**SECURITIES AND EXCHANGE COMMISSION**

** **

**Washington,DC 20549**

 

**Form 10-K**

**(MarkOne)**

** **

| **ý** |   | **Annual Report Pursuant to Section 13 or 15(d)  of the Securities Exchange Act of 1934**                                                              |
|------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                   |
|       |   | **For  the fiscal year ended December 31, 2002.**                                                                                                      |
|       |   |                                                                                                                                                   |
| **o**      |   | **Transition Report Pursuant to Section 13 or 15(d)  of the Securities Exchange Act of 1934**                                                          |
|       |   |                                                                                                                                                   |
|       |   | **For  the Transition Period From            to           ** |

 

**CommissionFile Number 0-5555**

 

**LIBERTY HOMES, INC.**

(Exact name of registrantas specified in its charter)

** **

| **Indiana**                               |   | **35-1174256**                   |
|-------------------------------------------|--------|----------------------------------|
| (State of  Incorporation)                 |   | IRS Employer  Identification No. |
|                                      |   |                             |
| **PO Box  35, Goshen, Indiana**           |   | **46527-0035**                   |
| (Address of Principal  Executive Offices) |   | (ZIP Code)                       |
|                                      |   |                             |
| Registrant’s telephone  number       |   | **574.533.0431**                 |

 

Securities registeredpursuant to Section 12 (g) of the Act:

 

| **Title of Each Class** |   |   |   | **Name of Each Exchange   on Which Registered** |
|-------------------------|--------|--------|--------|-------------------------------------------------|
| Class A Common Stock    |   |   | NASDAQ |
| Class B Common Stock    |   |   | NASDAQ |

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.              Yes ý     No o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405of this chapter) is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis form 10-K.             ý

 

Indicate by check markwhether the Registrant is an accelerated filer.       Yeso     No ý

 

As of June 28, 2002, theaggregate market value of the non-voting Common Stock Class A, held bynonaffiliates and the voting Common Stock Class B, held by nonaffiliates (basedupon the closing price on the last date of trade) was approximately $3,350,000and $1,300,000, respectively.

 

Number of sharesoutstanding of each of the registrant’s classes of common stock.  

 

| **Class**                              |   | **Shares of Outstanding   at June 28, 2002** |
|----------------------------------------|--------|----------------------------------------------|
|                                   |   |                                         |
| Class A Common Stock,  $1.00 par value |   | 2,085,645                                    |
| Class B Common Stock,  $1.00 par value |   | 1,659,422                                    |

 

DOCUMENTS INCORPORATED BYREFERENCE

 

Portions of Registrant’s Annual Report to Shareholders for the fiscalyear ended December 31, 2002 are incorporated by reference into Part II.  Portions of the Proxy Statement for the 2003Annual Meeting of Shareholders are incorporated by reference into PartIII.  

 

The Exhibit Index islocated on page 17.

 

 

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**PART I**

 

**Forward Looking Information –**Thediscussion below contains forward looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995.  These statements include statements regarding industry andcompany outlooks and risk factors.  TheCompany may make other forward looking statements orally or in writing fromtime to time.  All such forward lookingstatements are not guaranties of future events or performance and involve risksand uncertainties. Actual results may differ materially from those in theforward looking statements as the result of a number of material factors.  These factors include without limitation,the availability of financing credit at both the wholesale and retail level,the availability of a competent workforce, the regulation of the industry atthe federal, state and local levels, changes in interest rates, the stabilityof dealer distribution networks, unanticipated results in pending legalproceedings and the condition of the economy and its effect on consumerconfidence.

 

Item 1.  Business

 

Liberty Homes,Inc. (the “Company”) was organized as an Indiana corporation in 1970 as thesuccessor to a business founded in 1941. The Company designs, manufactures and sells at wholesale throughout mostof the United States a broad line of manufactured homes and modular homes undervarious trade names.  Additionally, itsells at retail in two Company-owned retail centers in Indiana and North Carolina.  Constructed on a wheel-mounted under-carriage,a manufactured home is a relocatable factory-built dwelling which, when movedto a location, properly set up and connected to utilities, provides permanenthousing.  A manufactured home may alsoconsist of two or more units which are moved separately and when securelyjoined together are called multi-sectional housing.

 

A manufacturedhome is to be distinguished from a travel trailer, motor home or otherrecreational vehicle which is generally used for living accommodations duringrelatively short periods, primarily for vacation and recreational purposes.

 

The Company’stypical manufactured home contains a living room, dining room or area, a fullyequipped kitchen, two, three, four or five bedrooms, and one or more fullbaths.  The Company also produces manyhomes with such additional living spaces as family rooms, sunrooms, dens,utility rooms 

 

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and porches.  The homes are equipped with central heating,carpeting, a choice of coordinated colors and interior decoration, and areoffered in a wide range of floor plans. Single section homes are 12, 14 or 16 feet wide and vary in overalllength from 36 to 76 feet. Multi-section homes are two or more 12, 14, 15 or 16 foot wide sections,with overall lengths ranging from 36 to 76 feet.

 

The Company’stypical modular home is built in two or three sections and is very similar to amulti-section manufactured home, however without a permanent steel chassis.

 

The Companyutilizes assembly line techniques in the production of its homes.  Lumber for walls, roofs, ceilings andfloors, steel, wood or vinyl siding, ceiling materials, windows, furniture,electrical and plumbing fixtures, and many other items are purchased fromnumerous suppliers for fabrication or assembly.  Sources of material are readily available and the Company is notdependent upon any particular supplier for its raw materials or componentparts.

 

For the most part,the Company sells its products to numerous independent dealers, most of whomalso sell competing products.  In theyear ended December 31, 2002, the Company’s largest dealer accounted forapproximately seven percent of the Company’s sales.  The Company generally manufactures its homes only after receiptof orders from its dealers, and sales backlogs in the manufactured housingindustry are traditionally short.

 

Retail prices forthe Company’s single section homes typically range from approximately $25,000to $50,000 and from approximately $35,000 to $125,000 for multi-section homes.  The Company’s homes generally fall withinthe mid price range of the industry.

 

Manufactured homeswere sold by the Company during 2002 to dealers in most of the continentalUnited States.  Transportation chargesfrom the point of manufacture to the dealer are an important factor in the costof a manufactured home and often influence a dealer’s preference for similarproducts.  In general, most retailoutlets are located within a 500 mile radius of the manufacturing facilityserving the dealer.

 

In each of thegeographical areas in which the Company operates, it faces direct competitionfrom other manufacturers, some of whom are larger than the Company and possessgreater resources. This

 

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group of competitorsconsists of manufacturers who compete with the Company on a national level aswell as many others who are only regional in scope.  According to data from the Institute of Building Technology andSafety, at the end of 2002, there were 64 companies operating 233 facilitiesproducing manufactured housing in the United States.  Since the manufactured homes sold by the Company are a form ofhousing, changes in factors which influence the national housing market usuallyaffect the Company’s business, either beneficially or adversely.

 

In addition, thequality and number of manufactured home developments with space available fornew homes sometimes affect the market for manufactured homes.  Manufactured home parks and placement ofmanufactured homes on real-estate type scattered sites or subdivisions aregenerally subject to local zoning ordinances and other local regulations.  Any limitation of the availability of spacefor manufactured homes due to any cause, including such local ordinances, couldadversely affect the Company’s business.

 

In 2000, theCompany formed three subsidiaries, Ocala Housing Center, Inc.; Waverlee Homesof Texas, Inc.; and First American Homes, Inc., to establish temporary retailoutlets for homes the Company was obligated to repurchase under agreements withvarious financial institutions providing inventory financing to the Company’sindependent dealers.  During 2002, theCompany closed and liquidated the Waverlee Homes of Texas, Inc. subsidiary andduring 2001, the Company closed and liquidated the First American Homes, Inc.subsidiary.  The Ocala Housing Center,Inc. operations were being liquidated at the end of 2002.

 

In 1999, IrishHomes, Inc., a wholly-owned subsidiary of the Company, began a retail center inElkhart, Indiana.  Irish Homes, Inc.,commenced operations in 1988 to develop subdivisions using the Company’smanufactured homes.  The homes locatedwithin subdivisions include a garage and are placed on a foundation withlandscaping, concrete and other work, performed on site by independentcontractors.

 

In 1998,Statesville Housing Center, Inc. was formed as a wholly-owned subsidiary of theCompany and began operations as a retail dealer of the Company’s homes.  This retail center is located 

 

4

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in Statesville, NorthCarolina within a mile of one of the Company’s manufacturing plants.

 

During 1997, theCompany formed Gipper Development Company, LLC, a majority owned entity, whichis developing a manufactured housing community in Northern Indiana.

 

In 1994, theCompany formed Waverlee Homes, Inc., a majority owned subsidiary, whichoperates production facilities in Hamilton, Alabama.  This operation enhanced the Company’s ability to serve the marketin the South Central United States.

 

Because of theirsize and weight, manufactured homes are generally transported by speciallymodified trucks.  Most states requirespecial permits for the movement of such homes. Typically, these permitsprescribe the roads to be used, speed limits, hours during which travel ispermitted, types of signaling devices which must be used, and other suchrestrictions, primarily for safety purposes. Seasonal weather conditions can also be a factor for transportation.

 

The constructionof manufactured homes, and the plumbing, heating and electrical systemsinstalled therein, are subject to the National Manufactured Home Constructionand Safety Standards promulgated by the U.S. Department of Housing and UrbanDevelopment (HUD) pursuant to authority granted them by the NationalManufactured Home Construction and Safety Standards Act of 1974.  HUD has also promulgated lengthy and complexregulations to implement and enforce the construction standards, and there aresubstantial penalties for deviations from the regulations.  Construction of the Company’s modular homesis subject to state or local modular building codes.

 

The Company’sability to sell its homes is dependent to a considerable degree upon theavailability and terms of financing both to its dealers and to retailcustomers.  Consequently, increases ininterest rates or tightening of credit could adversely affect the Company’sbusiness.  Conversely, a lowering ofinterest rates or relaxation of credit restraints could improve the Company’sbusiness.

 

Dealers whopurchase from the Company generally obtain inventory financing from financialinstitutions (usually banks or finance companies) on a “floor plan” basiswhereby the financial institution obtains a lien upon, or title to, all or partof a dealer’s inventory.  To assistdealers in obtaining such financing, the Company, in accordance with tradepractice, generally enters into repurchase agreements 

 

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with lending institutionswhereby the Company, during the period (usually from one to one and one-halfyears) pending sale to a retail customer, agrees to repurchase a home sofinanced in the event of the dealer’s default and subsequent inability to repaythe amount borrowed from the financial institution.  In the event of repurchase, the Company will experience a loss ifthe repurchase price paid to the financial institution plus any related costsof repossession (e.g., freight, repairs and shortages) exceed the proceedsreceived by the Company from resale of the home repurchased.

 

Retail customersusually finance their home purchases with funds borrowed from banks, financecompanies, mortgage companies and savings and loan associations.  Manufactured home loans are secured eitherby the home (chattel mortgage) or by a combination of the home and land(land/home or real property mortgage). Chattel loans are often made at a substantially higher rate of interestand are not competitive when conventional real property mortgage rates are low,as they have been in recent years.  Inaddition, the number of finance institutions making chattel loans onmanufactured homes has declined in the past few years.  However, manufactured homes and modularhomes qualify for and are financed utilizing conventional real propertymortgage financing.  The increasingacceptance of these homes for such financing has, to a certain extent, offsetthe decline in the availability of chattel financing.

 

Employees

 

As of March 13, 2003, the Company had approximately800 full-time employees.

 

Item 2.  Properties.

 
| **Manufacturing  Facilities —** |                         |
|--------------------------------------|------------------------------|
| Syracuse, Indiana                    | Sheridan, Oregon             |
| Yoder, Kansas                        | Ocala, Florida               |
| Dorchester, Wisconsin                | Statesville, North  Carolina |
| Plant #1                             | Hamilton, Alabama            |
| Plant #2                             | Tuscumbia, Alabama           |
| Leola, Pennsylvania                  |                         |

 

The Tuscumbiaplant and Plant #1 at Dorchester were idled during the year 2000 and the Ocalaplant was idled at the end of 2002.  Allof these plants are currently being marketed for sale.  All of the remaining manufacturingfacilities are utilized during one shift per day.

 

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The Company ownsall of its manufacturing facilities in fee simple and believes that itsfacilities and equipment contained therein are well maintained and in goodcondition.  All the Company’smanufacturing facilities are intended for the manufacture of homes, and in theCompany’s judgment, all are adequate for their current use.

 

**RetailCenters -**
| Elkhart, Indiana            |
|-----------------------------|
| Statesville, North Carolina |

 

The Company ownsits Elkhart, Indiana retail center in fee simple.  It leases a retail facility in Statesville, North Carolina.  All of these facilities are intended for thedisplay and retail sales of manufactured homes and are well maintained and ingood condition.

 

**Other -**
| Goshen, Indiana |
|-----------------|

 

The Company’sexecutive office and its engineering and design center is located in Goshen,Indiana.  The Company owns the propertyin fee simple.  The property is in goodcondition, is well maintained and fits the purpose of its intended use.

 

Item 3.  Legal Proceedings.

 

The Company isparty to various legal proceedings from the normal course of operations. TheCompany has provided for anticipated losses resulting from suchlitigation.  In management’s opinion,the Company has adequate legal defenses and does not believe these suits willmaterially affect the Company’s operations or financial position.

 

Item 4.  Submission of Matters to a Vote of SecurityHolders.

 

There were nomatters submitted to a vote of security holders for the three months ended December31, 2002.

 

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**PART II**

 

Item 5.  Market for the Company’s Common Equity andRelated Stockholder Matters.

 

The Company’s 2002Annual Report to Shareholders is an exhibit of this filing.  The information under the caption “CapitalStock” on page seven of the report is incorporated by reference as Item 5 ofthis filing.  The Company does not haveany compensation plan or individual compensation arrangement under which sharesof the Company’s common stock have been reserved for issuance to any person inexchange for consideration in the form of goods or services.

 

The Company’sshares are traded on the NASDAQ small cap market.

 

Item 6.  Selected Financial Data.

 

The Company’s 2002Annual Report to Shareholders is an exhibit of this filing.  The information under the caption “SelectedFinancial Data” on page one of the report is incorporated by reference as Item6 of this filing.

 

Item 7.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.

 

The Company’s 2002Annual Report to Stockholders is an exhibit of this filing.  The information contained on pages onethrough six of the report under the caption “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” is incorporated byreference as Item 7 of this filing.

 

Item 7a.  Quantitative and Qualitative DisclosuresAbout Market Risk.

 

Not applicable.

 

Item 8.  Financial Statements and Supplementary Data.

 

The Company’s 2002Annual Report to Stockholders is an exhibit of this filing.  The 2002, 2001 and 2000 consolidatedfinancial statements and footnotes thereto, together with the report thereon ofCrowe, Chizek and Company LLP dated February 18, 2003, on pages nine throughtwenty of the report are incorporated by reference as Item 8 of this filing.

 

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Item 9.  Changes in and Disagreements withAccountants on Accounting and Financial Disclosure.

 

None.

 

**PART III**

 

Item 10.  Directors and Executive Officers of theRegistrant.

 

Edward J. Hussey,age 85, has been President, Chairman of the Board and a Director of the Company(or it predecessors) since 1960, and is the father of Edward Joseph Hussey andMichael F. Hussey.

 

Edward JosephHussey, age 55, is an attorney and a son of Edward J. Hussey.  He has been a Director of the Company since1981, Secretary of the Company since 1985 and was named Vice President of theCompany in 1990.  In September, 1987, hebegan employment with the Company on a full time basis.  Since 1975, he has been associated with thelaw firm of Hodges & Davis P.C., where he is of counsel.

 

Michael F. Hussey,age 46, has been employed by the Company since 1980.  He was named Vice President of Finance in 1984 and became aDirector in 1988.  He is the son ofEdward J. Hussey.

 

David M. Huffine,age 54, has been a Director of the Company since 1988.  He is currently self-employed.  From 1993 to 2002, he was Vice President ofDuneland Mortgage, President of I.M. Homes, Inc., Rocky Ford, Colorado,President of Sky View Homes, Inc. and Chairman of the Board of RampartInvestigations.

 

Mitchell Day, age47, has been a Director since 1995.  Hehas also been President of Day Equipment Corporation, Goshen, Indiana since1984.

 

Lester M. Molnar,age 72, retired as Vice President of the Company in 1993 after sixteen years ofservice.  He has been a Director since2001.

 

Dorothy L.Peterson, age 91, has been employed with the Company since 1952.  She was appointed Assistant Treasurer in1985.

 

Marc A. Dosmann,age 50, joined the Company in February 1995 as Vice President and ChiefFinancial Officer.

 

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Bruce A. McMillan,age 51, has served the Company in various capacities for over 30 years.  He was appointed to the position of VicePresident of Sales in 1994.

 

Ronald Atkins, age52, has served the Company in manufacturing and purchasing functions since1981.  During 1996, he was appointed tothe position of Vice President of Purchasing.

 

Nader Tomasbi, age43, joined the Company in July 1994.  In1998, he was appointed as Vice President of Engineering and Design.

 

Brian L.Christner, age 43, joined the Company in December 1994 as Controller and hasheld the position of Treasurer since January 2002.

 

Gregory T. Shank,age 35, joined the Company in December 1999 as Controller.  He was Controller from August 1998 toDecember 1999 of the Truck Accessory Group, Inc. and from December 1996 toAugust 1998, he was Controller of Bristol Pipe, Inc.

 

Item 11.  Executive Compensation.

 

The Company’sProxy Statement for the Annual Meeting of Shareholders to be held on April 24,2003 includes information under the captions “Executive Compensation andShareowner Return Performance Presentation” on pages five through eight.  The proxy statement has been separatelyfiled and those sections are exhibits of this filing and are incorporated byreference as Item 11 of this filing.

 

Item 12.  Security Ownership of Certain BeneficialOwners and Management.

 

The Company’sProxy Statement for the Annual Meeting of Shareholders to be held on April 24,2003 includes information under the caption “Shares Outstanding and VotingRights” on pages two and three.  Theproxy statement has been separately filed and this section is an exhibit of thisfiling and is incorporated by reference as Item 12 of this filing.

 

Item 13.  Certain Relationships and RelatedTransactions.

 

The Company’sProxy Statement for the Annual Meeting of Shareholders to be held April 24,2003 includes information in footnotes four and seven on page four.  The proxy statement has been separatelyfiled and this information is incorporated by reference as item 13 of thisfiling.

 

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Item 14.  Management’s Report on Disclosure Controlsand Procedures and Internal Control.

 

The Company’sChief Executive Officer and the Chief Financial Officer have reviewed theCompany’s system of disclosure controls and procedures as of a date withinninety days before the filing date of this Form 10-K, and have concluded thesystem of disclosure controls and procedures has been effective in thedetermination of items to be reported in this 10-K report.  Furthermore, there have been no significantchanges in the Company’s system of internal controls, or in other factors thatcould significantly affect these controls, subsequent to the date of thisreview and there have been no discoveries of any significant deficiencies ormaterial weaknesses in such controls that would require the Company to take correctiveactions.

 

**PART IV**

 

Item 15.  Exhibits, Financial Statement Schedules andReports on Form 8-K.

 

(a) The followingdocuments are filed as part of this report on Form 10-K:

 
| **1.  Financial Statements**                                                                                           |   |                                              |
|-----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
| Consolidated Balance  Sheet at December 31,  2002 and 2001                                                             |   | See Shareholder Annual Report  Page 9 and 10      |
|                                                                                                                        |   |
|                                                                                                                        |   |                                              |
| Consolidated Statements  of Income for Years Ended December 31, 2002, 2001 and 2000                                         |   | See Shareholder Annual Report  Page 11            |
|                                                                                                                        |
|                                                                                                                        |   |                                              |
| Consolidated Statements  of Changes in Shareholders’ Equity for the Years  Ended December 31, 2002, 2001 and 2000 |   | See Shareholder Annual Report  Page 11            |
|                                                                                                                        |
|                                                                                                                        |   |                                              |   |
| Consolidated Statements  of Cash Flows for the Years Ended December 31,  2002, 2001 and 2000                           |   | See Shareholder Annual Report  Page 12            |
|                                                                                                                        |
|                                                                                                                        |   |                                              |   |
| Notes to Consolidated  Financial Statements                                                                                 |   | See Shareholder Annual Report  Pages 13 – 19 |
|                                                                                                                        |   |                                              |   |
| Report of Independent  Auditors   (Crowe, Chizek and Company LLP)                                                           |   | See Shareholder Annual Report  Page 20            |

 

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**2. ****Valuation on Qualifying Accounts**

 
|                   |   |                                 |      | **Additions**                         |   | **Deductions**                   |   |                                       |   |
|------------------------|--------|--------------------------------------|-----------|---------------------------------------|--------|----------------------------------|--------|--------------------------------------------|--------|
| **Accrued   Warranty** |   | **Balance at  beginning of  period** |      | **Charged to    costs and  expenses** |   | **Charged to  other   accounts** |   | **Payment of    claims and services** |   | **Balance at    end of period** |   |
|                   |   |                                 |      |                                  |   |                             |   |                                       |   |   |   |
| Year ended   2000      |   | $                                    | 1,764,000 |                                  | $      | 9,718,000                        |   | $                                          | 0      |   | $ | 9,718,000 |   | $ | 1,764,000 |   |
| Year ended   2001      |   | 1,764,000                            |      | 8,392,000                             |   | 0                                |   | 8,392,000                                  |   | 1,764,000 |   |
| Year ended   2002      |   | 1,764,000                            |      | 7,087,000                             |   | 0                                |   | 6,770,000                                  |   | 2,081,000 |   |
|                        |        |                                      |           |                                       |        |                                  |        |                                            |        |  |  |  |  |  |  |  |

 

(b) Reports on Form 8-K

 

No reports on Form 8-Kwere filed during the three months ended December 31, 2002.

 

(c) Exhibits

 

The exhibits filed withthis Form 10-K are listed in the exhibit index located on page 17. 

 

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**REPORTOF INDEPENDENT AUDITORS**

** **

Board of Directors andShareholders 

Liberty Homes, Inc. 

Goshen, Indiana

 

We have audited theaccompanying consolidated balance sheets of Liberty Homes, Inc. andSubsidiaries as of December 31, 2002 and 2001 and for each of the three yearsin the period ended December 31, 2002, and have issued our report thereon datedFebruary 18, 2003 (which report is incorporated by reference in this Form10-K).  In the course of our audit ofsuch financial statements, we have also audited the schedule listed in Part IV,Item 15.(a).2.  This schedule is theresponsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

 

In our opinion, thisschedule presents fairly, in all material respects, when read in conjunctionwith the related consolidated financial statements, the information therein setforth.

 
|   |   | /s/ Crowe, Chizek and  Company LLP |   |
|--------|--------|------------------------------------|--------|
|   |   |                               |
|   |   | Crowe, Chizek and  Company LLP     |

 

Elkhart, Indiana February 18, 2003 

 

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**SIGNATURES**

 

Following therequirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. 

 
|           | **Liberty Homes, Inc.**                                                                   |
|----------------|-------------------------------------------------------------------------------------------|
|           | (Registrant)                                                                              |
|           |                                                                                      |
|           |                                                                                      |
| March 31, 2003 | By:                                                                                       |   /s/ Marc A. Dosmann |   |
|           | Marc A. Dosmann

Vice President – CFO

(Principal Financial  and Accounting Officer) |

 

Following therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated.  

 
| /s/ Edward J. Hussey      | President, Director,  Chairman of the Board of Directors       |
|---------------------------|----------------------------------------------------------------|
| Edward J. Hussey          | (Principal Executive  Officer)                                 |
|                      | March 31, 2003                                                 |
|                      |                                                           |
|                      |                                                           |
| /s/ Edward Joseph  Hussey | Director, Vice  President, Secretary & Assistant Treasurer |
| Edward Joseph Hussey      | March 31, 2003                                                 |
|                      |                                                           |
|                      |                                                           |
|                      |                                                           |
| /s/ Michael F. Hussey     | Director & Vice  President – Finance                  |
| Michael F. Hussey         | March 31, 2003                                                 |
|                      |                                                           |
|                      |                                                           |
| /s/ Mitchell Day          | Director                                                       |
| Mitchell Day              | March 31, 2003                                                 |

 

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**CERTIFICATION**

 

I, Edward J. Hussey,certify that:

 
| 1.     | I have reviewed this  annual report on Form 10-K of Liberty Homes, Inc.;                                                                                                                                                                                                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.     | Based on my knowledge,  this annual 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 annual report;                                                                  |
| 3.     | Based on my knowledge,  the financial statements, and other financial information included in this  annual report, fairly present in all material respects the financial  condition, results of operations and cash flows of the registrant as of, and  for, periods presented in this annual report;                                                                                         |
| 4.     | The registrant’s other  certifying officer 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 annual report is being prepared; |
|   | b.                                                                                                                                                                                                                                                                                                                                                                                            | evaluated the  effectiveness of the registrant’s disclosures controls and procedures as of a  date within 90 days prior to the filing date of this annual report (the  “Evaluation Date”); |
|   | c.                                                                                                                                                                                                                                                                                                                                                                                            | and presented in  this annual 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 officer 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; |
|   | b.                                                                                                                                                                                                                                                                                                                                                                                            | and 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 officer and I have indicated in this annual 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 weakness. |

 
| March 31, 2003 |   | /s/ Edward J. Hussey |
|----------------|--------|----------------------|
| Date           |   |                 | Edward J. Hussey,  President – Chief Executive Officer |

 

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**CERTIFICATION**

 

I, Marc A.Dosmann, certify that:

 
| 1.     | I have reviewed this  annual report on Form 10-Q of Liberty Homes, Inc.;                                                                                                                                                                                                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.     | Based on my knowledge,  this annual 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 annual report;                                                                  |
| 3.     | Based on my knowledge,  the financial statements, and other financial information included in this  annual report, fairly present in all material respects the financial  condition, results of operations and cash flows of the registrant as of, and  for, periods presented in this annual report;                                                                                         |
| 4.     | The registrant’s other  certifying officer 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:                                                                                                                                                              |
|   | d.                                                                                                                                                                                                                                                                                                                                                                                            | 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 annual report is being prepared; |
|   | e.                                                                                                                                                                                                                                                                                                                                                                                            | evaluated the  effectiveness of the registrant’s disclosures controls and procedures as of a  date within 90 days prior to the filing date of this annual report (the  “Evaluation Date”); and |
|   | f.                                                                                                                                                                                                                                                                                                                                                                                            | presented in this  annual 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 officer 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):                                                                                                                               |
|   | c                                                                                                                                                                                                                                                                                                                                                                                             | 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; |
|   | d.                                                                                                                                                                                                                                                                                                                                                                                            | and 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 officer and I have indicated in this annual 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 weakness. |

 
| March 31, 2003 |   | /s/ Marc A. Dosmann |
|----------------|--------|---------------------|
| Date           |   |                | Marc A. Dosmann, Vice  President – Chief Financial Officer |

 

16

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**EXHIBIT INDEX**

 
|   |                                                                                                                                                                                                                                                                                     |   | **Page** |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|
| 3(a)   | Articles of  Incorporation of the Company.

(File #0-5555, Form  10-K for the year ended December 31, 1984).                                                                                                                                                                             |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 3(b)   | Amendment to Articles  of Incorporation.

(File #0-5555, Form  10-Q for the quarter ended March 31, 1985, Exhibit 4).                                                                                                                                                                    |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 3(c)   | By-laws of the Company.

(File #0-5555, Form  10-K for the year ended December 31, 1987).                                                                                                                                                                                                |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 10(a)  | Employment Agreement  between the Company and Edward Joseph Hussey   dated September 14, 1993  (File #0-5555, Form 10-K for the year ended December 31, 1993).                                                                                                                           |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 10(b)  | Employment Agreement  between the Company and Michael F. Hussey dated  September 14, 1993   (File #0-5555, Form 10-K for the year ended December 31, 1993).                                                                                                                              |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 10(c)  | Split-Dollar Insurance  Plan effective June 11, 1993 between the Company and   Nancy A. Parrish and Michael F. Hussey, Trustees for the Edward Joseph   Hussey 1993 Irrevocable Trust 

(File #0-5555, Form  10-K for the year ended December 31, 1993).                                 |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 10(d)  | Split-Dollar Insurance  Plan effective June 11, 1993 between the Company and   Nancy A. Parrish and John P. Hussey, Trustees for the Michael F. Hussey 1993  Irrevocable Trust 

(File #0-55555,Form  10-K for the year ended December 31, 1993).                                        |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 13     | Annual Report to  Shareholders for 2002 

(Except for those  portions of this report which are expressly incorporated by reference in this  Form 10-K, the information contained in such 2002 Annual Report to Shareholders  is not deemed “filed” as part of this Form 10-K). |   | *        |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 21     | List of Subsidiaries                                                                                                                                                                                                                                                                     |   |     |
|   |                                                                                                                                                                                                                                                                                     |   |     |
| 99(1)  | Certification of Chief  Executive Officer and Chief Financial Officer pursuant   to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       |   |     |

 

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 * Incorporated by reference 

 

17

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