,270,000  |  
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                |   | 43,191,000    |             |              |   | 46,601,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  
|                                     |                                                                                                                                                | $ | 62,985,000    |             |              | $ | 72,551,000 |            
|                                     |                                                                                                                                                |   |               |             |              |   |            |             |  

The accompanying notes are an integral part of these consolidated condensed financial statements.

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SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |            |            |            |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ----- | ---------- | ----------------- | ---------- | ----------------------- | ---------- | ----------------------- | ---------- | ------------- | ----------- | ------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | -
|                                                                                                                                                |                                          |       |            |                   |            | Thirteen Weeks Ended    |            | Thirty-nine Weeks Ended
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                        
|                                                                                                                                                |                                          |       |            |                   |            | September 27,           |            | September 28,           |            | September 27, |             | September 28,
|                                                                                                                                                |                                          |       |            |                   |            | 2002                    |            | 2001                    |            | 2002          |             | 2001         
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |              
|                                                                                                                                                |                                          |       |            |                   |            | (Restated  see note 2) |            | (Restated  see note 2)
|Net revenues                                                                                                                                    |                                          | $     | 35,026,000 |                   |            | $                       | 34,067,000 |                         |            | $             | 106,739,000 |               |            | $          | 96,785,000 |           
|Cost of sales                                                                                                                                   |                                          |       | 27,311,000 |                   |            |                         | 25,505,000 |                         |            |               | 83,823,000  |               |            |            | 73,410,000 |           
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                |                                          |       |            | Gross profit      |            |                         | 7,715,000  |                         |            |               | 8,562,000   |               |            |            | 22,916,000 |            |            |            | 23,375,000 |  
|Operating expenses:                                                                                                                             |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                | Selling, general and administrative      |       |            | 7,129,000         |            |                         |            | 7,543,000               |            |               |             | 20,785,000    |            |            |            | 21,882,000 |           
|                                                                                                                                                | Amortization of intangibles              |       |            | 13,000            |            |                         |            | 76,000                  |            |               |             | 40,000        |            |            |            | 229,000    |           
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                |                                          |       | 7,142,000  |                   |            |                         | 7,619,000  |                         |            |               | 20,825,000  |               |            |            | 22,111,000 |           
|Operating income                                                                                                                                |                                          |       | 573,000    |                   |            |                         | 943,000    |                         |            |               | 2,091,000   |               |            |            | 1,264,000  |           
|Interest expense                                                                                                                                |                                          |       | (206,000   | )                 |            |                         | (440,000   | )                       |            |               | (801,000    | )             |            |            | (1,611,000 | )         
|Interest income                                                                                                                                 |                                          |       | 52,000     |                   |            |                         | 48,000     |                         |            |               | 177,000     |               |            |            | 264,000    |           
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|Income (loss) from continuing operations
before income taxes                                                                                    |                                          |       | 419,000    |                   |            |                         | 551,000    |                         |            |               | 1,467,000   |               |            |            | (83,000    | )         
|Income taxes                                                                                                                                    |                                          |       |           |                   |            |                         |           |                         |            |               |            |               |            |            |           |           
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|Income (loss) from continuing operations                                                                                                        |                                          |       | 419,000    |                   |            |                         | 551,000    |                         |            |               | 1,467,000   |               |            |            | (83,000    | )         
|Loss from discontinued operations, net of
tax benefit of $1.8 million for the
thirteen and thirty- nine weeks ended
September 27, 2002 (note 2) |                                          |       | (3,286,000 | )                 |            |                         | (822,000   | )                       |            |               | (4,877,000  | )             |            |            | (1,524,000 | )         
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                |                                          |       |            | Net loss          |            | $                       | (2,867,000 | )                       |            | $             | (271,000    | )             |            | $          | (3,410,000 | )          |            | $          | (1,607,000 | )
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|Basic and diluted earnings per share:                                                                                                           |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                | Income (loss) from continuing
operations |       | $          | 0.03              |            |                         | $          | 0.05                    |            |               | $           | 0.12          |            |            | $          | (0.01      | )         
|                                                                                                                                                | Loss from discontinued operations        |       |            | (0.27             | )          |                         |            | (0.07                   | )          |               |             | (0.40         | )          |            |            | (0.12      | )         
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                |                                          |       |            | Net income (loss) |            | $                       | (0.24      | )                       |            | $             | (0.02       | )             |            | $          | (0.28      | )          |            | $          | (0.13      | )
|                                                                                                                                                |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|Weighted average number of common
shares:                                                                                                       |                                          |       |            |                   |            |                         |            |                         |            |               |             |               |            |            |            |           
|                                                                                                                                                |                                          | Basic |            |                   | 12,133,865 |                         |            |                         | 12,133,350 |               |             |               | 12,133,865 |            |            |            | 12,133,109 |           
|                                                                                                                                                |                                          |       | Diluted    |                   |            | 12,301,516              |            |                         |            | 12,458,800    |             |               |            | 12,386,841 |            |            |            | 12,133,109 |           

The accompanying notes are an integral part of these consolidated condensed financial statements.

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SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |            |            |             |  
|--------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------- | ---------- | ----------------------- | ---------- | ------------- | ---------- | ---------- | ----------- | -
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            | Thirty-nine Weeks Ended
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                        
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            | September 27,           |            | September 28,
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            | 2002                    |            | 2001         
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Cash flows from operating activities:                                       |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|                                                                            | Income (loss) from continuing operations                                                                        |                                                         | $                                              | 1,467,000                                           |            |                         | $          | (83,000       | )         
|                                                                            | Adjustments to reconcile income (loss) from continuing operations to net cash
provided by operating activities: |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 | Equity income of joint ventures                         |                                                |                                                     | (308,000   | )                       |            |               | (265,000   | )         
|                                                                            |                                                                                                                 | Depreciation of property and equipment                  |                                                |                                                     | 1,699,000  |                         |            |               | 1,703,000  |           
|                                                                            |                                                                                                                 | Amortization of intangibles                             |                                                |                                                     | 40,000     |                         |            |               | 211,000    |           
|                                                                            |                                                                                                                 | Loss on sale of property and equipment                  |                                                |                                                     | 122,000    |                         |            |               | 13,000     |           
|                                                                            |                                                                                                                 | Amortization of debt issuance costs                     |                                                |                                                     | 213,000    |                         |            |               | 214,000    |           
|                                                                            |                                                                                                                 | Provision for doubtful accounts receivable              |                                                |                                                     | 172,000    |                         |            |               | 148,000    |           
|                                                                            |                                                                                                                 | Origination of installment contracts                    |                                                |                                                     | (2,823,000 | )                       |            |               | (3,434,000 | )         
|                                                                            |                                                                                                                 | Provision for credit losses on installment contracts    |                                                |                                                     |           |                         |            |               | 150,000    |           
|                                                                            |                                                                                                                 | Principal collected on originated installment contracts |                                                |                                                     | 4,476,000  |                         |            |               | 3,609,000  |           
|                                                                            |                                                                                                                 | Change in assets and liabilities:                       |                                                |                                                     |            |                         |            |               |            |           
|                                                                            |                                                                                                                 |                                                         | Inventories                                    |                                                     |            | 931,000                 |            |               |            | 3,450,000  |            
|                                                                            |                                                                                                                 |                                                         | Accounts receivable                            |                                                     |            | (5,343,000              | )          |               |            | (3,665,000 | )          
|                                                                            |                                                                                                                 |                                                         | Refundable income taxes, prepayments and other |                                                     |            | 383,000                 |            |               |            | 4,721,000  |            
|                                                                            |                                                                                                                 |                                                         | Accounts payable                               |                                                     |            | 3,741,000               |            |               |            | (6,531,000 | )          
|                                                                            |                                                                                                                 |                                                         | Accrued liabilities                            |                                                     |            | 304,000                 |            |               |            | 6,228,000  |            
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                | Net cash provided by operating activities           |            |                         | 5,074,000  |               |            |            | 6,469,000   |  
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Cash flows from investing activities:                                       |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|                                                                            | Capital expenditures                                                                                            |                                                         |                                                | (385,000                                            | )          |                         |            | (661,000      | )         
|                                                                            | Investments in joint ventures                                                                                   |                                                         |                                                | (379,000                                            | )          |                         |            | (146,000      | )         
|                                                                            | Proceeds from sale of joint venture                                                                             |                                                         |                                                | 1,250,000                                           |            |                         |            |              |           
|                                                                            | Distribution from joint ventures                                                                                |                                                         |                                                | 185,000                                             |            |                         |            | 371,000       |           
|                                                                            | Proceeds from sale of property and equipment                                                                    |                                                         |                                                | 630,000                                             |            |                         |            | 342,000       |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                | Net cash provided by (used in) investing activities |            |                         | 1,301,000  |               |            |            | (94,000     | )
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Cash flows from financing activities:                                       |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|                                                                            | Net repayments on notes payable                                                                                 |                                                         |                                                | (6,749,000                                          | )          |                         |            | (11,750,000   | )         
|                                                                            | Refund of deposit                                                                                               |                                                         |                                                |                                                    |            |                         |            | 1,000,000     |           
|                                                                            | Proceeds from exercise of stock option                                                                          |                                                         |                                                |                                                    |            |                         |            | 1,000         |           
|                                                                            | Payment of debt issuance costs                                                                                  |                                                         |                                                |                                                    |            |                         |            | (1,106,000    | )         
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                | Net cash used in financing activities               |            |                         | (6,749,000 | )             |            |            | (11,855,000 | )
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Net cash and cash equivalents used in continuing operations                 |                                                                                                                 |                                                         | (374,000                                       | )                                                   |            |                         | (5,480,000 | )            
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Net cash and cash equivalents provided by (used in) discontinued operations |                                                                                                                 |                                                         | 20,000                                         |                                                     |            |                         | (574,000   | )            
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Net decrease in cash and cash equivalents                                   |                                                                                                                 |                                                         | (354,000                                       | )                                                   |            |                         | (6,054,000 | )            
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Cash and cash equivalents at the beginning of period                        |                                                                                                                 |                                                         | 354,000                                        |                                                     |            |                         | 6,054,000  |              
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |              
|Cash and cash equivalents at the end of period                              |                                                                                                                 | $                                                       |                                               |                                                     |            | $                       |           |              
|                                                                            |                                                                                                                 |                                                         |                                                |                                                     |            |                         |            |               |           

The accompanying notes are an integral part of these consolidated condensed financial statements.

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SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.     BASIS OF PRESENTATION:

The consolidated condensed balance sheet as of December 28, 2001, which has
been derived from audited financial statements, and the unaudited interim
consolidated condensed financial statements as of September 27, 2002, have been
prepared by the Company without audit, but in the opinion of management reflect
the adjustments necessary (which include only normal recurring adjustments) for
the fair presentation of the information set forth therein. Results of
operations for the interim 2002 period are not necessarily indicative of
results expected for the full year. While certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission, the Company believes that the disclosures herein are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the audited financial statements
and the notes thereto included in the Companys Annual Report to Stockholders
for the fiscal year ended December 28, 2001.

2.     DISCONTINUED OPERATIONS:

In addition to the four retail centers closed earlier in 2002, the Company
decided during the third quarter to close seven other retail centers that were
part of the Retail Segment. These retail centers had been negatively affected
by weak market conditions and restrictive retail financing conditions,
principally as a result of the withdrawal of several lenders from the market.
The decision to close the retail centers was based primarily on managements
evaluation of recent operating results. These centers are expected to be sold
or closed by December.

Accordingly, as required by FASB Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (FASB 144), the operating
results of the closed retail centers, which were previously reported in the
Retail Segment, for 2002 and all prior periods presented herein have been
classified in discontinued operations. The Company recognized a $5.1 million
loss ($3.3 million net of tax benefit) on discontinued operations in the third
quarter, which included $.5 million of operating losses during the quarter
(including $0.1 million for interest allocated to these retail centers based on
average monthly inventory balances), $3.2 million to write-down the carrying
value of unsold homes in current retail inventory and $1.4 million for
leasehold, severance, termination of leases and equipment-related costs. For
the thirty-nine week period ended September 27, 2002, the Company recognized a
$6.7 million loss on discontinued operations ($4.9 million net of tax benefit).
As required by FASB 144, any further operating losses, as well as adjustments
to exit costs accruals (if any), will be reported in discontinued operations as
incurred, or when circumstances warrant revisions of the related accounts.
Historical operating results of the discontinued operations were as follows:

|               |  |                      |        |                         |  |               |       |               |  |   |        |   |  |   |        |  
|-------------- |  | -------------------- | ------ | ----------------------- |  | ------------- | ----- | ------------- |  | - | ------ | - |  | - | ------ | -
|               |  | Thirteen Weeks Ended |        | Thirty-nine Weeks Ended
|               |  |                      |        |                        
|               |  | September 27,        |        | September 28,           |  | September 27, |       | September 28,
|               |  | 2002                 |        | 2001                    |  | 2002          |       | 2001         
|               |  |                      |        |                         |  |               |       |              
|(In thousands) |  |                      |        |                         |  |               |       |               |  |   |        |   |  |   |        |  
|Net sales      |  | $                    | 3,523  |                         |  | $             | 7,101 |               |  | $ | 11,677 |   |  | $ | 24,332 |  
|Net loss       |  |                      | (3,286 | )                       |  |               | (822  | )             |  |   | (4,877 | ) |  |   | (1,524 | )

Assets and liabilities of the discontinued operations have been reflected in
the consolidated condensed balance sheets as current or non-current based on
the original classification of these accounts, net of any necessary valuation
allowances. Although we believe we have appropriately reduced the carrying
value of the assets to their estimated recoverable amounts, net of disposal
cost where appropriate, actual results could be different and the difference
will be reported in discontinued operations in future periods.

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Net assets of the discontinued operations are as follows:

|                                      |  |                    |       |                   |  |   |        |  
|------------------------------------- |  | ------------------ | ----- | ----------------- |  | - | ------ | -
|                                      |  | September 27, 2002 |       | December 28, 2001
|                                      |  |                    |       |                  
|(In thousands)                        |  |                    |       |                   |  |   |        |  
|Cash and cash equivalents             |  | $                  |      |                   |  | $ |       |  
|Accounts receivable                   |  |                    | 757   |                   |  |   | 3,544  |  
|Inventories                           |  |                    | 2,896 |                   |  |   | 9,322  |  
|Property and equipment                |  |                    | 1,360 |                   |  |   | 2,252  |  
|Other assets                          |  |                    | 54    |                   |  |   | 34     |  
|Current liabilities                   |  |                    | (512  | )                 |  |   | (817   | )
|                                      |  |                    |       |                   |  |   |        |  
|Net assets of discontinued operations |  | $                  | 4,555 |                   |  | $ | 14,335 |  
|                                      |  |                    |       |                   |  |   |        |  

Total severance and exit costs accruals at September 27, 2002 amounted to $487,000.

There are no material contingent liabilities, including environmental
liabilities or litigation, related to the closed retail centers.

3.     INVENTORIES:

Inventories are valued at first-in, first-out (FIFO) cost, which is not in
excess of market. An analysis of inventories follows:

|                 |  |               |            |              |  |   |            | 
|---------------- |  | ------------- | ---------- | ------------ |  | - | ---------- | 
|                 |  | September 27, |            | December 28,
|                 |  | 2002          |            | 2001        
|                 |  |               |            |             
|                 |  | (Unaudited)   |            |              |  |  
|Raw materials    |  | $             | 3,747,000  |              |  | $ | 4,657,000  | 
|Work in progress |  |               | 648,000    |              |  |   | 592,000    | 
|Finished goods   |  |               | 7,887,000  |              |  |   | 14,390,000 | 
|                 |  |               |            |              |  |   |            | 
|                 |  | $             | 12,282,000 |              |  | $ | 19,639,000 | 
|                 |  |               |            |              |  |   |            | 

4.     EARNINGS PER SHARE:

Basic earnings per share (EPS) excludes dilution and is computed by dividing
income available to common stockholders by the weighted average number of
shares outstanding during the subject period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock are exercised or converted into common stock or result in the
issuance of common stock that will share in the earnings of the Company.

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The following reconciliation details the numerators and denominators used to
calculate basic and diluted earnings per share for the respective periods:

|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|--------------------------------------------- |  | -------------------- | ---------- | ----------------------- |  | ------------- | ---------- | ------------- |  | - | ---------- | - |  | - | ---------- | -
|                                              |  | Thirteen Weeks Ended |            | Thirty-nine Weeks Ended
|                                              |  |                      |            |                        
|                                              |  | September 27,        |            | September 28,           |  | September 27, |            | September 28,
|                                              |  | 2002                 |            | 2001                    |  | 2002          |            | 2001         
|                                              |  |                      |            |                         |  |               |            |              
|Income (loss) from
continuing operations      |  | $                    | 419,000    |                         |  | $             | 551,000    |               |  | $ | 1,467,000  |   |  | $ | (83,000    | )
|Loss from discontinued
operations, net of tax |  |                      | (3,286,000 | )                       |  |               | (822,000   | )             |  |   | (4,877,000 | ) |  |   | (1,524,000 | )
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Net loss                                      |  | $                    | (2,867,000 | )                       |  | $             | (271,000   | )             |  | $ | (3,410,000 | ) |  | $ | (1,607,000 | )
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Average shares outstanding:                   |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Basic                                         |  |                      | 12,133,865 |                         |  |               | 12,133,350 |               |  |   | 12,133,865 |   |  |   | 12,133,109 |  
|Add: dilutive effect of
options issued        |  |                      | 167,651    |                         |  |               | 325,450    |               |  |   | 252,976    |   |  |   |           |  
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Diluted                                       |  |                      | 12,301,516 |                         |  |               | 12,458,800 |               |  |   | 12,386,841 |   |  |   | 12,133,109 |  
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Earnings per share 
basic and diluted:       |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Income (loss) from
continuing operations      |  | $                    | 0.03       |                         |  | $             | 0.05       |               |  | $ | 0.12       |   |  | $ | (0.01      | )
|Loss from discontinued
operations, net of tax |  |                      | (0.27      | )                       |  |               | (0.07      | )             |  |   | (0.40      | ) |  |   | (0.12      | )
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  
|Net loss                                      |  | $                    | (0.24      | )                       |  | $             | (0.02      | )             |  | $ | (0.28      | ) |  | $ | (0.13      | )
|                                              |  |                      |            |                         |  |               |            |               |  |   |            |   |  |   |            |  

Net incremental shares issuable on the exercise of employee stock options
calculated using the treasury stock method amounted to 193,375 shares for the
thirty-nine weeks ended September 28, 2001. Such incremental shares were not
included in the computation of diluted shares available to common shareholders,
as the effect of these shares was antidilutive.

5.     RECENT ACCOUNTING PRONOUNCEMENTS:

On December 29, 2001, the Company adopted SFAS No. 142, Goodwill and Intangible
Assets.SFAS No. 142 eliminates the amortization of goodwill and requires that
an impairment test be performed at least annually at the reporting unit level,
using a two-step impairment test. The first step determines if goodwill is
impaired by comparing the fair value of the reporting unit as a whole to the
book value. If a deficiency exists, the second step compares the amount of the
impairment loss as the difference between the implied fair value of goodwill
and its carrying amount. Purchased intangibles with indefinite economic lives
will no longer be amortized but reviewed for impairment annually. Other
intangibles will continue to be amortized over their useful lives and reviewed
for impairment in accordance with SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets.

The impact of SFAS No. 142 on net loss and net loss per share had the standard
been in effect during 2001 would have been insignificant.

The Company has completed its transitional impairment test of goodwill under
the specific guidance of SFAS No. 142 and has concluded that goodwill is not
impaired

6.     REPURCHASE AGREEMENTS:

Substantially all of the Companys independent dealers finance their purchases
through floor-plan arrangements under which a financial institution provides
the dealer with a loan for the purchase price of the home and maintains a
security interest in the home as collateral. In connection with a floor-plan
agreement, the financial institution, which provides the dealer financing,
customarily requires the Company to enter into a separate repurchase agreement
with the financial institution, under which the Company is obligated, upon
default by the independent dealer, to repurchase the homes at the Companys
original invoice price plus certain administrative and shipping expenses less
any principal payments made by the dealer. Repurchases were $383,000 and $1,319,000 for the quarters ended

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September 27, 2002 and
September 28, 2001, respectively. Losses on repurchases were $91,000 and
$351,000 for the quarters ended September 27, 2002 and September 28, 2001,
respectively. At September 27, 2002, the Companys contingent repurchase
liability under floor plan financing arrangements was approximately $34
million. While homes that have been repurchased by the Company under floor-plan
financing arrangements are usually sold to other dealers and losses experienced
to date under these arrangements have not been material, no assurance can be
given that the Company will be able to sell to other dealers homes which it may
be obligated to repurchase in the future under such floor plan financing
arrangements or that the Company will not suffer losses with respect to, and as
a consequence of, those arrangements.

7.     LEGAL PROCEEDINGS:

The Company is a party to various legal proceedings incidental to its business.
The majority of these legal proceedings are claims related to warranty on
manufactured homes, or employment issues such as workers compensation claims.
Management believes that adequate reserves are maintained for such claims. In
the opinion of management, after consultation with legal counsel, the ultimate
liability, if any, with respect to these proceedings will not materially affect
the financial position or results of operations of the Company; however, the
ultimate resolution of these matters, which could occur within one year, could
result in losses in excess of the amounts reserved.

8.     SEGMENT AND RELATED INFORMATION:

The Company has four reportable segments: manufacturing, retail operations,
component supply and consumer financing. The manufacturing segment produces
manufactured homes for sale to independent and, to a lesser extent,
company-owned retail centers. The retail operations segment sells homes to
retail customers, which have been produced by the Companys manufacturing
segment and various other manufacturers. The component supply segment sells
various supply products to the Companys manufacturing segment and to third
party customers. The consumer-financing segment originated and serviced
consumer loans primarily for homes manufactured by the Company through February
1997. Wenco Finance has now restricted its loan origination activities and
engaged 21st Mortgage to service its existing loan portfolio. Wenco 21, the
Companys joint venture, continues to offer consumer financing for homes
manufactured by the Company, as well as for other homes sold through its retail
centers and independent dealers.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based on total (external and intersegment) revenues, gross profit, and segment
operating income. The Company accounts for intersegment sales and transfers as
if the sales or transfers were to third parties, at current market prices. The
Company does not allocate income taxes to its segments. The Companys
reportable segments are strategic business units that offer different products
and services. They are managed separately because each business requires
different operating and marketing strategies.

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The following table presents information about segment profit or loss
(dollars in thousands):

|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |         |  
|---------------------------------------- | ------------------------------------------ | --------------------------------------- | ---------------- | - | -------------------- | ------ | ----------------------- | - | ------------- | ------ | ------------- | - | ------- | ------- | ------ | - | ------ | ------- | -
|                                         |                                            |                                         |                  |   | Thirteen Weeks Ended |        | Thirty-nine Weeks Ended
|                                         |                                            |                                         |                  |   |                      |        |                        
|                                         |                                            |                                         |                  |   | September 27,        |        | September 28,           |   | September 27, |        | September 28,
|                                         |                                            |                                         |                  |   | 2002                 |        | 2001                    |   | 2002          |        | 2001         
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |              
|Revenues:                                |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |  
|                                         |                                            | Manufacturing                           |                  | $ | 33,949               |        |                         | $ | 34,089        |        |               | $ | 102,165 |         |        | $ | 99,559 |        
|                                         |                                            | Retail operations                       |                  |   | 2,030                |        |                         |   | 2,954         |        |               |   | 6,738   |         |        |   | 9,348  |        
|                                         |                                            | Component supply                        |                  |   | 6,664                |        |                         |   | 6,169         |        |               |   | 18,826  |         |        |   | 18,013 |        
|                                         |                                            | Consumer financing                      |                  |   | 290                  |        |                         |   | 285           |        |               |   | 808     |         |        |   | 870    |        
|                                         |                                            | Other                                   |                  |   | 69                   |        |                         |   | 596           |        |               |   | 207     |         |        |   | 3,356  |        
|                                         |                                            | Eliminations for intersegment revenues: |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|                                         |                                            |                                         | Manufacturing    |   |                      | (2,335 | )                       |   |               | (4,962 | )             |   |         | (6,251  | )      |   |        | (16,813 | )
|                                         |                                            |                                         | Component supply |   |                      | (5,794 | )                       |   |               | (5,407 | )             |   |         | (16,655 | )      |   |        | (15,659 | )
|                                         |                                            |                                         | Other            |   |                      | 153    |                         |   |               | 343    |               |   |         | 901     |        |   |        | (1,889  | )
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|Total revenues                           |                                            | $                                       | 35,026           |   |                      | $      | 34,067                  |   |               | $      | 106,739       |   |         | $       | 96,785 |  
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |  
|Gross profit:                            |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |  
|                                         |                                            | Manufacturing                           |                  | $ | 6,141                |        |                         | $ | 5,035         |        |               | $ | 17,847  |         |        | $ | 16,585 |        
|                                         |                                            | Retail operations                       |                  |   | 930                  |        |                         |   | 1,869         |        |               |   | 2,890   |         |        |   | 5,627  |        
|                                         |                                            | Component supply                        |                  |   | 584                  |        |                         |   | 476           |        |               |   | 1,666   |         |        |   | 1,572  |        
|                                         |                                            | Consumer financing                      |                  |   | 98                   |        |                         |   | 141           |        |               |   | 402     |         |        |   | 365    |        
|                                         |                                            | Other                                   |                  |   | (103                 | )      |                         |   | 938           |        |               |   | (467    | )       |        |   | 2,372  |        
|                                         |                                            | Eliminations                            |                  |   | 65                   |        |                         |   | 103           |        |               |   | 578     |         |        |   | (3,146 | )      
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|Gross profit                             |                                            | $                                       | 7,715            |   |                      | $      | 8,562                   |   |               | $      | 22,916        |   |         | $       | 23,375 |  
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |  
|Segment operating income (loss):         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |  
|                                         |                                            | Manufacturing                           |                  | $ | 1,540                |        |                         | $ | 709           |        |               | $ | 4,380   |         |        | $ | 3,740  |        
|                                         |                                            | Retail operations                       |                  |   | (489                 | )      |                         |   | (766          | )      |               |   | (1,287  | )       |        |   | (1,959 | )      
|                                         |                                            | Component supply                        |                  |   | 352                  |        |                         |   | 261           |        |               |   | 1,085   |         |        |   | 837    |        
|                                         |                                            | Consumer financing                      |                  |   | (222                 | )      |                         |   | (147          | )      |               |   | (552    | )       |        |   | (84    | )      
|                                         |                                            | Other                                   |                  |   | 82                   |        |                         |   | 240           |        |               |   | 650     |         |        |   | 53     |        
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|Segment operating income                 |                                            |                                         | 1,263            |   |                      |        | 297                     |   |               |        | 4,276         |   |         |         | 2,587  |  
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |  
|                                         | Income/expenses not allocated to segments: |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |       
|                                         |                                            | Corporate                               |                  |   | (844                 | )      |                         |   | 254           |        |               |   | (2,809  | )       |        |   | (2,670 | )      
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        
|Income (loss) from continuing operations |                                            | $                                       | 419              |   |                      | $      | 551                     |   |               | $      | 1,467         |   |         | $       | (83    | )
|                                         |                                            |                                         |                  |   |                      |        |                         |   |               |        |               |   |         |         |        |   |        |        

Revenue from segments below the quantitative thresholds are attributable to two
other operating segments of the Company, which include a trucking business
(closed in July 2001) and insurance business. These segments have never met
the quantitative thresholds for determining reportable segments.

The financial information for the periods ended September 28, 2001 concerning
reportable segments has been restated to reflect the reclassification of the
retail center closings as discontinued operations (Note 2).

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A summary of segment assets at September 27, 2002 and December 28, 2001 is as
follows:

|                |                          |  |               |            |              |  |   |            |  
|--------------- | ------------------------ |  | ------------- | ---------- | ------------ |  | - | ---------- | -
|                |                          |  | September 27, |            | December 28,
|                |                          |  | 2002          |            | 2001        
|                |                          |  |               |            |             
|Segment Assets: |                          |  |               |            |              |  |   |           
|                | Manufacturing            |  | $             | 20,751,000 |              |  | $ | 19,252,000 |  
|                | Retail Operations        |  |               | 9,662,000  |              |  |   | 22,603,000 |  
|                | Component Supply         |  |               | 3,516,000  |              |  |   | 3,601,000  |  
|                | Consumer Financing       |  |               | 13,833,000 |              |  |   | 12,495,000 |  
|                | Corporate                |  |               | 17,396,000 |              |  |   | 17,654,000 |  
|                | Other Operating Segments |  |               | 21,000     |              |  |   | 48,000     |  
|                | Eliminations             |  |               | (2,194,000 | )            |  |   | (3,102,000 | )
|                |                          |  |               |            |              |  |   |            |  
|                | Consolidated             |  | $             | 62,985,000 |              |  | $ | 72,551,000 |  
|                |                          |  |               |            |              |  |   |            |  




Item 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GENERAL

While the Company is still experiencing the negative economic factors
influencing financial performance of the entire manufactured housing industry
since approximately 1998, it has taken a number of steps that have been
effective in implementing its plans to decrease costs and improve efficiency
and quality. In 2000 and 2001, these steps included closing less efficient
manufacturing facilities, consolidating divisions, and disposing of
unprofitable retail centers, as well as improving efficiency in the remaining
manufacturing plants, lowering labor costs and turnover, decreasing plant
injuries, and lowering warranty expenses by improved quality.

During the third quarter of fiscal 2002, weak market conditions continued,
with more restrictive retail financing conditions for consumers, and slow
retail sales. On October 1, 2002, the Company announced its decision to close
the majority of its ten remaining retail centers, in order to improve
profitability by focusing resources on its manufacturing segment. The Company
sells the majority of the homes it produces through its network of independent
home dealers in 22 states. The Company also broke ground in September on a new
supply distribution facility that is intended to enhance supply distribution by
affording the Company the opportunity to take advantage of bulk purchasing
opportunities and manufacturing efficiencies.

DISCONTINUED OPERATIONS

In addition to the three retail centers closed earlier in 2002, the Company
made the decision in the third quarter to close seven of its ten remaining
retail centers. The centers are expected to be sold or closed by early
December. The decision was based primarily on losses incurred at these centers
over the previous several months. In connection with the decision to close
these retail centers, the Company recognized a loss on discontinued operations
in the third quarter of $3.3 million (net of a tax benefit of $1.8 million) or
$0.27 per share consisting of operating losses during the quarter (including
allocated interest expense), a write-down of the carrying value of unsold homes
in current retail inventory, severance, exit costs associated with rental
commitments, and write-down of equipment and leasehold improvements. The
Company has classified the historical operating results of the retail centers
as discontinued operations in the accompanying statements of operations for all
periods presented. Accordingly, the comparative interim statements of
operations for the thirteen and thirty-nine week periods ended September 28,
2001 differ from the amounts previously reported in Forms 10-Q filed in 2001.

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RESULTS OF OPERATIONS

Results of operations for the thirty-nine weeks and thirteen weeks ended
September 27, 2002 and September 28, 2001 are not necessarily indicative of the
results that may be expected for the entire year, in part, to the cyclical and
seasonal nature of the Companys business. Typically, sales are higher in the
second and third quarters than in the remainder of the year.

Thirty-nine weeks and thirteen weeks ended September 27, 2002 as compared with
thirty-nine weeks and thirteen weeks ended September 28, 2001.

Net Revenues

Total net revenues (consisting of gross sales less volume discounts, returns
and allowances) for the thirty-nine weeks ended September 27, 2002 were $106.7
million, as compared with $96.8 million in the prior year period. For the
thirteen weeks ended September 27, 2002, total net revenues were $35.0 million,
as compared with $34.1 million for the comparable period a year ago.

Net revenues from wholesale sales of manufactured homes were $102.2 million
(including intersegment revenues of $5.7 million) for the thirty-nine weeks
ended September 27, 2002, as compared with $99.6 million (including
intersegment revenues of $16.9 million) for the prior year period, an increase
of 2.6%. The increase in sales to dealers was primarily attributable to
increased sales prices due to increased material prices. Total homes shipped
for the thirty-nine weeks ended September 27, 2002 was 3,272, down slightly
from the 3,336 homes shipped in the prior year period. The average wholesale
price per home for the thirty-nine weeks ended September 27, 2002 was $29,432,
as compared with $28,208 in the prior year period, an increase of 4.3%. For the
thirteen weeks ended September 27, 2002, net revenues from the wholesale sale
of manufactured homes were $33.9 million (including intersegment revenues of
$2.3 million), as compared with $34.1 million (including intersegment revenues
of $5.0 million) for the prior year period, a slight decrease. Total homes
shipped for the thirteen weeks ended September 27, 2002 was 1,082, down 5.3%
from the number of homes shipped in the prior year period. The average
wholesale price per home for the thirteen weeks ended September 27, 2002 was
$29,545, as compared with $28,113 in the prior year period, an increase of
5.1%.

Net revenues from retail sales of manufactured homes from continuing operations
were $6.7 million for the thirty-nine weeks ended September 27, 2002, as
compared with $9.3 million for the prior year period, a decrease of 28.0%.
Total retail homes sold for the thirty-nine weeks ended September 27, 2002 was
167, down 37.5% from the number of homes sold in the prior year period. The
decline in retail sales was primarily attributable to increased competition and
the difficulty for retail customers to obtain financing. The decline in retail
revenues was offset slightly by an increase in the average retail price per
home sold. The average retail price per home sold during the thirty-nine weeks
ended September 27, 2002 was $51,642, as compared with $46,402 in the prior
year period, an increase of 11.3%. For the thirteen weeks ended September 27,
2002, net revenues from the retail sale of manufactured homes were $2.0
million, as compared with $3.0 million for the prior year period, a decrease of
31.3%. Total retail homes sold for the thirteen weeks ended September 27, 2002
was 52, down 39.5% from the number of homes sold in the prior year period. The
decline in retail sales was primarily attributable to increased competition and
the difficulty for retail customers to obtain financing. The decline in retail
revenues was offset slightly by an increase in the average retail price per
home sold. The average retail price per home sold during the thirteen weeks
ended September 27, 2002 was $51,121, as compared with $43,525 in the prior
year period, an increase of 17.5%. The increase in sales price was due to more
homes sold with more square footage, more customized features and more options
and an increase in land home sales, which carry higher sales prices because of
added land improvement features.

Net revenues from the component supply segment were $18.8 million (including
intersegment revenues of $16.6 million) for the thirty-nine weeks ended
September 27, 2002, as compared with $18.0 million (including intersegment
revenues of $15.7 million) for the prior year period, an increase of 4.5%. The
increase in supply sales was primarily attributable to the increase in
intersegment sales to the manufacturing segment. For the thirteen weeks ended
September 27, 2002, net revenues from the component supply segment were $6.7
million (including intersegment revenues of $5.8 million), as compared with
$6.2 million (including intersegment revenues of $5.0 million) for the prior
year period, an increase of 8.0%. The increase in supply sales was primarily
attributable to the increase in intersegment sales to the manufacturing
segment.

12



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##### Table of Contents



Revenues from the retail finance subsidiary were $808,000 and $290,000,
respectively, for the thirty-nine weeks and thirteen weeks ended September 27,
2002, as compared with revenues of $870,000 and $285,000 for the comparable
prior year periods.

Following are basic operating facts for the thirteen weeks and thirty-nine
weeks ended for September 27, 2002, and September 28, 2001 respectively:

Operating facts

|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |       |     |     | 
|---------------------------------------------------- | ------------------ | ------------------ | ------ | ----- | -------------------- | -- | ----------------------- | --- | ------------- | -- | ------------- | ----- | -- | --- | ------ | ----- | --- | --- | 
|                                                     |                    |                    |        |       | Thirteen Weeks Ended |    | Thirty-nine Weeks Ended
|                                                     |                    |                    |        |       |                      |    |                        
|                                                     |                    |                    |        |       | September 27,        |    | September 28,           |     | September 27, |    | September 28,
|                                                     |                    |                    |        |       | 2002                 |    | 2001(1)                 |     | 2002          |    | 2001(1)      
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |              
|Company owned retail centers
(continuing operations) |                    |                    | 3      |       |                      |    | 4                       |     |               |    | 3             |       |    |     | 4      |      
|Retail units sold:                                   |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|                                                     |                    | New Single-section |        |       | 7                    |    |                         |     | 15            |    |               |       | 15 |     |        |       | 33  |    
|                                                     |                    | New Multi-section  |        |       | 24                   |    |                         |     | 49            |    |               |       | 92 |     |        |       | 158 |    
|                                                     |                    | Used homes         |        |       | 21                   |    |                         |     | 22            |    |               |       | 60 |     |        |       | 76  |    
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|                                                     |                    |                    | Total  |       |                      | 52 |                         |     |               | 86 |               |       |    | 167 |        |       |     | 267 | 
|Wholesale units sold:                                |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|                                                     | External Customers |                    |        | 1,031 |                      |    |                         | 985 |               |    |               | 3,135 |    |     |        | 2,803 |    
|                                                     | Intercompany       |                    |        | 51    |                      |    |                         | 158 |               |    |               | 137   |    |     |        | 533   |    
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|                                                     |                    |                    | 1,082  |       |                      |    | 1,143                   |     |               |    | 3,272         |       |    |     | 3,336  |      
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|Total homes sold                                     |                    |                    | 1,134  |       |                      |    | 1,229                   |     |               |    | 3,439         |       |    |     | 3,603  |      
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|Internalization (2)                                  |                    |                    | 100    | %     |                      |    | 98                      | %   |               |    | 99            | %     |    |     | 96     | %    
|                                                     |                    |                    |        |       |                      |    |                         |     |               |    |               |       |    |     |        |      
|Average sales prices  retail (new)                  |                    | $                  | 51,121 |       |                      | $  | 43,525                  |     |               | $  | 51,642        |       |    | $   | 46,402 |      
|Average sales price  wholesale                      |                    | $                  | 29,545 |       |                      | $  | 28,113                  |     |               | $  | 29,432        |       |    | $   | 28,208 |      
|Floor sections produced                              |                    |                    | 1,842  |       |                      |    | 1,917                   |     |               |    | 5,667         |       |    |     | 5,681  |      



---

|(1) |  | Summary operating data for the thirteen and thirty-nine weeks ended
September 28, 2001 have been restated to exclude discontinued
operations of retail center closures in 2002.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents the percentage of new homes sold at retail that are also
manufactured by the Company.                                                                               

Gross Profit

Gross profit consists of net revenues less the cost of sales, which includes
labor, materials, and overhead. Gross profit for the thirty-nine weeks ended
September 27, 2002 was $22.9 million, or 21.5% of net revenues, as compared
with $23.4 million, or 24.2% of net revenues, in the prior year period. This
decline in the gross profit percentage was attributable primarily to higher
material prices and labor costs, offset slightly by lower warranty expenses.
For the thirteen weeks ended September 27, 2002, gross profit was $7.7 million,
or 22.0% of net revenues, as compared with $8.6 million, or 25.1% of net
revenues, in the prior year period. This decline in the gross profit percentage
was attributable primarily to higher material and labor costs, offset slightly
by lower warranty expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include primarily sales
commissions, advertising expenses, freight costs, salaries for support
personnel, administrative compensation, executive and management bonuses,
insurance costs, and professional fees. Selling, general and administrative
expenses were $20.8 million, or 19.5% of net revenues, during the thirty-nine
weeks ended September 27, 2002, as compared with $21.9 million, or 22.6% of net
revenues, for the same period of the prior year. For the thirteen weeks ended
September 27, 2002, selling, general and administrative expenses were $7.1
million, or 20.4% of net revenues, as compared with $7.5 million, or 22.1% of
net revenues, for the same period of the prior year. The decline in selling,
general and administrative expenses as a percentage of sales was attributable
primarily to lower dealer interest payments, lower freight expenses due to
lower fuel prices, lower legal expenses and lower administrative salaries,
offset slightly by higher insurance costs.

13



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##### Table of Contents



Interest Expense

Interest expense for the thirty-nine weeks ended September 27, 2002 was
$801,000, as compared with $1.6 million in the prior year period. For the
thirteen weeks ended September 27, 2002, interest expense was $206,000, as
compared with $440,000 in the prior year period. The decrease in interest
expense in the current quarter was a result of lower interest rates, 5.8%
compared to 7.6% and lower average borrowings, $4.5 million compared to $14.9
million on the credit line.

Provision for Income Taxes

Income taxes are provided for based on the tax effect of revenue and expense
transactions included in the determination of pre-tax book income. Because the
Company has operated at a loss in recent fiscal years, management believes that
under the provisions of SFAS No. 109, it is no longer appropriate to record
deferred income tax benefits on current losses in excess of anticipated refunds
of taxes previously paid. In fiscal 2001, the Company established valuation
allowances against the tax benefits of substantially all net operating loss
carry forwards and deductible temporary differences between financial and
taxable income.

In March 2002, Congress passed an economic stimulus bill containing certain
temporary business tax incentives. The tax provisions in the stimulus bill
extended the net operating loss (NOL) carryback period to five years for NOLs
arising in tax years ending in 2001 and 2002, and allowed use of NOL carrybacks
and carryforwards to offset 100 percent of alternative minimum taxable income
(AMTI). These NOL carryback provisions allowed the Company to carry its 2001
loss back to 1996 and the years following.

In addition, net operating losses, if any, up to $19.7 million in 2002 could be
carried back to prior years, which could produce a maximum federal income tax
refund of approximately $6.8 million. Realization of such refund would depend,
among other things, on whether the Company has a net operating loss in 2002.
During the third quarter of fiscal 2002, in which the Company recognized
significant losses from the closing of retail centers, it became clear that the
Company would have a net operating loss in 2002; thus, the Company recorded a
$1.8 million tax benefit. With regard to the remaining potential refund of $5
million, management cannot predict at this time whether any such refund will be
ultimately claimed.

The bill also allows an additional first-year depreciation deduction equal to
30 percent of the adjusted basis of qualified property acquired after September
10, 2001, and before September 11, 2004, and placed in service before 2005
(2006 for certain property with recovery period of 10 years or longer and
certain transportation property). Qualified property includes MACRS property
with a recovery period of 20 years or less, computer software, water utility
property and leasehold improvement property.

LIQUIDITY AND CAPITAL RESOURCES

During the thirty-nine weeks ended September 27, 2002, cash provided by
operations was approximately $5.1 million, a decrease of $1.4 million, as
compared to the prior year period. In the comparable 2001 period, the Company
received $5.1 million in tax refunds. Excluding the impact of tax refunds, cash
flow from operations were up $3.7 million versus the prior year, principally
related to improved operating results and higher collections on installment
loans. During the thirty-nine weeks ended September 27, 2002, the normal
seasonal build-up in accounts receivable was greater than in the same period of
2001 and the effect of the buildup in receivables was offset by an increase in
accounts payable. The overall improvement in operating cash flows in 2002 also
reflected the continued decline ($0.9 million) in inventory as a result of
managements focus on increasing inventory turns.

Cash flows provided by investing activities were $1.3 million in the
thirty-nine weeks ended September 27, 2002 versus a negative $0.1 million in
the comparable 2001 period. During the second quarter of 2002, the Company sold
its joint venture equity interest in Ridge Pointe Manufacturing, L.L.C. for
$1,250,000.

The Company used cash flows from operations and proceeds from the sale of the
equity interest in Ridge Pointe Manufacturing, L.L.C. to reduce outstanding
credit line borrowings by $6.7 million in 2002. In the comparable period in
2001, the Company reduced its overall borrowings by $11.8 million and incurred
$1.1 million in debt issuance costs related to the establishment of the bank
line.

14



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##### Table of Contents



At September 27, 2002, outstanding borrowings under the $40 million secured
bank line were $4.1 million and availability on the line, which is dependent
upon meeting certain financial ratios and covenants, was $15.4 million.
Recording charges during the third quarter of 2002 associated with
discontinuing the operations of seven retail centers (see Note 2) caused the
Company to be in violation of its minimum quarterly EBITDA covenant. The
Company has obtained an amendment, dated November 7, 2002, to the minimum
quarterly EBITDA covenant that cured the violation for the quarter ended
September 27, 2002 to provide for continuing access to the $40 million secured
bank line through its maturity on March 8, 2004. Management believes that
operating cash flows, together with borrowing capacity under the line, will
provide the Company with adequate liquidity and capital resources through the
remaining term of the bank line.

At September 27, 2002, the Company had zero cash, compared to $354,000 at
December 28, 2001. At September 27, 2002, the Companys net working capital
was $4.6 million, an increase of $2.2 million compared to $2.4 million at
December 28, 2001. The increase in net working capital was primarily due to
operating cash flows and the sale of the Companys equity interest in Ridge
Pointe Manufacturing, L.L.C., the proceeds from which were used to repay
short-term borrowings.

There are two material commitments for capital expenditures for the remainder
of fiscal 2002, a concrete project for its Energy and Lifestyle manufacturing
facilities and corporate headquarters properties for approximately $560,000 to
provide proper water drainage and long-term property enhancement, and a new
supply distribution building for approximately $950,000. These are the only two
material capital projects the Company plans to make during the next twelve
months.

Substantially all of the Companys independent dealers finance their purchases
through floor-plan arrangements under which a financial institution provides
the dealer with a loan for the purchase price of the home and maintains a
security interest in the home as collateral. In connection with a floor-plan
agreement, the financial institution, which provides the dealer financing,
customarily requires the Company to enter into a separate repurchase agreement
with the financial institution, under which the Company is obligated, upon
default by the independent dealer, to repurchase the homes at the Companys
original invoice price plus certain administrative and shipping expenses less
any principal payments made by the dealer. Repurchases were $383,000 and
$1,319,000 for the quarters ended September 27, 2002 and September 28, 2001,
respectively. Losses on repurchases were $91,000 and $351,000 for the quarters
ended September 27, 2002 and September 28, 2001, respectively. At September 27,
2002, the Companys contingent repurchase liability under floor plan financing
arrangements was approximately $34 million. While homes that have been
repurchased by the Company under floor-plan financing arrangements are usually
sold to other dealers and losses experienced to date under these arrangements
have been insignificant, no assurance can be given that the Company will be
able to sell to other dealers homes which it may be obligated to repurchase in
the future under such floor plan financing arrangements or that the Company
will not suffer losses with respect to, and as a consequence of, those
arrangements.

Inflation

The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on its sales or profitability.
The Company has in the past been able to pass on most of the increases in its
costs by increasing selling prices, although there can be no assurance that the
Company will be able to do so in the future.




Item 3.

The following discussion about the Companys interest rate risk includes
forward looking statements that involve risks and uncertainties. Actual
results could differ materially from those projected in the forward looking
statements.

Quantitative and Qualitative Disclosures of Market Risk.

Historically the Company has not entered into derivatives contracts to either
hedge existing risk or for speculative purposes. The Company also does not and
has not entered into contracts involving derivative financial instruments or
derivative commodity

15



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##### Table of Contents



instruments. Pertinent provisions of Regulation S-K call
for disclosures to clarify exposures to market risk associated with activities
in derivative financial instruments, other financial instruments and derivative
commodity instruments. The Regulation defines other financial instruments to
include trade accounts receivable, loans and structured notes. The Company
does not utilize
derivative instruments to manage such risks. The Companys principal credit
agreement bears a floating interest rate of 1.0% over prime. Accordingly, the
Company is subject to market risk associated with changes in interest rates.
At September 27, 2002, $4.1 million was outstanding under the credit agreement.
As of September 28, 2001, the principal amount outstanding under the credit
agreement was $15.7 million. Assuming that amount outstanding, a 1% increase in
the applicable interest rate during 2002 would result in additional interest
expense of approximately $41,000 per annum, which would reduce cash flow and
pre-tax earnings dollar for dollar. With respect to accounts receivable, most
of the Companys sales of manufactured homes are pre-sold, such that orders
exist before construction begins. When manufactured homes are sold to dealers
as inventory, such homes are paid for by dealers floor plan financing, such
that funds ordinarily transfer to the Company from the dealers floor plan
lender within 21 days. Management thus does not perceive that the Company is
subject to a material market risk with respect to its accounts receivable.




Item 4. CONTROLS AND PROCEDURES

During the 90-day period prior to the filing of this quarterly report, an
evaluation was performed under the supervision and with the participation of
the Companys management, including the Companys Chief Executive Officer (CEO)
and Corporate Controller (who is the Companys chief accounting officer), of
the effectiveness of the design and operation of the Companys disclosure
controls and procedures (as defined in Rules 13a  14(c) and 15d  14(c) under
the Securities Exchange Act of 1934, as amended). Following that evaluation,
the Companys management, including the CEO and Corporate Controller, concluded
that the Companys disclosure controls and procedures were effective at that
time. There have been no significant changes in the Companys internal
controls, other factors that could significantly affect internal controls, or
significant or material weaknesses with regard to the Companys internal
controls identified by the Company subsequent to that evaluation.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 Forward-looking statements in this Annual Report on Form 10-K,
including without limitation, statements relating to the adequacy of the
Companys resources, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
such forward-looking statements involve risks and uncertainties, which could
cause actual results to differ materially from those in any forward looking
statements, including without limitation: general economic conditions; the
cyclical and seasonal nature of housing markets; competitive pricing pressures
at both the wholesale and retail levels; changes in market demand; recent
management changes; the impact of cost reduction programs and other management
initiatives; availability of financing for prospective purchasers of the
Companys homes and availability of floor plan financing for dealers;
performance of the loans held by the Companys finance subsidiary;
availability and pricing of raw materials; concentration of the Companys
business in certain regional markets; adverse weather conditions that reduce
retail sales; the possibility of plant shutdowns from weather or other causes;
availability of labor for the Company to meet operating requirements; the
highly competitive nature of the manufactured housing industry; Federal, state
and local regulation of the Companys business; the Companys contingent
repurchase liabilities with respect to dealer financing; the Companys reliance
on independent dealers; and other risks indicated from time to time in the
Companys filings with the Securities and Exchange Commission.

16



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##### Table of Contents









PART II  OTHER INFORMATION

Item 1. Legal Proceedings

The Company is a party to various legal proceedings incidental to its business.
The majority of these legal proceedings are claims related to warranty on
manufactured homes, or employment issues such as workers compensation claims.
Management believes that adequate reserves are maintained for such claims. In
the opinion of management, after consultation with legal counsel, the ultimate
liability, if any, with respect to these proceedings will not materially affect
the financial position or results of operations of the Company; however, the
ultimate resolution of these matters, which could occur within one year, could
result in losses in excess of the amounts reserved.




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

The following exhibits including items incorporated by reference are filed
as a part of this report.

|     |  |                                                                                                                                                      | 
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- | 
|3.1  |  | Certificate of Incorporation of the Company, as amended (filed as
Exhibit 3.1 to the Registration Statement on Form S-3, Registration
No. 333-32933) | 
|     |  |                                                                                                                                                      | 
|3.2  |  | By-Laws of the Company. (Filed as Exhibit 3.2 to the Registration
Statement on Form S-1, Registration No. 33-57420.)                                
|     |  |                                                                                                                                                     
|99.1 |  | Certification of chief executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §
906 of the Sarbanes-Oxley Act of 2002         
|     |  |                                                                                                                                                     
|99.2 |  | Certification of chief accounting
officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §
906 of the Sarbanes-Oxley Act of 2002        

(b)  Reports on Form 8-K

The following reports on Form 8-K were filed during the quarter ended
September 27, 2002:

(1)  Report on Form 8-K dated July 8, 2002, reporting two senior management
changes.

(2)  Report on Form 8-K dated August 12, 2002, reporting the Companys
certifications by its chief executive officer and chief financial officer
required pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, accompanying the Companys quarterly report
on Form 10-Q for the period ended June 28, 2002

17



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |                  |  |     |                                                                     |  | 
|----- | ---------------- |  | --- | ------------------------------------------------------------------- |  | 
|      |                  |  |     | SOUTHERN ENERGY HOMES, INC.                                        
|     
|Date: | November 8, 2002 |  | By: | /s/ Keith O. HoldbrooksKeith O. Holdbrooks, Chief Executive Officer
|     
|Date: | November 8, 2002 |  | By: | /s/ James A. HastyJames A. Hasty, Chief Accounting Officer         

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith O. Holdbrooks, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Southern Energy Homes,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| |  | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

18



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5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 8, 2002

/s/ KEITH O. HOLDBROOKS
Keith O. Holdbrooks
Chief Executive Officer

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James A. Hasty, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Southern Energy Homes,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| |  | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19



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| |  | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 8, 2002

/s/ JAMES A. HASTY
James A. Hasty
Corporate Controller (Chief Accounting Officer)

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