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 April 4, 1997 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                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


    Highway 41 North, P.O. Box 390, Addison, Alabama               35540
    ------------------------------------------------               -----
       (Address of principal executive offices)                  (Zip Code)

                                 (205) 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.


     15,453,557, shares of Common Stock, $.0001 par value, as of May 6, 1997







                  SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
                  --------------------------------------------


                                      INDEX
                                      -----

                                                                            Page
PART I      FINANCIAL INFORMATION:

            Consolidated Condensed Balance Sheets,
                     April 4, 1997 and January 3, 1997                        2

            Consolidated Condensed Statements of Operations - Thirteen
                     Weeks Ended April 4, 1997 and March 29, 1996             3

            Consolidated Condensed Statements of Cash Flows - Thirteen
                     Weeks Ended April 4, 1997 and March 29, 1996             4

            Notes to Consolidated Condensed Financial Statements              5

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

PART II     OTHER INFORMATION                                                11


            SIGNATURES                                                       12


                                       1


I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                  SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                April 4,               January 3,
                                                                                  1997                    1997
                                     ASSETS
CURRENT ASSETS:
<S>                                                                             <C>                     <C>       
   Cash and cash equivalents                                                    $1,861,000              $5,299,000
   Accounts receivable (less allowance for doubtful accounts of
     $292,000 and  $362,000, respectively)                                      31,852,000              17,558,000
   Installment contracts receivable - current                                      435,000                 421,000
   Inventories                                                                  25,175,000              27,019,000
   Deferred tax benefits                                                         1,886,000               1,829,000
   Prepayments and other                                                         1,989,000                 890,000
                                                                        -------------------     ---------------------
                                                                                63,198,000              53,016,000
                                                                        -------------------     ---------------------

PROPERTY AND EQUIPMENT:
   Property and equipment, at cost                                              25,283,000              23,527,000
   Less - accumulated depreciation                                               5,684,000               5,169,000
                                                                        -------------------     ---------------------
                                                                                19,599,000              18,358,000
                                                                        -------------------     ---------------------


INTANGIBLES AND OTHER ASSETS
   Installment contracts receivable, less allowance for credit
     losses of $1,121,000 and $1,142,000, respectively                          27,073,000              26,064,000
   Goodwill                                                                     12,950,000              13,093,000
   Non-compete agreements                                                          635,000                 667,000
   Organization and pre-operating costs                                            577,000                 649,000
   Other assets                                                                  1,292,000                 811,000
                                                                        -------------------     ---------------------
                                                                                42,527,000              41,284,000
                                                                        -------------------     ---------------------
                                                                              $125,324,000            $112,658,000
                                                                        ===================     =====================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Notes payable                                                               $16,157,000             $12,025,000
   Accounts payable                                                              7,803,000               4,303,000
   Accrued liabilities                                                          20,204,000              18,953,000
                                                                        -------------------
                                                                                                ---------------------
                                                                                44,164,000              35,281,000
                                                                        -------------------     ---------------------

STOCKHOLDERS' EQUITY:
   Preferred stock, $.0001 par value, 1,000,000 shares authorized,
      none outstanding                                                                   -                       -
   Common stock, $.0001 par value, 20,000,000 shares authorized,
      15,437,801 shares outstanding at April 4, 1997 and
      January 3, 1997                                                                2,000                   2,000
   Capital in excess of par                                                     35,999,000              35,999,000
   Retained earnings                                                            45,159,000              41,376,000
                                                                        -------------------
                                                                                                ---------------------
                                                                                81,160,000              77,377,000
                                                                        -------------------     ---------------------
                                                                              $125,324,000            $112,658,000
                                                                        ===================     =====================
</TABLE>

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



                                       2



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

<TABLE>
<CAPTION>
                                                                                  Thirteen Weeks Ended
                                                                        -----------------------------------------
                                                                              April 4,                 March 29,
                                                                               1997                      1996
                                                                        ---------------            --------------
<S>                                                                        <C>                       <C>        
NET REVENUES                                                               $80,116,000               $71,111,000

COST OF SALES                                                               67,618,000                61,763,000
                                                                        ---------------            --------------

        Gross profit                                                        12,498,000                 9,348,000
                                                                        ---------------            --------------

OPERATING EXPENSES:
    Selling                                                                  2,925,000                 1,659,000
  General and administrative                                                 2,991,000                 2,219,000
  Provision  for credit losses                                                       -                   194,000
  Amortization of intangibles                                                  250,000                   125,000
                                                                        ---------------            --------------

                                                                             6,166,000                 4,197,000
                                                                        ---------------            --------------

        Operating income                                                     6,332,000                 5,151,000
                                                                        ---------------            --------------

INTEREST EXPENSE                                                               277,000                     1,000
INTEREST INCOME                                                                 43,000                   214,000
                                                                        ---------------            --------------

        Income before income taxes                                           6,098,000                 5,364,000

PROVISION FOR INCOME TAXES                                                   2,315,000                 2,067,000
                                                                        ---------------            --------------

        Net income                                                          $3,783,000                $3,297,000
                                                                        ===============            ==============

NET INCOME PER COMMON SHARE                                                      $0.25                     $0.22
                                                                        ===============            ==============

WEIGHTED AVERAGE NUMBER OF
  COMMON AND COMMON
  EQUIVALENT SHARES                                                         15,437,801                15,053,414
                                                                        ===============            ==============

</TABLE>

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


                                       3



                  SOUTHERN ENERGY HOMES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                           Thirteen Weeks Ended
                                                                                       April 4,            March 29,
                                                                                         1997                1996
                                                                                    ----------------    ----------------
OPERATING ACTIVITIES:
<S>                                                                                    <C>               <C>          
   Net income                                                                          $ 3,783,000       $   3,297,000
   Adjustments to reconcile net income to net cash used in
       operating activities:
       Depreciation of property and equipment                                              515,000             336,000
       Amortization of intangibles                                                         250,000             125,000
       Credit for deferred tax benefits                                                    (57,000)                  -
       Provision for doubtful accounts                                                     (70,000)            185,000
       Provision  for credit losses                                                              -             194,000
       Origination of installment contracts                                             (1,145,000)         (5,899,000)
       Principal collected on originated installment contracts                             119,000              39,000
       Change in assets and liabilities:
         Decrease (increase) in inventories                                              1,844,000          (3,669,000)
         Increase in accounts receivable                                               (14,224,000)         (7,246,000)
         Increase in prepayments and other                                              (1,099,000)         (1,289,000)
         Increase in accounts payable                                                    3,500,000           3,490,000
         Increase in accrued liabilities                                                 1,251,000           4,329,000
                                                                                    ----------------    ----------------

           Net cash used in operating activities                                        (5,333,000)         (6,108,000)
                                                                                    ----------------    ----------------

INVESTING ACTIVITIES:
   Purchase of subsidiary, net of cash acquired                                                  -            (413,000)
   Capital expenditures                                                                 (1,756,000)           (545,000)
   Maturities of investments                                                                     -           2,076,000
   Purchase of investments                                                                       -             (50,000)
   Investment in joint ventures                                                           (481,000)                  -
                                                                                    ----------------    ----------------

           Net cash (used in) provided by investing activities                          (2,237,000)          1,068,000
                                                                                    ----------------    ----------------

FINANCING ACTIVITIES:
     Net borrowings on notes payable                                                     4,132,000                   -
     Repayments on long-term debt                                                                -             (15,000)
                                                                                    ----------------    ----------------

           Net cash (used in) provided by financing activities                           4,132,000             (15,000)
                                                                                    ----------------    ----------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (3,438,000)         (5,055,000)
                                                                                    ----------------    ----------------

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
  PERIOD                                                                                 5,299,000          16,750,000
                                                                                    ----------------    ----------------

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD                                  $    1,861,000        $ 11,695,000
                                                                                    ================    ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     Cash paid during the period for interest                                       $       293,000     $        1,000
                                                                                    ================    ================

     Income taxes paid                                                              $    1,383,000      $      433,000
                                                                                    ================    ================
</TABLE>

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


                                       4


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

1.  BASIS OF PRESENTATION:

The consolidated  condensed  balance sheet as of January 3, 1997, which has been
derived  from  audited   financial   statements,   and  the  unaudited   interim
consolidated  condensed  financial  statements  as of April 4,  1997,  have been
prepared by the Company without audit, but in the opinion of management  reflect
all adjustments  necessary for the fair presentation of the Company's  financial
position  as of  January  3,  1997 and April 4,  1997 and the  results  of their
operations for the thirteen week periods ended April 4, 1997 and March 29, 1996.
Results of operations for the interim 1997 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 generally  accepted  accounting  principles  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 January 3, 1997.

2.  INVENTORIES:

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


                                                April 4,          January 3,
                                                  1997              1997
                                                      (Unaudited)

         Raw materials                         $11,050,000     $ 11,607,000
         Work in progress                        1,221,000        1,108,000
         Finished goods                         12,904,000       14,304,000
                                              ------------     ------------
                                               $25,175,000     $ 27,019,000
                                              ============     ============

3.  NET INCOME PER SHARE:

In February  1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of Financial  Accounting  Standards  ("SFAS")  No. 128,  Earnings per
Share.  This  statement  establishes  standards  for  computing  and  presenting
earnings per share  ("EPS").  This  Statement  will  simplify the  standards for
computing  earnings per share  previously  found in APB Opinion No. 15, Earnings
per share, and will make them comparable to international EPS standards. It will
replace the  presentation  of primary EPS with a  presentation  of basic EPS and
will  require  dual  presentation  of basic and  diluted  EPS on the face of the
income statement and requires a reconciliation  of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS
computation.

This Statement is effective for financial  statements  issued for periods ending
after December 15, 1997,  including interim periods and requires  restatement of
all  prior-period  EPS data  presented.  The Company will adopt the Statement at
fiscal year-end 1997. Had the Company implemented SFAS 128 on December 30, 1995,
the pro forma EPS results would have been as follows:

<TABLE>
<CAPTION>
                            Thirteen Weeks Ended April 4, 1997       Thirteen Weeks Ended March 29, 1996
                            ----------------------------------       -----------------------------------
                                             Dilutive                                  Dilutive
                                            Effect of                                 Effect of
                                              Options                                   Options
                                    Basic      Issued       Diluted          Basic       Issued       Diluted
                                    -----      ------       -------          -----       ------       -------
<S>                            <C>            <C>        <C>            <C>             <C>        <C>
Net income                     $3,783,000           -    $3,783,000     $3,297,000            -    $3,297,000
Shares available to
 Common shareholders           15,437,801     129,632    15,567,433     15,053,414      161,885    15,215,299
Earnings per share                 $ 0.25           -        $ 0.24         $ 0.22            -        $ 0.22
</TABLE>


                                       5


4.  REPURCHASE AGREEMENTS:

It is customary  practice for  companies in the  manufactured  home  industry to
enter into  repurchase  agreements  with  financial  institutions  which provide
financing to dealers.  Generally,  the agreements  provide for the repurchase of
the  manufactured  homes  from  the  financing   institution  in  the  event  of
repossession  upon an independent  dealer's  default.  The Company's  contingent
liability  under such agreements is  approximately  $91.2 million as of April 4,
1997.  Losses  experienced under these agreements have not been significant and,
in the opinion of management,  any future losses under these  agreements  should
not have a material effect on the accompanying financial statements.

5.  LEGAL PROCEEDINGS:

The Company is a defendant in a lawsuit filed on March 27, 1996 in Fulton County
Superior  Court,  Georgia by EurAm  International,  Inc.,  a sales agent for the
Company.  On April 29,  1996 the Company  removed the case to the United  States
District Court for the Northern District of Georgia in Atlanta. In this lawsuit,
the plaintiff alleges that the Company has breached an agreement relating to the
sale  of  the   Company's   modular   homes  in   Germany,   including   alleged
misrepresentations  and faulty  performance,  resulting  in  damages  alleged to
amount to $25  million.  The  Company  believes  the claim is without  merit and
intends to  vigorously  defend the claim,  but the  litigation  is  currently in
discovery and there can be no assurances as to its likely outcome.

In addition,  the Company has been informed by Gesellschoft fur Bauen Und Wohnen
Hannover  MbH  ("GBH"),  a German  housing  authority,  that it has replaced the
Company  with a local  company to complete a contract  that GBH had entered into
with the Company for the purchase  and erection of modular  housing in Hannover,
Germany.  In connection with the contract,  the Company posted a $660,000 letter
of credit in favor of GBH. In March 1997,  GBH made a claim  against the Company
for damages of  approximately  $800,000  arising from the shift in suppliers and
has  attempted  to draw upon the  letter of credit  posted by the  Company.  The
Company has obtained a temporary  restraining  order preventing GBH from drawing
upon the letter of credit and the  Company is actively  negotiating  with GBH to
resolve the dispute.  There can be no assurances as to the likely  resolution of
the GBH claim.

The Company is a party to various  other  legal  proceedings  incidental  to its
business.  The majority of these legal proceedings  relate to employment matters
or product  warranty  liability claims for which  management  believes  adequate
reserves are maintained.  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.

6.  BUSINESS COMBINATIONS:

Wenco has been  originating  and servicing  consumer  loans  primarily for homes
manufactured  by the  Company.  In February  1997,  the  Company  formed a joint
venture,  Wenco 21, with 21st Century.  The Company has made an initial  capital
contribution of $500,000 to Wenco 21,  representing a 50% ownership  interest of
the joint  venture.  Wenco 21 will  continue  to offer,  through  21st  Century,
consumer  financing for homes  manufactured  by the Company as well as for other
homes sold through its retail centers and independent  dealers.  In light of the
shift in consumer  finance  activities to Wenco 21, Wenco has suspended its loan
origination activities and has engaged 21st Century to service its existing loan
portfolio.

In January 1997, the Company contracted to build a new corporate office facility
adjacent  to its  Southern  Energy  plant  in  Addison,  Alabama  at a  cost  of
approximately $1.5 million.




                                       6



Item 2.

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

RESULTS OF OPERATIONS

Thirteen  weeks ended April 4, 1997 as compared with thirteen  weeks ended March
29, 1996.

Net Revenues

Total net revenues (gross sales less volume  discounts,  returns and allowances)
for the thirteen weeks ended April 4, 1997 were $80.1 million, which represented
an  increase  of 13% over the prior year  period.  During the fourth  quarter of
1996,  the Company  entered into the retail  sector of the industry  through the
acquisition of BR Holding Corp.,  and a group of retail companies doing business
as Blue Ribbon Homes.

Net revenues of the  manufactured  home  segment,  which  includes the Company's
retail operations, were $79.4 million for the thirteen weeks ended April 4, 1997
as  compared  with $71.0  million for the prior year  period.  Retail home sales
accounted for $11.9 million of the  manufactured  home segment  revenues for the
thirteen weeks ended April 4, 1997. Sales to dealers accounted for approximately
$67.5 million of manufactured home segment revenues for the thirteen weeks ended
April 4, 1997, as compared  with $71.0  million for the prior year period.  This
decrease  in  revenue  was  attributable  to a  decrease  in the number of homes
shipped,  which was  partially  offset by an increase  in the average  wholesale
price per home  shipped.Total  homes sold in the  thirteen  weeks ended April 4,
1997 was  2,517,  down 3.9%  over the  number  of homes  sold in the prior  year
period.  The  decrease  in homes  sold was  attributable  primarily  to a slight
decline  in demand  for  manufactured  housing  during  the  winter  months  and
unfavorable  weather  conditions.  Revenues from the Company's  retail financing
segment were  $679,000 for the thirteen  weeks ended April 4, 1997,  as compared
with $90,000 for the prior year period.  This increase was  attributable  to the
increased  lending  activity by the  Company's  wholly owned  subsidiary,  Wenco
Finance, Inc. ("Wenco"). Wenco has been originating and servicing consumer loans
primarily for homes  manufactured by the Company.  In February 1997, the Company
formed a joint venture with 21st Century Mortgage  Corporation ("21st Century").
The joint  venture,  Wenco 21, will  continue to offer,  through  21st  Century,
consumer  financing for homes  manufactured  by the Company as well as for other
homes sold through its retail centers and independent  dealers.  In light of the
shift in consumer  finance  activities to Wenco 21, Wenco has suspended its loan
origination activities and has engaged 21st Century to service its existing loan
portfolio.

Gross Profit

Gross profit  consists of net revenues  less the cost of sales,  which  includes
labor,  materials and overhead.  Gross profit for the thirteen weeks ended April
4, 1997 increased to $12.5 million, or 15.6% of net revenues, from $9.4 million,
or 13.1% of net revenues in the prior year period.  The increase in gross profit
percentage  in the current year quarter was  attributable  to lower raw material
prices,  increased labor efficiency,  and the Company's movement into the retail
sector of the industry, which typically operates at higher gross margins.

Selling Expenses

Selling  expenses include  primarily sales  commissions,  advertising  expenses,
salaries for support  personnel and freight  costs.  Selling  expenses were $2.9
million,  or 3.7% of net  revenues,  during the quarter  ended April 4, 1997, as
compared with $1.7 million or 2.3% of net  revenues,  for the same period of the
prior year. The increase in selling  expense as a percentage of net revenues was
attributable  primarily  to  increased  selling  expenses  associated  with  the
Company's  retail  operation,  which was partially offset by savings in shipping
costs realized from an increase in shipments through MH Transport, the company's
trucking  subsidiary,  which  reduced the company's  reliance  upon  independent
trucking companies.


General and Administrative




                                       7



General and administrative expenses include administrative  salaries,  executive
and management bonuses,  insurance costs and professional fees. For the thirteen
weeks  ended  April 4,  1997,  general  and  administrative  expenses  were $3.0
million, or 3.7% of net revenues,  as compared with $2.2 million, or 3.1% of net
revenues,   for  the  same  period  of  1996.   The   increase  in  general  and
administrative expense is primarily attributable to salary increases during 1996
and the addition of new  employees  who were hired in order to resolve  staffing
shortages which have occurred as the Company continues to expand.

Provision for Credit Losses

The Company provides for estimated  credit losses based on industry  experience,
historical  loss  experience,   current   repossession  trends  and  costs,  and
management's  assessment of the current  credit  quality of the loan  portfolio.
There was no provision for credit  losses for the thirteen  weeks ended April 4,
1997 as compared with $194,000 for the thirteen weeks ended March 29, 1996.

Interest Expense

Interest  expense for the thirteen  weeks ended April 4, 1997 was  $277,000,  as
compared with $1,000 in the prior year period.  The increase in interest expense
in the current year period was a result of increased  notes  payable  associated
with the floor-plan financing of the Company's retail inventory.

Interest Income

Interest  income for the  thirteen  weeks  ended April 4, 1997 was  $43,000,  as
compared with $214,000 in the prior year period. The decrease in interest income
in the current year period reflects lower average cash and investment balances.

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.  Income tax
expense  for the  thirteen  weeks ended  April 4, 1997 was $2.3  million,  or an
effective tax rate of 38.0% as compared  with $2.1 million,  or an effective tax
rate of 38.5% in the prior year period.

LIQUIDITY AND CAPITAL RESOURCES

Since its organization,  the Company has financed its operations  primarily with
cash  generated  from  a  combination  of  operations,   stock  offerings,   and
borrowings.

Cash Flows

During the  thirteen  weeks  ended  April 4, 1997,  the  Company's  cash used by
operations  was  approximately  $5.3 million.  Cash used by operations  includes
originations  of  installment  contracts of $1.1 million and increased  accounts
receivable and prepayments of $15.3 million. These amounts were partially offset
by net income of $3.8 million, decreased inventory of $1.8 million and increased
accounts  payable and accrued  liabilities of $4.7 million.  In addition to cash
provided by operating activities, other significiant cash flows included capital
expenditures of $1.8 million and borrowings of $4.1 million.

During the  thirteen  weeks ended March 29,  1996,  the  Company's  cash used by
operations was approximately $6.1 million.  Cash used by operations  included an
increase in accounts receivable of approximately $7.2 million and an increase in
inventories of approximately  $3.7 million.  These amounts were partially offset
by increased  accounts  payable and accrued  liabilities of  approximately  $7.8
million and net income of $3.3  million.  Each of these  increases was primarily
related to sales growth.  In addition to cash provided by operating  activities,
other  significant  cash flows  included  capital  expenditures  of $545,000 and
maturities of investments of $2.1 million.

In  February  1997,  the  Company  formed a joint  venture,  Wenco 21, with 21st
Century,   which  through  21st  Century  will   originate  and  service  retail
installment  contracts.  The Company has made an initial capital



                                       8


contribution of $500,000 to Wenco 21,  representing a 50% ownership  interest of
the joint  venture.  Under its joint venture  agreement  with 21st Century,  the
Company may be called upon to make additional capital  contributions or loans in
order to meet Wenco 21's capital requirements. The Company believes that cash on
hand, cash generated by its  operations,  and funds available under its existing
line of credit will be adequate to fund any such commitments.

At April 4, 1997, the Company's net working capital was $19.0 million, including
$1.9 million in cash  equivalents,  as compared with $17.7 million at January 3,
1997,  including $5.3 million in cash and cash equivalents.  The increase in net
working  capital was a result of an increase  in  accounts  receivable  of $14.3
million and an  increase in  prepayments  and other of $1.1  million,  which was
partially  offset by a decrease in inventories of $1.8 million and a decrease in
cash and cash equivalents of $3.4 million.  The Company also has a $10.0 million
unsecured  line of credit which is renewable  annually and bears interest at the
London Interbank Offered Rate ("LIBOR") plus 1.5%. The Company's ability to draw
upon this line of credit is dependent upon meeting certain  financial ratios and
covenants.  The Company has $5.0 million outstanding under this line at April 4,
1997.

Substantially  all of the  Company's  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  independent  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 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  independent  dealer.  At April  4,  1997,  the  Company's
contingent  repurchase  liability under  floor-plan  financing  arrangements was
approximately  $91.2  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.

The Company is building a new corporate office facility in Addision,  Alabama at
a cost of  approximately  $1.5  million and plans to acquire or open more retail
sales  centers.  The  Company  believes  that cash on hand,  cash  generated  by
operations,  and funds  available  under  its  existing  line of credit  will be
adequate to fund its expansion plans.

Expansion

The Company  has  continued  to  demonstrate  its ability to increase  revenues,
expand production capacity,  and vertically integrate its operations through the
acquisition of additional manufacturing facilities and businesses.

In  November  1996,  the  Company  acquired a group of retail  sales  centers in
Alabama and  Mississippi.  The purchase price  consisted of  approximately  $1.1
million  in cash and $4.5  million  of  common  stock  issued.  The  Company  is
obligated to make  additional  payments to the seller if the  acquired  business
meets certain earnings targets. Any additional payments will be made 20% in cash
and 80% in shares of the  Company's  common stock and will be  accounted  for as
goodwill and amortized over the remaining  recovery  period of the goodwill.  At
March 31, 1997 an additional payment totaling approximately $207,000 was due for
earnings targets achieved through December 31, 1996. This amount was paid in May
1997,  $41,000  in  cash  and  14,256  shares  of  the  Company's  common  stock
(approximate market value on March 31, 1997 of $148,000).

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.




                                       9



"SAFE HARBOR"  STATEMENT UNDER THE PRIVATE  SECURITIES  LITIGATION REFORM ACT OF
1995

Forward-looking   statements  in  this  report,  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,  including without limitation: the cyclical and
seasonal  nature  of  housing   markets;   the  availability  of  financing  for
prospective  purchasers of the Company's  homes;  the amount of capital that the
Company  may  commit to its Wenco 21 joint  venture to make  available  consumer
loans;  the performance of the loans held by the Company's  finance  subsidiary;
the  availability  and  pricing  of  raw  materials;  the  concentration  of the
Company's business in certain regional markets; the Company's ability to execute
and manage its expansion  plans;  the  availability  of labor to implement those
plans;  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.




                                       10


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is a defendant in a lawsuit filed on March 27, 1996 in Fulton County
Superior  Court,  Georgia by EurAm  International,  Inc.,  a sales agent for the
Company.  On April 29,  1996 the Company  removed the case to the United  States
District Court for the Northern District of Georgia in Atlanta. In this lawsuit,
the plaintiff alleges that the Company has breached an agreement relating to the
sale  of  the   Company's   modular   homes  in   Germany,   including   alleged
misrepresentations  and faulty  performance,  resulting  in  damages  alleged to
amount to $25  million.  The  Company  believes  the claim is without  merit and
intends to  vigorously  defend the claim,  but the  litigation  is  currently in
discovery and there can be no assurances to its likely outcome.

In addition, the Company has been informed by Geselleschoft fur Bauen Und Wohnen
Hannover  MbH  ("GBH"),  a German  housing  authority,  that it has replaced the
Company  with a local  company to complete a contract  that GBH had entered into
with the Company for the purchase  and erection of modular  housing in Hannover,
Germany.  In connection with the contract,  the Company posted a $660,000 letter
of credit in favor of GBH. In March 1997,  GBH made a claim  against the Company
for damages of  approximately  $800,000  arising from the shift in suppliers and
has  attempted  to draw upon the  letter of credit  posted by the  Company.  The
Company has obtained a temporary  restraining  order preventing GBH from drawing
upon the letter of credit and the  Company is actively  negotiating  with GBH to
resolve the dispute.  There can be no assurances as to the likely  resolution of
the GBH claim.

The Company is a party to various  other  legal  proceedings  incidental  to its
business.  The majority of these legal proceedings  relate to employment matters
or product  warranty  liability claims for which  management  believes  adequate
reserves are maintained.  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 2.  Changes in Securities

         Not applicable.

Item 3.  Defaults Upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits                      None

         (b)  Reports on Form 8-K           None


                                       11


                                   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:    May 7, 1997                  By:   /s/ Wendell L. Batchelor
     ---------------------                  --------------------------------
                                      Wendell L. Batchelor, Chairman, President
                                      and Chief Executive Officer




Date:    May  7, 1997                 By:   /s/ Keith W. Brown
     ---------------------                  ------------------
                                      Keith W. Brown, Executive Vice President,
                                      Chief Financial Officer, Treasurer and
                                      Secretary