<PAGE>   1
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                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

                                    FORM 10-K

         FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                  SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
         For the fiscal year ended March 27, 1998

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                  SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
         For the transition period from ____ to ____

                         Commission File Number 0-24268

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

                             PALM HARBOR HOMES, INC.
             (Exact name of registrant as specified in its charter)

                  FLORIDA                                   59-1036634
      (State or other jurisdiction of                   (I.R.S. Employer 
       incorporation or organization)                   identification no.)

15303 DALLAS PARKWAY, SUITE 800, DALLAS, TEXAS                75248
  (Address of principal executive offices)                  (Zip Code)

       Registrant's telephone number, including area code: (972) 991-2422

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of Class)

         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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant as of May 22, 1998, was $289,737,320 based on
the closing price on that date of the Common Stock as quoted on the Nasdaq
National Market.

         As of May 22, 1998, 19,029,057 shares of the registrant's Common Stock
were issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Annual Report to Shareholders for the year
ended March 27, 1998, are incorporated by reference in Parts II and IV.

         Portions of the registrant's Proxy Statement relating to its Annual
Meeting of Shareholders to be held June 30, 1998 are incorporated by reference
in Part III.


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<PAGE>   2

         This report contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including, without limitation,
those regarding the growth and financing strategies of Palm Harbor Homes, Inc.
(the "Company"), projections of revenues, income or other financial items, the
effective implementation of the Company's business or growth strategy, the
adequacy of the Company's capital resources and other statements regarding
trends relating to the manufactured home industry, and various other items
involving known and unknown risks, uncertainties and other factors which may
cause the actual results, performance and achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include
political, economic or other factors such as inflation rates, recessionary or
expansive trends, taxes and regulations and laws affecting the business in each
of the Company's markets; demographic changes; competitive product, advertising,
promotional and pricing activity; raw material and labor costs and availability;
dependence on the rate of development and degree of acceptance of new product
introductions in the marketplace; relationships with customers or dealers; the
availability, terms and development of capital; changes in or failure to
identify or consummate successful acquisitions or to assimilate the operations
of any acquired businesses with those of the Company; the difficulty of
forecasting sales at certain times in certain markets; and government
regulation.

                                     PART I.

ITEM 1.    BUSINESS

GENERAL

         Palm Harbor Homes, Inc. (the "Company") is one of the largest producers
of multi-section manufactured homes in the United States. The Company's
operations are vertically integrated and encompass manufacturing, marketing,
financing and insurance. At March 27, 1998, the Company operated 16
manufacturing facilities that sell homes through retailers in 34 states
including approximately 300 independent retail sales centers and 94
Company-owned superstores.

         At March 27, 1998, the Company owned and operated 94 retail
superstores. The Company continued to take significant steps in fiscal year 1998
toward its plan to increase sales through Company-owned superstores. In fiscal
1998, the Company acquired 24 superstores in 8 states, 7 of such states, Nevada,
Colorado, Georgia, Utah, Arizona, Tennessee and Alabama, were states in which
the Company did not previously own retail superstores.

         Effective March 27, 1998, the Company purchased all of the outstanding
stock of Cannon Manufactured Housing Group, Inc., Cannon Mobile Homes, Inc.,
Pleasant Valley Mobile Homes, Inc., Countryside Mobile Homes, Inc., Cumberland
Homes, Inc., All Star Mobile Homes, Inc. and First Home Mortgage Corporation
(collectively, the "Cannon Companies"), adding 18 retail sales centers in
Georgia, Alabama and Tennessee to the Company's portfolio. All of the Cannon
Companies except First Home Mortgage Corporation have been merged into the
Company.

         Through its subsidiary, CountryPlace Mortgage, Ltd. ("CountryPlace"),
the Company offers installment financing to purchasers of manufactured homes
sold by Company-owned superstores. The Company believes that the ability to
finance its home sales will potentially provide it with an advantage over
certain of its competitors and create a source of additional earnings.

         Through its subsidiary, Standard Casualty Company, the Company writes
property and casualty insurance for owners of manufactured homes. Management of
the Company believes that having the internal capability to provide this type of
insurance complements the services of CountryPlace and will be additive to
earnings.

PRODUCTS

         The Company manufactures a variety of single and multi-section homes
under various brand names including Palm Harbor(R), Masterpiece, Keystone, River
Bend and Windsor Homes(TM). Palm Harbor offers over 150 floor plans and
approximately 82% of the homes produced by the Company are structurally or
decoratively customized to the home buyer's specifications. Although the Company
produces a wide retail price range of homes, the average retail price (excluding
land) of the Company's homes is approximately $55,000 and approximately 81% of
the Company's homes are multi-section.

         A typical home built by the Company contains two to five bedrooms, a
living room, family room, dining room, kitchen, two or three bathrooms and
features central heating, a range, refrigerator, carpeting and drapes. In
addition, the Company offers optional amenities, including dishwashers, washers,
dryers, furniture packages and cabinets, as well as a wide range of colors,
moldings and finishes. The Company has also attempted to broaden its base of
potential customers by offering optional features



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associated with site-built homes such as stone fireplaces, sky lights, vaulted
ceilings and whirlpool baths. The Company also offers a unique package of energy
saving construction features referred to as "EnerGmiser" which includes, among
other things, additional insulation to reduce heating and cooling costs, and
which exceeds statutorily-mandated energy efficiency levels.

         The Company's homes are designed and copyrighted after extensive field
research and consumer feedback. The Company has developed engineering systems
which, through the use of computer - aided technology, permit customization of
homes and assist with product development and enhancement.

MANUFACTURING OPERATIONS

         The Company's homes are currently manufactured at 16 facilities located
in Alabama, Arizona, Florida, Georgia, North Carolina, Ohio, Oregon and Texas. A
typical Company manufacturing facility has approximately 100,000 square feet of
floor space, and employs approximately 225 associates.

         The Company's facilities generally operate on a one shift per day, five
days per week basis, and the Company currently manufactures a typical home in
approximately three to five days. The Company's facilities have the capacity to
produce an aggregate of approximately 153 sections per day. The current rate of
production is 109 sections per day.

         The following table sets forth the total sections produced and homes
sold, as well as the number of manufacturing facilities operated by the Company,
for the fiscal years indicated:

<TABLE>
<CAPTION>
                                           1994           1995           1996           1997           1998
                                        ----------     ----------     ----------     ----------     ----------
<S>                                     <C>            <C>            <C>            <C>            <C>  
Homes sold:
   Single-section .................          1,327          1,474          2,192          2,781          2,687
   Multi-section ..................          6,661          8,723          9,983         11,092         11,457
                                        ----------     ----------     ----------     ----------     ----------
Total homes sold ..................          7,988         10,197         12,175         13,873         14,144
                                        ==========     ==========     ==========     ==========     ==========


Sections produced .................         14,815         19,163         22,049         24,545         26,014
Manufacturing facilities
   (at end of fiscal year) ........             12             13             14             15             16
</TABLE>

         The Company's homes are constructed at the Company's manufacturing
facilities. Typically, independent trucking companies transport finished homes
to the retail sales center. Retailers or other independent installers are
responsible for placing the home on site and making utility hook-ups. The
industry practice is to have third parties provide the installation and
finish-out services. The Company believes that its factory finish-out program
ensures that Palm Harbor quality is applied to the entire process, lessens
customer concerns, strengthens the Company's relationship with its retailers and
provides the Company an advantage over many of its competitors.

         The Company's backlog of orders as of May 29, 1998 was approximately
$26 million, as compared to approximately $20 million as of May 30, 1997. Since
retailers may cancel orders prior to production without penalty, the Company
does not consider its order backlog to be firm orders; however, such
cancellations rarely occur. Because of the seasonality of the housing market,
the level of backlog generally declines during the winter months.

         The principal materials used in the production of the Company's homes
include wood, wood products, gypsum wallboard, steel, fiberglass insulation,
carpet, vinyl, fasteners, appliances, electrical items, windows and doors. The
Company believes that the materials used in the production of its homes are
readily available at competitive prices from a wide variety of suppliers. Three
suppliers, which accounted for more than 5% of the Company's total purchases
during the Company's fiscal year ended March 27, 1998, represented approximately
10.3%, 5.7% and 5.3%, respectively, of total purchases during such fiscal year.
Accordingly, the Company does not believe that the loss of any single supplier
would have a material adverse effect on its business.

RETAIL OPERATIONS

         The Company's homes are sold through a distribution network consisting
of (i) superstores owned by the Company; and (ii) independent retailers. The
following table sets forth the number of homes sold by the Company through each
of these



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distribution channels, as well as the number of superstores and retail sales
centers in each channel, during the past three fiscal years:

<TABLE>
<CAPTION>
                                         March 29,      March 28,      March 27,
                                           1996           1997           1998
                                        ----------     ----------     ----------
<S>                                     <C>            <C>            <C>
Homes sold by retailers:

Company-owned .....................          1,055          5,211          7,696 (1)
Independent .......................         11,120          8,662          6,448
                                           -------        -------        -------
                  Total ...........         12,175         13,873         14,144
                                           =======        =======        =======
Number of sales centers:                                                 
                                                                         
Company- owned ....................             16             54             94
Independent .......................            628            600            300
                                           -------        -------        -------
                  Total ...........            644            654            394
                                           =======        =======        =======
</TABLE>                                                  

         (1) Excludes homes sold through the 18 superstores which were acquired
at the close of business in fiscal 1998.

         The Company originally established wholly-owned superstores in 1992,
and currently has 94 superstores in Alabama, Colorado, Florida, Georgia,
Indiana, Louisiana, Nevada, New Mexico, North Carolina, Ohio, Oregon, South
Carolina, Utah, Arizona, Tennessee, Texas and Washington. The Company plans to
add 10 to 15 retail superstores in fiscal 1999.

         The Company's independent retailer network principally consists of
local retailers, developers that market land/home packages and developers of
retirement lifestyle communities. No single independent retailer accounted for
5% or more of the Company's net sales during fiscal 1998. The Company provides
comprehensive sales training to its retail sales associates and brings them to
the manufacturing facilities for product training and to view new product
designs as they are developed. These training seminars, known as "Palm Harbor
University," facilitate the sale of the Company's homes by increasing the skill
and knowledge of the retail sales consultants. In addition, the Company displays
its products in trade shows and supports its retailers through the distribution
of floor plan literature, brochures, decor boards, banners and videos.

MARKETS SERVED

          Management believes that the Company's broad geographic presence
lessens the impact of adverse economic trends specific to any one region, while
at the same time enabling the Company to capitalize on favorable regional
economic trends. During the fiscal year ended March 27, 1998, the percentage of
the Company's revenues by region was as follows:

<TABLE>
<CAPTION>
                                                                                               PERCENTAGE OF
REGION                                         PRIMARY STATES                                REVENUE BY REGION
------                 ----------------------------------------------------------            -----------------
<S>                    <C>                                                                   <C>
Southeast              Florida, North Carolina, Alabama, Georgia, South Carolina,
                       Mississippi, Tennessee, Virginia                                              44.0%
Central                Texas, Oklahoma, Louisiana, Arkansas, Kansas                                  28.0
West                   New Mexico, Arizona, Colorado, Oregon, Washington, Idaho,
                       Montana, Nevada, Utah, California                                             22.0
Midwest                Ohio, Michigan, Indiana, Kentucky, West Virginia, Illinois                     6.0
                                                                                                   ------
                                                                                                    100.0%
                                                                                                   ======
</TABLE>

         Manufactured housing is a regional business and the primary geographic
market for a typical manufacturing facility is within a 250-mile radius. Each of
the Company's manufacturing facilities typically serves 20 to 65 retailers, and
the facility sales staff maintains personal contact with each retailer, whether
Company owned or independent. The Company's decentralized operations allow it to
be more responsive to retailers' concerns with respect to leadership in product
innovation, local home design and customer satisfaction.

CONSUMER FINANCING

         Historically, the Company has facilitated retail sales of its homes by
maintaining relationships with conventional lenders. While the Company intends
to maintain its relationships with conventional lenders, it believes that the
ability to provide financing



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to its customers on competitive terms will not only improve its responsiveness
to the financing needs of prospective purchasers, but will also provide an
additional source of earnings for the Company. The Company offers through
CountryPlace a variety of financing options, including customary retail
installment sales contracts, land in lieu of down payment and land/home
financing to best suit the needs of its retail customers. Financing services by
CountryPlace are currently being offered through Company-owned or affiliated
superstores.

         Loan applications originate at the superstore and are forwarded to
CountryPlace for final credit approval. CountryPlace then assigns the approved
loan contracts to one of two national consumer finance companies. CountryPlace
and the national consumer finance companies share on a predetermined basis the
interest income and losses resulting from the majority of the loans unless the
loan is also secured by the related land, whereby the national consumer finance
companies assume all losses.

         Retail installment loans assigned by CountryPlace are serviced and
administered by the national consumer finance companies. CountryPlace's share of
the interest income is, in part, in consideration for the following services
provided by CountryPlace: (i) contract origination services, including the
training of retailers with respect to the loan evaluation process; (ii) receipt
and processing of the retail installment sale contracts; (iii) collection
assistance with delinquent accounts, upon the request of the finance company;
and (iv) repossession assistance.

RETAILER INVENTORY FINANCING

         In accordance with manufactured housing industry practice,
substantially all retailers finance all or a portion of their purchases of
manufactured homes through wholesale "floor plan" financing arrangements. Under
a typical floor plan financing arrangement, a financial institution provides the
retailer with a loan for the purchase price of the home and maintains a security
interest in the home as collateral. The financial institution which provides
financing to the retailer 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 retailer and under certain other
circumstances, to repurchase the financed home at declining prices over the term
of the repurchase agreement (which generally ranges from 12 to 18 months). The
price at which the Company may be obligated to repurchase a home under these
agreements is based upon the Company's original invoice price plus certain
administrative and shipping expenses. The Company's obligation under these
repurchase agreements ceases upon the purchase of the home by the retail
customer.

         The risk of loss under such repurchase agreements is mitigated by the
fact that (I) a majority of the homes sold by the Company to independent
retailers are pre-sold to specific retail customers; (ii) the Company monitors
each retailer's inventory position on a regular basis; (iii) sales of the
Company's manufactured homes are spread over a large number of retailers, (iv)
none of the Company's independent retailers accounted for more than 5% of the
Company's net sales in fiscal 1998; (v) the price the Company is obligated to
pay declines over time; and (vi) the Company is, in most cases, able to resell
homes repurchased from credit sources in the ordinary course of business without
incurring significant losses. The Company estimates that its potential
obligations under such repurchase agreements was approximately $65 million as of
March 27, 1998. During the fiscal years ended March 29, 1996, March 28, 1997 and
March 27, 1998, net (income)/expenses incurred by the Company under these
repurchase agreements totaled ($3,000), $55,000 and ($13,000), respectively.

COMPETITION

         The manufactured housing industry is highly competitive at both the
manufacturing and retail levels, with competition based upon several factors,
including price, product features, reputation for service and quality, depth of
field inventory, promotion, merchandising and the terms of retail customer
financing. In addition, manufactured homes compete with new and existing
site-built homes, as well as apartments, town houses and condominiums. The
Company does not view any of its competitors as being dominant in the industry,
although some of the Company's competitors possess substantially greater
financial (including captive retail financing), manufacturing, distribution and
marketing resources than the Company. While the Company believes mortgage and
personal property financing have generally become more available to the
manufactured housing industry in recent years, a contraction in consumer credit
could provide an advantage to those competitors with substantial capital
resources.

GOVERNMENT REGULATION

         The Company's manufactured homes are subject to a number of federal,
state and local laws, codes and regulations. Construction of manufactured
housing is governed by the National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended (the "Home Construction Act"). In 1976, HUD
issued regulations under the Home Construction Act



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establishing comprehensive national construction standards. The HUD regulations,
known collectively as the Federal Manufactured Home Construction and Safety
Standards, cover all aspects of manufactured home construction, including
structural integrity, fire safety, wind loads, thermal protection and
ventilation. Such regulations preempt conflicting state and local regulations on
such matters, and are subject to continual change. The Company's manufacturing
facilities and the plans and specifications of its manufactured homes have been
approved by a HUD-certified inspection agency. Further, an independent
HUD-certified third-party inspector regularly reviews the Company's manufactured
homes for compliance with the HUD regulations during construction. Failure to
comply with applicable HUD regulations could expose the Company to a wide
variety of sanctions, including mandated closings of Company manufacturing
facilities. The Company believes its manufactured homes meet or surpass all
present HUD requirements.

         Manufactured and site-built homes are all typically built with paneling
and other products that contain formaldehyde resins. Since February 1985, HUD
has regulated the allowable concentrations of formaldehyde in certain products
used in manufactured homes and requires manufacturers to warn purchasers as to
formaldehyde-associated risks. The Environmental Protection Agency (the "EPA")
and other governmental agencies have in the past evaluated the effects of
formaldehyde. The Company uses materials in its manufactured homes that meet HUD
standards for formaldehyde emissions and believes it otherwise complies with HUD
and other applicable government regulations in this regard.

         The transportation of manufactured homes on highways is subject to
regulation by various federal, state and local authorities. Such regulations may
prescribe size and road use limitations and impose lower than normal speed
limits and various other requirements.

         The Company's manufactured homes are subject to local zoning and
housing regulations. In certain cities and counties in areas where the Company's
homes are sold, local governmental ordinances and regulations have been enacted
which restrict the placement of manufactured homes on privately-owned land or
which require the placement of manufactured homes in manufactured home
communities. Such ordinances and regulations may adversely affect the Company's
ability to sell homes for installation in communities where they are in effect.
A number of states have adopted procedures governing the installation of
manufactured homes. Utility connections are subject to state and local
regulation, and must be complied with by the retailer or other person installing
the home.

         The Company is subject to the Magnuson-Moss Warranty Federal Trade
Commission Improvement Act, which regulates the descriptions of warranties on
products. The description and substance of the Company's warranties are also
subject to a variety of state laws and regulations. A number of states require
manufactured home producers to post bonds to ensure the satisfaction of consumer
warranty claims.

         A variety of laws affect the financing of manufactured homes by the
Company. The Federal Consumer Credit Protection Act (Truth-in-Lending) and
Regulation Z promulgated thereunder require written disclosure of information
relating to such financing, including the amount of the annual percentage rate
and the finance charge. The Federal Fair Credit Reporting Act also requires
certain disclosures to potential customers concerning credit information used as
a basis to deny credit. The Federal Equal Credit Opportunity Act and Regulation
B promulgated thereunder prohibit discrimination against any credit applicant
based on certain specified grounds. The Real Estate Settlement Procedures Act
and Regulation X promulgated thereunder require certain disclosures regarding
the nature and costs of real estate settlements. The Federal Trade Commission
has adopted or proposed various Trade Regulation Rules dealing with unfair
credit and collection practices and the preservation of consumers' claims and
defenses. Installment sales contracts eligible for inclusion in a Government
National Mortgage Association program are subject to the credit underwriting
requirements of the Federal Housing Association. A variety of state laws also
regulate the form of the installment sale contracts or financing documents and
the allowable deposits, finance charge and fees chargeable pursuant to
installment sale contracts or financing documents. The sale of insurance
products by the Company is subject to various state insurance laws and
regulations which govern allowable charges and other insurance practices.

         The Company's operations are also subject to federal, state and local
laws and regulations relating to the generation, storage, handling, emission,
transportation and discharge of materials into the environment. Governmental
authorities have the power to enforce compliance with their regulations, and
violations may result in the payment of fines, the entry of injunctions or both.
The requirements of such laws and enforcement policies have generally become
more strict in recent years. Accordingly, the Company is unable to predict the
ultimate cost of compliance with environmental laws and enforcement policies.
See "Item 3. Legal Proceedings."




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<PAGE>   7

ASSOCIATES

         As of March 27, 1998, the Company had approximately 4,700 associates.
All of the Company's associates are non-union. The Company has not experienced
any labor-related work stoppages, and believes that its relationship with its
associates is good.

ITEM 2.  PROPERTIES

         The Company's homes are currently manufactured at 16 facilities in 8
states. The Company owns substantially all of its machinery and equipment. The
Company believes its facilities are adequately maintained and suitable for the
purposes for which they are used. The following table sets forth certain
information with respect to the Company's manufacturing facilities:

<TABLE>
<CAPTION>
                                                        COMMENCEMENT                                     APPROXIMATE
       STATE                    CITY                   OF PRODUCTION          OWNED/LEASED               SQUARE FEET
       -----                    ----                   -------------          ------------               -----------
<S>                         <C>                      <C>                        <C>                       <C>
      Alabama                   Boaz                   December 1986              Leased                     97,683
                                                       January 1993               Leased                     75,164

      Arizona                   Tempe                  January 1978                Owned                    103,500
                             Casa Grande                 July 1997                 Owned                     90,000

      Florida                Plant City               September 1981               Owned                     93,600
                                                         June 1985                 Owned                     87,200

      Georgia                 LaGrange                  August 1996                Owned                    200,000

   North Carolina             Albemarle                January 1994                Owned                    112,700
                             Siler City                January 1988                Owned                     91,200
                                                         July 1996                Leased                     40,000

        Ohio                   Sabina                  January 1988                Owned                     85,000

       Oregon                Millersburg                April 1995                 Owned                    168,650

        Texas                  Austin                  January 1981                Owned                    103,800
                                                        April 1992                 Owned                     77,000
                              Burleson                   June 1993                 Owned                     94,300
                             Fort Worth                 April 1993                 Owned                    121,300
                                Buda                   November 1994               Owned                     88,275
</TABLE>

         In addition to its production facilities, the Company owns certain
properties upon which 22 of its retail superstores are located. The Company also
leases approximately 24,000 square feet of office space in Dallas, Texas as its
corporate headquarters. The Company's corporate headquarters lease expires in
2003.

ITEM 3.  LEGAL PROCEEDINGS

         Except as described below, the Company is currently not subject to any
pending or threatened litigation, other than routine litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the business, financial condition or results of operations of
the Company.

         In December 1997, the Company acquired Sun City Homes, Inc. from James
and Ramona Green through a stock purchase. Subsequent to the acquisition, the
Company discovered certain material information that was not disclosed to the
Company in connection with the stock purchase transaction. On April 16, 1998,
the Company filed suit against James and Ramona Green in District Court, Clark
County, Nevada, for rescission, damages and injunctive relief based on claims of
breach of representations and warranties, fraudulent inducement, fraud and
unjust enrichment. On April 20, 1998, James and Ramona Green



                                        6
<PAGE>   8

filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the
District of Nevada. On April 28, 1998, the Company removed its Nevada state
court action to federal bankruptcy court as an adversary proceeding. The case is
now in the early stages of discovery and pretrial preparation.

         In late 1992, the Company removed an underground storage tank formerly
used to store gasoline from the site of its Tempe, Arizona manufacturing
facility. The Company is currently working in cooperation with the Arizona
Department of Environmental Quality to assess and respond to gasoline related
hydrocarbons detected in soil and groundwater at this site. Under certain
circumstances, a state fund may be available to compensate responsible parties
for petroleum releases from underground storage tanks. The Company is evaluating
the extent of the corrective action that may be necessary. Site characterization
is complicated by virtue of the presence of contaminants associated with the
Indian Bend Wash Area Superfund Site described below. At this time, the Company
does not expect that the costs of any corrective action or assessments related
to the tank will have a material adverse effect on its results of operations or
financial condition.

         The Company's Tempe facility is partially located within a large area
that has been identified by the Environmental Protection Agency ("EPA") as the
Indian Bend Wash Area Superfund Site (the "Indian Bend Superfund Site"). Under
federal law, certain persons known as potentially responsible parties ("PRPs")
may be held strictly liable on a joint and several basis for all cleanup costs
and natural resource damages associated with the release of hazardous substances
from a facility. The average cost to clean up a site listed on the National
Priorities List is over $30 million. The Indian Bend Superfund Site is listed on
the National Priorities List. Groups of PRPs may include current owners and
operators of a facility, owners and operators of a facility at the time of
disposal of hazardous substances, transporters of hazardous substance and those
who arrange for the treatment or disposal of hazardous substances at a site. No
government agency, including the EPA, has indicated that the Company has been or
will be named as a PRP or that it is otherwise responsible for the contamination
present at the Indian Bend Superfund Site. In general, although no assurance can
be given as to the future actions of either the EPA or PRPs who may incur
cleanup costs related to this site, the Company does not believe that its
ownership of property partially located within the Indian Bend Superfund Site
will have a material adverse effect on its results of operations or financial
condition.

         In 1994, the Company removed two underground storage tanks used to
store petroleum substances from property it owns in Georgia. The Company is
currently working in cooperation with the Georgia Department of Natural
Resources to assess and respond to petroleum related hydrocarbons detected in
soil and groundwater at this site, and to evaluate the extent of corrective
action that may be necessary. At this time, the Company does not expect that the
costs of future assessment and corrective action related to the tanks will have
a material adverse effect on its results of operations or financial condition.

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

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


                                    PART II.

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

         The Company's Common Stock has been traded on the Nasdaq National
Market under the symbol "PHHM" since July 31, 1995, the date on which the
Company completed its initial public offering. The following table sets forth,
for the period indicated, the high and low sales information per share of the
Common Stock as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
FISCAL 1998                                                             HIGH            LOW
-----------                                                             ----            ---
<S>                                                                    <C>            <C>   
First Quarter.................................................         $26.40         $17.00
Second Quarter(1).............................................          30.00          24.80
Third Quarter.................................................          30.50          24.75
Fourth Quarter................................................          38.38          27.75
</TABLE>




                                        7
<PAGE>   9

<TABLE>
<CAPTION>
FISCAL 1997                                                             HIGH            LOW
-----------                                                             ----            ---
<S>                                                                    <C>            <C>   
First Quarter.................................................          $21.28        $15.36
Second Quarter(2).............................................           25.20         19.52
Third Quarter.................................................           24.60         20.20
Fourth Quarter................................................           22.40         17.60
</TABLE>

-----------

(1)      On June 24, 1997, the Board of Directors of the Company declared a 5-4
         stock split effected in the form of a 25% stock dividend to
         shareholders of record on July 8, 1997. The stock dividend was paid on
         July 21, 1997.

(2)      On July 12, 1996, the Board of Directors of the Company declared a
         5-for-4 stock split effected in the form of a 25% stock dividend to
         shareholders of record on July 26, 1996. The stock dividend was paid on
         August 2, 1996.

         On May 22, 1998, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market was $40. As of May 22, 1998, there were
approximately 1,581 record holders of the Common Stock, and approximately 3,900
holders of the Common Stock overall based on an estimate of the number of
individual participants represented by security position listings.

         The Company has never paid cash dividends on its Common Stock. The
Board of Directors intends to retain any future earnings generated by the
Company to support operations and to finance expansion and does not intend to
pay cash dividends on the Common Stock for the foreseeable future. The payment
of cash dividends in the future will be at the discretion of the Board of
Directors and will depend upon factors such as the Company's earnings levels,
capital requirements, financial condition and other factors deemed relevant by
the Board of Directors. Future loan agreements may restrict or prohibit the
payment of dividends.

         In connection with the acquisition of the Cannon Companies, the Company
issued 157,975 shares to Thomas Cannon and Alice Cannon. The issuance of Common
Stock is claimed to be exempt from registration under the Securities Act of
1933, as amended, by virtue of the provisions of Section 4(2) of that Act.

ITEM 6.  SELECTED FINANCIAL DATA

         Information with respect to this Item 6 is incorporated herein by
reference from page 9 of the Company's Annual Report to Shareholders for the
year ended March 27, 1998, such page being filed as Exhibit 13.1 hereto.

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

         Information with respect to this Item 7 is incorporated herein by
reference from pages 10 through 13 of the Company's Annual Report to
Shareholders for the year ended March 27, 1998, such pages being filed as
Exhibit 13.1 hereto.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's financial statements for the fiscal year ended March 27,
1998 are listed in the accompanying Index to Consolidated Financial Statements
at page F-1 and are incorporated by reference from pages 14 through 26 of the
Company's Annual Report to Shareholders for the year ended March 27, 1998, such
pages being filed as Exhibit 13.1 hereto.

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

         None.




                                        8
<PAGE>   10

                                    PART III.

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         (a) Information with respect to the Company's Board of Directors and
executive officers is incorporated by reference from pages 2 through 5 of the
Company's definitive Proxy Statement filed with the Securities and Exchange
Commission on June 5, 1998 in connection with the Annual Meeting of Shareholders
to be held June 30, 1998.

         (b) Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the
Company's most recent fiscal year and Form 5 and amendments thereto furnished to
the Company with respect to its most recent fiscal year, no person who, at any
time during the most recent fiscal year was a director, officer, beneficial
owner of more than 10% of any class of equity securities of the Company
registered pursuant to Section 12 of the Exchange Act, or any other person
subject to Section 16 of the Exchange Act failed to file on a timely basis,
reports required by Section 16(a) of the Exchange Act during the most recent
fiscal year.


ITEM 11.     EXECUTIVE COMPENSATION

         Information with respect to executive compensation is incorporated by
reference from pages 3 through 7 of the Company's definitive Proxy Statement
filed June 5, 1998 in connection with the Annual Meeting of Shareholders to be
held June 30, 1998.                  


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information with respect to security ownership of certain beneficial
owners and management is incorporated by reference from pages 8 and 9 of the 
Company's definitive Proxy Statement filed June 5, 1998 in connection with the
Annual Meeting of Shareholders to be held June 30, 1998.


ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information with respect to certain relationships and related
transactions is incorporated by reference from pages 7 and 8 of the Company's
definitive Proxy Statement filed June 5, 1998 in connection with the Annual
Meeting of Shareholders to be held June 30, 1998.


                                    PART IV.

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

         (a) (1)      Financial Statements

             The Company's financial statements for the fiscal year ended March
27, 1998 are listed in the accompanying Index to Consolidated Financial
Statements at page F-1 and are incorporated herein by reference from pages 14
through 26 of the Company's Annual Report to Shareholders for the year ended
March 27, 1998.

             (2)      Financial Statement Schedules

                      None

             (3)      Index to Exhibits





                                        9
<PAGE>   11

<TABLE>
<CAPTION>
   Exhibit
     No.       Description
   -------     -----------
<S>            <C>
     2.1       Agreement and Plan of Merger, dated as of June 30, 1996, by and
               among Palm Harbor Homes, Inc., Newco Homes, Inc., Scott W.
               Chaney, Christopher M. Finke, Thomas B. Kesterson and Joseph H.
               Kesterson (Incorporated by reference to Exhibit 2.1 to the
               Registrant's Current Report on Form 8-K dated August 1, 1996
               (File No. 0-24268))

     2.2       Amendment No. 1 to Agreement and Plan of Merger, dated August 1,
               1996 (Incorporated by reference to Exhibit 2.2 to the
               Registrant's Current Report on Form 8-K dated August 1, 1996
               (File No. 0-24268))

     2.3       Stock Purchase Agreement dated February 9, 1998, by and among
               Palm Harbor Homes, Inc., Cannon Manufactured Housing Group, Inc.,
               Cannon Mobile Homes, Inc., Pleasant Valley Mobile Homes, Inc.,
               Countryside Mobile Homes, Inc., Cumberland Homes, Inc., All Star
               Mobile Homes, Inc., First Home Mortgage Corporation, Thomas G.
               Cannon, Dale F. Cannon, Jack H. Coffey, John G. Blake, Todd R.
               Cannon and the Estate of Grover R. Cannon (Incorporated by
               reference to Exhibit 2.1 to the Registrant's Current Report on
               Form 8-K dated February 9, 1998 (File No. 000-24268))

     2.4       Amendment Number 1 to Stock Purchase Agreement dated March 7,
               1998, by and among Palm Harbor Homes, Inc., Cannon Manufactured
               Housing Group, Inc., Cannon Mobile Homes, Inc., Pleasant Valley
               Mobile Homes, Inc., Countryside Mobile Homes, Inc., Cumberland
               Homes, Inc., All Star Mobile Homes, Inc., First Home Mortgage
               Corporation, Thomas G. Cannon, Dale F. Cannon, Jack H. Coffey,
               John G. Blake, Todd R. Cannon and the Estate of Grover R. Cannon
               (Incorporated by reference to Exhibit 2.2 to the Registrant's
               Current Report on Form 8-K dated April 7, 1998 (File No.
               000-24268))

     3.1       Amended and Restated Articles of Incorporation (Incorporated by
               reference to Exhibit 3.1 to the Registrant's Registration
               Statement on Form S-1, Registration No. 33-79164)

     3.2       Articles of Amendment (Incorporated by reference to Exhibit 3.2
               to the Registrant's Registration Statement on Form S-1,
               Registration No. 33-79164)

     3.3       Restated Bylaws (Incorporated by reference to Exhibit 3.3 to the
               Registrant's Registration Statement on Form S-1, Registration No.
               33-79164)

     4.1       Form of Common Stock Certificate (Incorporated by reference to
               Exhibit 4.1 to the Registrant's Registration Statement on Form
               S-1, Registration No. 33-79164)

    10.1       Associate Stock Purchase Plan (Incorporated by reference to
               Exhibit 10.2 to the Registrant's Registration Statement on Form
               S-1, No. 33-97676)

    10.2       Form of Indemnification Agreement between the Company and each of
               its directors and certain officers (Incorporated by reference to
               Exhibit 10.4 to the Registrant's Registration Statement on Form
               S-1, Registration No. 33-79164)

    10.3       Compensation Agreement between the Company and Lee Posey
               (Incorporated by reference to Exhibit 10.7 to the Registrant's
               Registration Statement on Form S-1, Registration No. 33- 79164)

    10.4       Amendment to Compensation Agreement between the Company and Lee
               Posey (Incorporated by reference to Exhibit 10.6 to the
               Registrant's Registration Statement on Form S-1, No. 33-97676)

   *13.1       Selected pages of the Company's Annual Report to Shareholders for
               the year ended March 27, 1998

   *21.1       List of Subsidiaries

   *23.1       Consent of Ernst & Young LLP

    24.1       Power of Attorney (included on the signature page of the Report)

   *27.1       Financial Data Schedule [Filed in electronic format only]
</TABLE>

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

* Filed herewith

         (b) The following reports on Form 8-K were filed during the last
quarter of the period covered by this Annual Report on Form 10-K, all of which
were filed to report the acquisition of the Cannon Companies:

             (i)  Form 8-K, filed with the Securities and Exchange Commission on
                  February 13, 1998; and

             (ii) Form 8-K, filed with the Securities and Exchange Commission on
                  April 9, 1998.

         (c) See Item 14(a)(3) above.

         (d) None.


                                       10
<PAGE>   12

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized on June 10, 1998.

                                        PALM HARBOR HOMES, INC.


                                        /s/ Lee Posey
                                        ---------------------------------------
                                        Lee Posey, Chairman of the Board

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

         KNOW ALL MEN BY THESE PRESENTS, that the undersigned do hereby
constitute and appoint Lee Posey and Kelly Tacke, and each of them, each with
full power to act without the other, his true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to the annual report on Form 10-K for the year ended March 27, 1998
of Palm Harbor Homes, Inc., and to file the same, with any and all exhibits
thereto, and all other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all of each of said
attorneys-in-fact and agents or any of them may lawfully do or cause to be done
by virtue thereof.

<TABLE>
<CAPTION>
             SIGNATURES                                  TITLE                              DATE
             ----------                                  -----                              ----
<S>                                      <C>                                           <C>
/s/ Lee Posey                            Chairman of the Board and Director            June 10, 1998
----------------------------------       (Principal Executive Officer)
Lee Posey                                

/s/ Larry Keener                         Chief Executive Officer, President and        June 10, 1998
----------------------------------       Director
Larry Keener                             

/s/ Scott W. Chaney                      Executive Vice President and Director         June 10, 1998
----------------------------------
Scott W. Chaney

/s/ Kelly Tacke                          Vice President-Finance, Chief Financial       June 10, 1998
----------------------------------       Officer and Secretary  (Principal Financial
Kelly Tacke                              and Accounting Officer)

/s/ William R. Thomas                    Director                                      June 10, 1998
----------------------------------
William R. Thomas

/s/ Walter D. Rosenberg, Jr.             Director                                      June 10, 1998
----------------------------------
Walter D. Rosenberg, Jr.

/s/ Frederick R. Meyer                   Director                                      June 10, 1998
----------------------------------
Frederick R. Meyer

/s/ John H. Wilson                       Director                                      June 10, 1998
----------------------------------
John H. Wilson

/s/ A. Gary  Shilling                    Director                                      June 10, 1998
----------------------------------
A. Gary Shilling
</TABLE>





                                       11
<PAGE>   13

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         The following financial statements of the Company and its subsidiaries
required to be included in Item 14(a)(1) are listed below:

PALM HARBOR HOMES, INC. AND SUBSIDIARIES

Consolidated Financial Statements (incorporated by reference under Item 8 of
Part II from pages 14 through 26 of the Company's Annual Report to Shareholders
for the year ended March 27, 1998):

         Consolidated Balance Sheets as of  March 28, 1997 and March 27, 1998

         Consolidated Statements of Income for the years ended March 29, 1996,
                March 28, 1997 and March 27, 1998 

         Consolidated Statements of Shareholders' Equity for the years ended
                March 29, 1996, March 28, 1997 and March 27, 1998 

         Consolidated Statements of Cash Flows for the years ended
                March 29, 1996, March 28, 1997 and March 27, 1998

         Notes to  Consolidated Financial Statements

         Report of Independent Auditors






                                       F-1
<PAGE>   14

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
   Exhibit
     No.       Description
   -------     -----------
<S>            <C>
     2.1       Agreement and Plan of Merger, dated as of June 30, 1996, by and
               among Palm Harbor Homes, Inc., Newco Homes, Inc., Scott W.
               Chaney, Christopher M. Finke, Thomas B. Kesterson and Joseph H.
               Kesterson (Incorporated by reference to Exhibit 2.1 to the
               Registrant's Current Report on Form 8-K dated August 1, 1996
               (File No. 0-24268))

     2.2       Amendment No. 1 to Agreement and Plan of Merger, dated August 1,
               1996 (Incorporated by reference to Exhibit 2.2 to the
               Registrant's Current Report on Form 8-K dated August 1, 1996
               (File No. 0-24268))

     2.3       Stock Purchase Agreement dated February 9, 1998, by and among
               Palm Harbor Homes, Inc., Cannon Manufactured Housing Group, Inc.,
               Cannon Mobile Homes, Inc., Pleasant Valley Mobile Homes, Inc.,
               Countryside Mobile Homes, Inc., Cumberland Homes, Inc., All Star
               Mobile Homes, Inc., First Home Mortgage Corporation, Thomas G.
               Cannon, Dale F. Cannon, Jack H. Coffey, John G. Blake, Todd R.
               Cannon and the Estate of Grover R. Cannon (Incorporated by
               reference to Exhibit 2.1 to the Registrant's Current Report on
               Form 8-K dated February 9, 1998 (File No. 000-24268))

     2.4       Amendment Number 1 to Stock Purchase Agreement dated March 7,
               1998, by and among Palm Harbor Homes, Inc., Cannon Manufactured
               Housing Group, Inc., Cannon Mobile Homes, Inc., Pleasant Valley
               Mobile Homes, Inc., Countryside Mobile Homes, Inc., Cumberland
               Homes, Inc., All Star Mobile Homes, Inc., First Home Mortgage
               Corporation, Thomas G. Cannon, Dale F. Cannon, Jack H. Coffey,
               John G. Blake, Todd R. Cannon and the Estate of Grover R. Cannon
               (Incorporated by reference to Exhibit 2.2 to the Registrant's
               Current Report on Form 8-K dated April 7, 1998 (File No.
               000-24268))

     3.1       Amended and Restated Articles of Incorporation (Incorporated by
               reference to Exhibit 3.1 to the Registrant's Registration
               Statement on Form S-1, Registration No. 33-79164)

     3.2       Articles of Amendment (Incorporated by reference to Exhibit 3.2
               to the Registrant's Registration Statement on Form S-1,
               Registration No. 33-79164)

     3.3       Restated Bylaws (Incorporated by reference to Exhibit 3.3 to the
               Registrant's Registration Statement on Form S-1, Registration No.
               33-79164)

     4.1       Form of Common Stock Certificate (Incorporated by reference to
               Exhibit 4.1 to the Registrant's Registration Statement on Form
               S-1, Registration No. 33-79164)

    10.1       Associate Stock Purchase Plan (Incorporated by reference to
               Exhibit 10.2 to the Registrant's Registration Statement on Form
               S-1, No. 33-97676)

    10.2       Form of Indemnification Agreement between the Company and each of
               its directors and certain officers (Incorporated by reference to
               Exhibit 10.4 to the Registrant's Registration Statement on Form
               S-1, Registration No. 33-79164)

    10.3       Compensation Agreement between the Company and Lee Posey
               (Incorporated by reference to Exhibit 10.7 to the Registrant's
               Registration Statement on Form S-1, Registration No. 33- 79164)

    10.4       Amendment to Compensation Agreement between the Company and Lee
               Posey (Incorporated by reference to Exhibit 10.6 to the
               Registrant's Registration Statement on Form S-1, No. 33-97676)

   *13.1       Selected pages of the Company's Annual Report to Shareholders for
               the year ended March 27, 1998

   *21.1       List of Subsidiaries

   *23.1       Consent of Ernst & Young LLP

    24.1       Power of Attorney (included on the signature page of the Report)

   *27.1       Financial Data Schedule [Filed in electronic format only]
</TABLE>

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

* Filed herewith