** **

**FORM 10-Q**

 

**SECURITIES AND EXCHANGE COMMISSION**

 

**Washington DC 20549**

 

 
| **(Mark  One)**                                     |   |                                                                                          |
|-----------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
| **ý**                                          |   | **Quarterly Report Pursuant to Section 13 or 15(d) of the  Securities Exchange Act of 1934**  |
|                                                |   |                                                                                          |
| **For  the quarterly period ended March 31, 2003.** |
|                                                |   |                                                                                          |
| **- or -**                                          |
|                                                |   |                                                                                          |
| **o**                                               |   | **Transition Report Pursuant to Section 13 or 15(d) of the  Securities Exchange Act of 1934** |

 

**Forthe Transition Period From            to           .**

 

**Commission File Number 0-5555**

 

**LIBERTY HOMES, INC.**

(Exact name ofregistrant as specified in its charter)

 

| **Indiana**                                                |   | **35-1174256**                     |
|------------------------------------------------------------|--------|------------------------------------|
| (State of  Incorporation)                                  |   | (IRS Employer  Identification No.) |
|                                                       |   |                               |
| **PO Box  35, Goshen, Indiana**                            |   | **46527**                          |
| (Address of principal  executive offices)                  |   | (ZIP Code)                         |
| **574.533.0431**                                           |
| (Registrant’s  telephone number, including area code) |

 

Indicate by checkmark whether 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 90days.                                     Yes  ý    No o

 

Indicate by check mark whether the Registrant is anaccelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes o  No ý

 

Indicate the number ofshares outstanding of each of the registrant’s classes of common stock, as ofthe latest practicable date.

 
| **Class**                             |   | **Shares of  Outstanding  at May 14, 2003** |   |
|---------------------------------------|--------|---------------------------------------------|--------|
|                                  |   |                                        |   |
| Class A Common Stock, $1.00 par value |   | 1,998,945                                   |   |
|                                  |   |                                        |   |
| Class B Common Stock, $1.00 par value |   | 1,655,522                                   |   |

 

 

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###### **INDEX**

 

Part I – Consolidated Financial Information

 
| General                           |                                                                                                  |
|-----------------------------------|-------------------------------------------------------------------------------------------------------|
| Item 1.                           | Consolidated  Financial Statements                                                                    |
|                              |                                                                                                  |
|                              | Consolidated Balance Sheet,  as of March 31, 2003 (Unaudited) and December 31, 2002                   |
|                              |                                                                                                  |
|                              | Consolidated Statement  of Income (Unaudited), for the three months ended March 31, 2003 and 2002     |
|                              |                                                                                                  |
|                              | Consolidated  Statement of Cash Flows (Unaudited) for the three months ended March 31, 2003  and 2002 |
|                              |                                                                                                  |
|                              | Notes  to Consolidated Financial Statements (Unaudited)                                               |
|                              |                                                                                                  |
| Item 2.                           | Management’s  Discussion and Analysis of Financial Condition and Results of Operations           |
|                              |                                                                                                  |
| Item 3.                           | Quantitative and Qualitative Disclosures About  Market Risk                                           |
|                              |                                                                                                  |
| Item 4.                           | Management’s  Report on Disclosure Controls and Procedures and Internal Control                  |
|                              |                                                                                                  |
| Part II –  Other Information |
|                              |
| Item 6.                           | Exhibits  and Reports on Form 8-K                                                                     |
|                              |                                                                                                  |
|                              | Signature and Certifications                                                                          |

 

2

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PART I - CONSOLIDATED FINANCIAL INFORMATION

 

General

 

The consolidated financial statements and footnotesthereto listed in the Index on page 2 of this report have been prepared usingaccounting principles generally accepted in the United States of America.  Such principles have been applied on a basisconsistent with 2002.  The results ofoperations for the interim period presented are not necessarily indicative ofresults to be expected for the year. The information furnished herein reflects all adjustments (consisting ofnormal recurring adjustments) which, in the opinion of management, arenecessary for a fair presentation of the results for the interim periods.

 

3

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**LIBERTY HOMES, INC.**

CONSOLIDATED BALANCESHEET

as of March 31,2003 and December 31, 2002

 
|                           |   | **(Unaudited)**     |       |                    |   |
|--------------------------------|--------|---------------------|------------|-------------------------|--------|
|                           |   | **March 31,  2003** | ** ** | **December  31,  2002** |   |
| **ASSETS**                     |   |                |       |                    |   |
| Current assets:                |   |                |       |                    |   |
| Cash and cash equivalents      |   | $                   | 1,529,000  |                    | $      | 4,308,000 |   |
| Short term investments         |   | 300,000             |       | 300,000                 |   |
| Receivables                    |   | 7,578,000           |       | 5,815,000               |   |
| Inventories                    |   | 11,804,000          |       | 10,644,000              |   |
| Deferred tax asset             |   | 3,441,000           |       | 3,441,000               |   |
| Income taxes refundable        |   | 236,000             |       | 1,912,000               |   |
| Prepayments and other          |   | 3,073,000           |       | 2,148,000               |   |
|                           |   |                |       |                    |   |
| Total current assets           |   | 27,961,000          |       | 28,568,000              |   |
|                           |   |                |       |                    |   |
| Property, plant and equipment: |   |                |       |                    |   |
|                           |   |                |       |                    |   |
| Land                           |   | 2,014,000           |       | 2,014,000               |   |
| Buildings and improvements     |   | 23,619,000          |       | 23,580,000              |   |
| Machinery and equipment        |   | 20,823,000          |       | 20,735,000              |   |
|                           |   |                |       |                    |   |
|                           |   | 46,456,000          |       | 46,329,000              |   |
|                           |   |                |       |                    |   |
| Less accumulated depreciation  |   | 26,950,000          |       | 26,458,000              |   |
|                           |   |                |       |                    |   |
|                           |   | 19,506,000          |       | 19,871,000              |   |
|                           |   |                |       |                    |   |
| Property held for sale         |   | 4,581,000           |       | 4,581,000               |   |
|                           |   |                |       |                    |   |
| Total assets                   |   | $                   | 52,048,000 |                    | $      | 53,020,000 |   |

 

 
|                                                                                            |   | **(Unaudited)**     |       |                    |   |
|-------------------------------------------------------------------------------------------------|--------|---------------------|------------|-------------------------|--------|
|                                                                                            |   | **March 31,  2003** |       | **December  31,  2002** |   |
| **LIABILITIES**                                                                                 |   |                |       |                    |   |
| Current liabilities:                                                                            |   |                |       |                    |   |
| Accounts payable                                                                                |   | $                   | 3,495,000  |                    | $      | 1,779,000 |   |
| Notes payable                                                                                   |   | 1,645,000           |       | 895,000                 |   |
| Accrued compensation & payroll taxes                                                        |   | 1,372,000           |       | 1,150,000               |   |
| Other accrued liabilities                                                                       |   | 5,049,000           |       | 6,439,000               |   |
|                                                                                            |   |                |       |                    |   |
| Total current liabilities                                                                       |   | 11,561,000          |       | 10,263,000              |   |
| Deferred income taxes                                                                           |   | 2,732,000           |       | 2,732,000               |   |
| Minority interest in consolidated subsidiaries                                                  |   | 900,000             |       | 929,000                 |   |
| Contingent liabilities (see notes)                                                              |   | —              |       | —                  |   |
|                                                                                            |   |                |       |                    |   |
| **SHAREHOLDERS’ EQUITY**                                                                   |   |                |       |                    |   |
| Capital Stock:                                                                                  |   |                |       |                    |   |
| Class A, $1 par value                                                                           |   |                |       |                    |   |
| Authorized-7,500,000 Shares Issued &  outstanding-1,999,000 in 2003 & 1,995,000 in 2002 |   | 1,999,000           |       | 1,995,000               |   |
| Class B, $1 par value                                                                           |   |                |       |                    |   |
| Authorized-3,500,000 Shares Issued &  outstanding-1,655,000 in 2003 & 1,659,000 in 2002 |   | 1,655,000           |       | 1,659,000               |   |
|                                                                                            |   |                |       |                    |   |
| Other capital                                                                                   |   | 83,000              |       | 83,000                  |   |
|                                                                                            |   |                |       |                    |   |
| Retained earnings                                                                               |   | 33,118,000          |       | 35,359,000              |   |
|                                                                                            |   |                |       |                    |   |
|                                                                                            |   | 36,855,000          |       | 39,096,000              |   |
|                                                                                            |   |                |       |                    |   |
| Total liabilities and stockholders’ equity                                                 |   | $                   | 52,048,000 |                    | $      | 53,020,000 |   |

 

4

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LIBERTY HOMES,INC.

 

CONSOLIDATED STATEMENT OFINCOME (UNAUDITED)

 

for the threemonths ended March 31, 2003 and 2002

 
|                                           |   | **2003**   |       | **2002**   |   |
|------------------------------------------------|--------|------------|------------|------------|--------|
|                                           |   |       |       |       |   |
| Net sales                                      |   | $          | 17,154,000 |       | $      | 21,899,000 |   |
|                                           |   |       |       |       |   |
| Cost of sales                                  |   | 15,976,000 |       | 19,292,000 |   |
|                                           |   |       |       |       |   |
| Gross profit                                   |   | 1,178,000  |       | 2,607,000  |   |
|                                           |   |       |       |       |   |
| Selling, delivery, general and administrative  |   |       |       |       |   |
| Expenses                                       |   | 3,180,000  |       | 4,115,000  |   |
|                                           |   |       |       |       |   |
| Operating loss                                 |   | (2,002,000 | )          | (1,508,000 | )      |
|                                           |   |       |       |       |   |
| Interest expense                               |   | (27,000    | )          | (46,000    | )      |
|                                           |   |       |       |       |   |
| Interest and other income                      |   | 15,000     |       | 26,000     |   |
|                                           |   |       |       |       |   |
| Loss before minority interest and income taxes |   | (2,014,000 | )          | (1,528,000 | )      |
|                                           |   |       |       |       |   |
| Minority interest                              |   | 29,000     |       | 28,000     |   |
|                                           |   |       |       |       |   |
| Income tax benefit                             |   | —     |       | 519,000    |   |
|                                           |   |       |       |       |   |
| Net loss                                       |   | $          | (1,985,000 | )          | $      | (981,000 | ) |
|                                           |   |       |       |       |   |
| Share loss per outstanding Common              |   |       |       |       |   |
| Share – basic and fully diluted           |   | $          | (.54       | )          | $      | (.26 | ) |
|                                           |   |       |       |       |   |
| Weighted average shares outstanding            |   | 3,654,000  |       | 3,749,000  |   |
|                                           |   |       |       |       |   |
| Cash dividend per share:                       |   |       |       |       |   |
|                                           |   |       |       |       |   |
| Class A and Class B Common Stock               |   | $          | 0.07       |       | $      | 0.07 |   |

 

5

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LIBERTY HOMES,INC.

 

CONSOLIDATED STATEMENT OFCASH FLOWS (UNAUDITED)

 

for the threemonths ended March 31, 2003 and 2002

 
|                                                                       |   | **2003**   |       | **2002**   |   |
|----------------------------------------------------------------------------|--------|------------|------------|------------|--------|
| Cash flows used in operating activities                                    |   |       |       |       |   |
| Net loss                                                                   |   | $          | (1,985,000 | )          | $      | (981,000 | ) |
| Adjustment to reconcile net loss to net cash used in  operating activities |   |       |       |       |   |
| Depreciation                                                               |   | 492,000    |       | 557,000    |   |
| Minority interest                                                          |   | (29,000    | )          | (28,000    | )      |
|                                                                       |   |       |       |       |   |
| Changes in assets and liabilities:                                         |   |       |       |       |   |
| Receivables                                                                |   | (1,763,000 | )          | 934,000    |   |
| Inventories                                                                |   | (1,160,000 | )          | (886,000   | )      |
| Prepayments and other                                                      |   | (925,000   | )          | 97,000     |   |
| Accounts payable                                                           |   | 1,716,000  |       | 793,000    |   |
| Other current liabilities                                                  |   | (1,168,000 | )          | (2,204,000 | )      |
| Income taxes receivable                                                    |   | 1,676,000  |       | (531,000   | )      |
| Total adjustments                                                          |   | (1,161,000 | )          | (1,268,000 | )      |
| Net cash used in operating activities                                      |   | (3,146,000 | )          | (2,249,000 | )      |
|                                                                       |   |       |       |       |   |
| Cash flows used in investing activities                                    |   |       |       |       |   |
| Additions to property, plant and equipment                                 |   | (127,000   | )          | (351,000   | )      |
|                                                                       |   |       |       |       |   |
| Net cash used in investing activities                                      |   | (127,000   | )          | (351,000   | )      |
|                                                                       |   |       |       |       |   |
| Cash flows provided by (used in) financing  activities                     |   |       |       |       |   |
| Cash dividends paid                                                        |   | (256,000   | )          | (262,000   | )      |
| Proceeds from notes payable                                                |   | 3,107,000  |       | 311,000    |   |
| Payments of notes payable                                                  |   | (2,357,000 | )          | (461,000   | )      |
| Retirement of common stock                                                 |   | —     |       | (54,000    | )      |
|                                                                       |   |       |       |       |   |
| Net cash provided by (used in) financing activities                        |   | 494,000    |       | (466,000   | )      |
|                                                                       |   |       |       |       |   |
| Net decrease in cash and cash equivalents                                  |   | (2,779,000 | )          | (3,066,000 | )      |
|                                                                       |   |       |       |       |   |
| Cash and cash equivalents at beginning of period                           |   | 4,308,000  |       | 7,223,000  |   |
|                                                                       |   |       |       |       |   |
| Cash and cash equivalents at end of period                                 |   | $          | 1,529,000  |       | $      | 4,157,000 |   |
|                                                                       |   |       |       |       |   |
| Supplemental disclosures of cash flow information                          |   |       |       |       |   |
| Cash paid during the period for income taxes                               |   | —     |       | —     |   |
| Cash paid for interest expense                                             |   | $          | 27,000     |       | $      | 46,000 |   |

 

6

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**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

**(UNAUDITED)**

 

SHORT TERM INVESTMENTS:

Short-term investments consist primarily ofcertificates of deposits with original maturities greater than 90 days.

 

INVENTORIES:

Inventories are stated at the lower of cost or market,with cost determined on a first-in, first-out basis.  Inventories at March 31, 2003 consist of:

 

| Raw Material     |   | $         | 5,973,000  |   |
|------------------|--------|-----------|------------|--------|
| Work in Progress |   | 1,613,000 |       |
| Finished goods   |   | 4,218,000 |       |
|             |   | $         | 11,804,000 |   |

 

PROPERTY HELD FOR SALE:

The Company currently has for sale three of its former productionfacilities, one each in Ocala, Florida, Dorchester, Wisconsin and Tuscumbia,Alabama.  The Wisconsin and Alabamafacilities ceased operation in 2000. Production from the Dorchester, Wisconsin plant was consolidated intothe Company’s other Dorchester plant, while the Tuscumbia business was moved 50miles to the Hamilton, Alabama plant. At the end of 2002, production ceased at the Florida plant.  The Company is preparing this facility forsale and will serve this market area from its other facilities.  These closings were done as part of theCompany’s response to the current industry downturn.

 

Each facility includesland, land improvements and buildings. Appraisal values and asking price for each of these properties exceedsthe net book value of each.  All threefacilities can fit a wide variety of use. The Company anticipates selling all of these properties for amounts thatexceed their net book value plus disposal costs.  Accordingly, the statements reflect the aggregate net book valueof $4,581,000 for all these properties and no adjustments for impairment havebeen made.

 

NOTES PAYABLE:

At March 31, 2003, theCompany had the following notes payable:

 
| Revolving credit line  of $2,659,000 secured by subsidiaries’ retail inventory bearing interest at  1/2% over prime rate |   | $         | 445,000   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|
|                                                                                                                          |   |      |
| Unsecured revolving credit  line of $5,000,000 bearing interest at 1/2% under prime                                           |   | 1,200,000 |
|                                                                                                                          |   | $         | 1,645,000 |

 

CONTINGENT LIABILITIES:

Repurchase Obligations

The Company is contingently liable under terms of repurchase agreementswith various financial institutions, which provide for the repurchase of itshomes sold to dealers under floor plan financing arrangements upon dealerdefault.  The risk of loss under theseagreements is spread over many dealers and is further reduced by the resalevalue of the homes.  The Company has, asof March 31, 2003, provided for losses on homes for which it has received orexpects notification of repurchase.  Anysignificant change could place unplanned demands on the Company.

 

7

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Other Contingencies

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

 

EARNINGS PER SHARE

Basic and dilutedearnings per share are computed based on weighted average Class A and Class Bshares outstanding.  There are nooptions or warrants outstanding to create a dilutive effect.

 

REVENUE RECOGNITION

Revenue is recognizedwhen title is transferred upon shipment.

 

NATURE OF BUSINESS, RISKSAND UNCERTAINTIES

The Companydesigns, manufactures and sells at wholesale a broad line of single and multi-sectionmanufactured homes and multi-section modular homes to numerous independentdealers in the United States who may utilize floorplan financing arrangementswith lending institutions.  Continuedavailability of credit to these dealers is vital to the Company’s business.

 

The process of preparingfinancial statements in conformity with generally accepted accountingprinciples requires the use of estimates and assumptions regarding certainassets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events asof the date of the financial statements. Accordingly, upon settlement, actual amounts may differ from estimatedamounts.  The most notable assumptionsincluded in the financial statements involve product warranty costs, potentialrepurchase obligations on dealer floorplan financing arrangements, lawsuits,deferred taxes and property held for sale.

 

Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations. 

 

RESULTS OF OPERATIONS

During the quarter, manyfactors produced a difficult operating environment for the Company.  The national economy showed signs ofcontinued weakness.  More specific tothe Company’s industry, credit availability at both the wholesale and retaillevels continued to diminish while the supply of repossessed homes remained ata high level.  Tighter creditunderwriting coupled with price competition from repossessed homes as well asoverall consumer uncertainty resulted in fewer new home orders to the Company.

 

In a gauge of the most currently available statistics,the Manufactured Housing Institute reports a 28% unit volume decline during thefirst two months of 2003 over the same period in 2002.  For the quarter, the Company shipped 25%fewer homes in 2003 than during 2002. Net sales for the first quarter of 2003 were $17,154,000, a decrease of$4,745,000 or 22% from the same quarter of 2002.

 

While fixed manufacturing cost reductions wereimplemented during the current quarter, such actions could not preempt all theeffects of declining volume.  Grossprofit as a percent of net sales fell to 7% from 12% in the year earlier periodfor a total reduction of $1,429,000.  Selling,delivery, general and administrative expenses for the 2003 quarter declined$935,000 from the first quarter of 2002. Lower gross profit was offset in part by lower selling, delivery,general and administrative expense, producing a $494,000 increase from thefirst quarter 2002 operating loss, to $2,002,000 in 2003.

 

8

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A tax valuation allowance for the Company’s 2003 losshas eliminated any provision of a tax benefit for the quarter.  The resultant net loss for the 2003 quartergrew to $1,985,000 from a net loss of $981,000 in the prior year.

 

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital resources dropped from theCompany’s position at December 31, 2002. Cash, cash equivalents and short term investments as of March 31, 2003and December 31, 2002 were $1,529,000 and $4,308,000, respectively.  Working capital as of March 31, 2003 andDecember 31, 2002 was $16,400,000 and $18,305,000, respectively.  The Company’s current ratio was 2.4 to 1 and2.8 to 1 at March 31, 2003 and December 31, 2002, respectively.

 

The Company currently has a $5,000,000 unsecuredoperating line of credit on which it had a borrowed balance of $1,200,000 atMarch 31, 2003.  This line was not usedin 2002.  This credit arrangement is duefor renewal on June 30, 2003.

 

Additionally, held for sale are three productionfacilities which have been closed as part of the Company’s cost reductionprogram.  These properties have anaggregate net book value of $4,581,000 and the Company believes they can besold for an aggregate amount in excess of this value.

 

The Company believes thatcash flow from operations, cash reserves and the renewal of credit arrangementscurrently in place will be sufficient to meet the Company’s requirements in theyear 2003.  The Company has taken intoconsideration the current conditions in which the Company operates.  Any additional downturn in the industrycould affect the Company and cause it to seek additional lines of credit.

 

OUTLOOK AND RISK FACTORS

The dynamics thatpropelled the manufacturing component of the industry into its currentcondition will continue to affect near term performance.  These factors will adversely affect new homeorders resulting in lower sales.

 

The Company’soperations run parallel to the forces in the industry and are impacted by thesame risk factors affecting the industry. Since the Company produces only to dealers’ orders and sales backlogsare traditionally short, the order activity at the Company is indicative of theday to day retail sales activity of its products.  Any changes affecting retail customer demand, such as cost,unemployment and the factors previously mentioned, may have an immediate effecton the Company’s operations.

 

Increased underwritingstandards and a reduced number of retail lenders are factors which will affectthe industry for the foreseeable future. This constriction of credit will keep many potential homebuyers out ofthe marketplace for manufactured housing. Previously less restrictive underwriting standards have created a highdefault rate on loans resulting in numerous repossessions.  These repossessions continue and the supplyof these unsold homes pose a challenge to new home sales.

 

It is a commonpractice for manufactured housing producers to participate in dealer financingprograms which require the manufacturer to repurchase homes which remain unsoldand in dealer inventory within a certain time period following delivery to thedealer, if the dealer defaults on its financing obligations.  When initiated, this repurchase obligationbrings homes back into the wholesale market and may result in some discountingas the units are resold.  At times inthe past, 

 

9

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the industry hashad a significant level of these repurchased homes that competed with futureorders to factories for new homes and such conditions could arise again.

 

The distribution systemfor the Company’s modular homes may be somewhat different. While the Companysells some of its modular homes to traditional manufactured home retailers, alarge percentage of modular homes are sold to builder developers who do nottypically stock numerous homes for display. Consequently, homes sold to such builder developers are not subject torepurchase as described above.  As themodular portion of the Company’s business grows, the Company’s contingentliability for repurchase of homes should proportionately shrink.

 

The spate of dealerfailures that occurred industry-wide in 2000 slowed during the last two years.However, it is difficult to project what may happen with the existing dealerbase in the future.  Continued falloutamong this part of the distribution chain may disrupt the market.

 

CRITICAL ACCOUNTINGPOLICIES AND ESTIMATES

During this quarter,except for changes in the valuation of deferred tax benefits, the Company hasnot changed its use of estimates and judgements in the application of GenerallyAccepted Accounting Policies used in the United States.  For the valuation of deferred tax benefits,management has placed an allowance on the valuation of federal and state taxbenefits resulting from the Company’s net operating loss for the quarter.

 

FORWARD LOOKING STATEMENTS

The discussion above contains forward lookingstatements within the meaning of the Private Securities Litigation Reform Actof 1995.  These statements includestatements regarding industry and company outlooks and risk factors.  The Company may make other forward lookingstatements orally or in writing from time to time.  All such forward looking statements are not guaranties of futureevents or performance and involve risks and uncertainties.  Actual results may differ materially fromthose in the forward looking statements as the result of a number of materialfactors.  These factors include withoutlimitation, the availability of financing credit at both the wholesale andretail level, the availability of a competent workforce, the regulation of theindustry at the federal, state and local levels, changes in interest rates, thestability of dealer distribution networks, unanticipated results in pendinglegal proceedings and the condition of the economy and its effect on consumerconfidence.

 

Item 3.  Quantitative and Qualitative DisclosureAbout Market Risk.  

 

Not applicable.

 

Item 4.  Management’s Report on DisclosureControls and Procedures and Internal Control. 

 

(a)           The Chief ExecutiveOfficer and the Chief Financial Officer of the Company have evaluated theeffectiveness of the design and operation of the Company’s system of disclosurecontrols and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under theExchange Act) as of a date within 90 days prior to the filing of this Form10-Q.  As a result of that evaluation,they have concluded that the Company’s disclosure controls and procedures areeffective to ensure that information required to be disclosed in the Company’sreports filed or submitted under the Exchange Act is recorded, processed,summarized and reported within the time periods specified in Securities andExchange Commission rules and forms.

 

(b)           Therehave been no significant changes in the Company’s system of internal controlsor in other factors that could significantly affect internal controlssubsequent to the date of their 

 

10

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evaluation.  There were no discoveries of any significantdeficiencies or material weaknesses in such controls that would require theCompany to take corrective actions.

 

**PART II – OTHER INFORMATION**

Item 6.  Exhibits andReports on Form 8-K

 

Exhibit 99.1 Certification of Chief Executive Officer and Chief Financial Officerpursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

No reports on Form 8-Kfor January, February or March, 2003 have been filed.

 

11

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**SIGNATURE**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 
|              | LIBERTY HOMES, INC. |
|-------------------|---------------------|
|              | Registrant          |
|              |                |
|              |                |
|              | BY:                 | /s/ Marc A. Dosmann |
|              |                | Marc A. Dosmann |
|              |                | Vice President – Chief  Financial Officer   (Principal Financial and Accounting Officer) |
|              |                |
|              |                |
| Dated   | May 15, 2003        |   |   |
|                   |                     |  |  |  |

 

12

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**CERTIFICATION**

I, Edward J. Hussey,certify that:

 

1.                                       Ihave reviewed this quarterly report on Form 10-Q of Liberty Homes, Inc.;

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

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, periods presented in this quarterly report;

4.                                       Theregistrant’s other certifying officer and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

a.                                       designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

b.                                      evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

c.                                       presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

5.                                       Theregistrant’s other certifying officer and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

a.                                       allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b.                                      anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

6.                                       Theregistrant’s other certifying officer and I have indicated in this quarterly reportwhether or not there were significant changes in internal controls or in otherfactors that could significantly affect internal controls subsequent to thedate of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weakness.

 
| May 15, 2003 |   | /s/ EDWARD J. HUSSEY                       |
|--------------|--------|--------------------------------------------|
| Date         |   | Edward J. Hussey, Chief  Executive Officer |

 

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**CERTIFICATION**

I, Marc A. Dosmann,certify that:

 

7.                                       Ihave reviewed this quarterly report on Form 10-Q of Liberty Homes, Inc.;

8.                                       Basedon my knowledge, this quarterly report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this quarterlyreport;

9.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, periods presented in this quarterly report;

10.                                 Theregistrant’s other certifying officer and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

d.                                      designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

e.                                       evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

f.                                         presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

11.                                 Theregistrant’s other certifying officer and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

c.                                       allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

d.                                      anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

12.                                 Theregistrant’s other certifying officer and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weakness.

 
| May 15, 2003 |   | /s/ MARC A. DOSMANN                                             |
|--------------|--------|-----------------------------------------------------------------|
| Date         |   | Marc A. Dosmann, Vice  President – Chief Financial Officer |

 

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