** **

**FORM10-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 September 30, 2002.**                                                                                      |
|---------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                                                                                                  |
|                      |   | **or**                                                                                                                                                                                                                                |
|                      |   |                                                                                                                                                                                                                                  |
| ******o**                 |   | **Transition Report Pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934  For the Transition Period From           to          .** |
|                      |   |                                                                                                                                                                                                                                  |

 

**Commission File Number 0-5555**

**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 check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  Yes  ý    No o

 

Indicate the number of shares outstanding of each of the registrant’sclasses of common stock, as of the latest practicable date.

 
| **Class**                              |   | **Shares of  Outstanding  at November 5, 2002** |   |
|----------------------------------------|--------|-------------------------------------------------|--------|
|                                   |   |                                            |   |
| Class A Common  Stock, $1.00 par value |   | 1,995,045                                       |   |
|                                   |   |                                            |   |
| Class B Common  Stock, $1.00 par value |   | 1,659,422                                       |   |

 

###### ****

 

###### **INDEX**

 
| Part I —  Consolidated Financial Information (Unaudited) |                                                                                        |
|---------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                          |                                                                                        |   |
| General                                                       |                                                                                        |   |
| Item 1.                                                       | Consolidated Financial  Statements — Liberty Homes, Inc.                               |   |
|                                                          | Consolidated Balance Sheet,  as of September 30, 2002 and December 31, 2001                 |   |
|                                                          | Consolidated Statement  of Income, for the three months ended September 30, 2002 and 2001   |   |
|                                                          | Consolidated Statement  of Income, for the nine months ended September 30, 2002 and 2001    |   |
|                                                          | Consolidated  Statement of Cash Flows for the nine months ended September 30, 2002 and 2001 |   |
|                                                          | Notes to Consolidated  Financial Statements                                                 |   |
| Item  2.                                                      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
| 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

----

 

PART I**—**CONSOLIDATEDFINANCIAL INFORMATION

 

General

 

                The consolidated financial statements and footnotesthereto listed in the Index on page 2 of this report have been prepared usinggenerally accepted accounting principles applied on a basis consistent with2001.  The results of operations for theinterim period presented are not necessarily indicative of results to beexpected for the year.  The informationfurnished herein reflects all adjustments (consisting of normal recurringadjustments) which, in the opinion of management, are necessary for a fairpresentation of the results for the interim periods.

 

 

3

----

 

**LIBERTYHOMES, INC.**

CONSOLIDATED BALANCE SHEET

as of September 30, 2002and December 31, 2001

 
| ** **                                                                                      |   | **September  30,  2002** |       | **December  31,  2001** |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|------------|-------------------------|--------|
| **ASSETS**                                                                                      |   |                     |       |                    |   |
| Current assets:                                                                                 |   |                     |       |                    |   |
| Cash and cash  equivalents                                                                      |   | $                        | 4,642,000  |                    | $      | 7,223,000 |   |
| Short term  investments                                                                         |   | 300,000                  |       | 300,000                 |   |
| Receivables                                                                                     |   | 9,647,000                |       | 10,506,000              |   |
| Inventories                                                                                     |   | 12,274,000               |       | 12,567,000              |   |
| Deferred tax  asset                                                                             |   | 2,322,000                |       | 2,820,000               |   |
| Income taxes  refundable                                                                        |   | 1,565,000                |       | 362,000                 |   |
| Prepayments and  other                                                                          |   | 1,957,000                |       | 2,248,000               |   |
|                                                                                            |   |                     |       |                    |   |
| Total current  assets                                                                           |   | 32,707,000               |       | 36,026,000              |   |
|                                                                                            |   |                     |       |                    |   |
| Property, plant  and equipment:                                                                 |   |                     |       |                    |   |
|                                                                                            |   |                     |       |                    |   |
| Land                                                                                            |   | 2,292,000                |       | 2,412,000               |   |
| Buildings and  improvements                                                                     |   | 29,531,000               |       | 29,549,000              |   |
| Machinery and  equipment                                                                        |   | 22,316,000               |       | 21,840,000              |   |
|                                                                                            |   |                     |       |                    |   |
|                                                                                            |   | 54,139,000               |       | 53,801,000              |   |
|                                                                                            |   |                     |       |                    |   |
| Less accumulated  depreciation                                                                  |   | 29,265,000               |       | 28,328,000              |   |
|                                                                                            |   |                     |       |                    |   |
|                                                                                            |   | 24,874,000               |       | 25,473,000              |   |
|                                                                                            |   |                     |       |                    |   |
| Total assets                                                                                    |   | $                        | 57,581,000 |                    | $      | 61,499,000 |   |
|                                                                                            |   |                     |       |                    |   |
| **LIABILITIES**                                                                                 |   |                     |       |                    |   |
| Current  liabilities:                                                                           |   |                     |       |                    |   |
| Accounts payable                                                                                |   | $                        | 3,529,000  |                    | $      | 2,651,000 |   |
| Floorplan notes  payable                                                                        |   | 1,079,000                |       | 2,383,000               |   |
| Accrued  compensation & payroll taxes                                                       |   | 1,476,000                |       | 1,055,000               |   |
| Other accrued  liabilities                                                                      |   | 6,654,000                |       | 6,906,000               |   |
|                                                                                            |   |                     |       |                    |   |
| Total current  liabilities                                                                      |   | 12,738,000               |       | 12,995,000              |   |
| Deferred income  taxes                                                                          |   | 2,450,000                |       | 2,450,000               |   |
| Minority  interest in consolidated subsidiaries                                                 |   | 954,000                  |       | 1,097,000               |   |
| Contingent  liabilities (see notes)                                                             |   | —                   |       | —                  |   |
|                                                                                            |   |                     |       |                    |   |
| **SHAREHOLDERS’  EQUITY**                                                                  |   |                     |       |                    |   |
| Capital Stock:                                                                                  |   |                     |       |                    |   |
| Class A, $1 par  value                                                                          |   |                     |       |                    |   |
| Authorized-7,500,000  Shares Issued & outstanding-2,086,000 in 2002 & 2,088,000 in 2001 |   | 2,086,000                |       | 2,088,000               |   |
| Class B, $1 par  value                                                                          |   |                     |       |                    |   |
| Authorized-3,500,000  Shares Issued & outstanding-1,659,000 in 2002 & 1,665,000 in 2001 |   | 1,659,000                |       | 1,665,000               |   |
|                                                                                            |   |                     |       |                    |   |
| Other capital                                                                                   |   | 83,000                   |       | 83,000                  |   |
|                                                                                            |   |                     |       |                    |   |
| Retained  earnings                                                                              |   | 37,611,000               |       | 41,121,000              |   |
|                                                                                            |   |                     |       |                    |   |
|                                                                                            |   | 41,439,000               |       | 44,957,000              |   |
|                                                                                            |   |                     |       |                    |   |
| Total  liabilities and shareholders’ equity                                                |   | $                        | 57,581,000 |                    | $      | 61,499,000 |   |

 

 

4

----

 

LIBERTY HOMES, INC.

CONSOLIDATED STATEMENT OF INCOME

 

for the three monthsended September 30, 2002 and 2001

 
|                                                     |   | **2002**   |       | **2001**   |   |
|----------------------------------------------------------|--------|------------|------------|------------|--------|
|                                                     |   |       |       |       |   |
| Net sales                                                |   | $          | 23,959,000 |       | $      | 29,992,000 |   |
|                                                     |   |       |       |       |   |
| Cost of sales                                            |   | 21,223,000 |       | 25,350,000 |   |
|                                                     |   |       |       |       |   |
| Gross profit                                             |   | 2,736,000  |       | 4,642,000  |   |
|                                                     |   |       |       |       |   |
| Selling,  delivery, general and administrative expenses  |   | 4,558,000  |       | 4,491,000  |   |
|                                                     |   |       |       |       |   |
| Operating income  (loss)                                 |   | (1,822,000 | )          | 151,000    |   |
|                                                     |   |       |       |       |   |
| Interest expense                                         |   | (38,000    | )          | (61,000    | )      |
| Interest and  other income, net                          |   | (123,000   | )          | 78,000     |   |
|                                                     |   |       |       |       |   |
| Income (loss)  before minority interest and income taxes |   | (1,983,000 | )          | 168,000    |   |
|                                                     |   |       |       |       |   |
| Minority  interest                                       |   | 68,000     |       | (21,000    | )      |
|                                                     |   |       |       |       |   |
| Income tax  benefit (expense)                            |   | 674,000    |       | (63,000    | )      |
|                                                     |   |       |       |       |   |
| Net income  (loss)                                       |   | $          | (1,241,000 | )          | $      | 84,000 |   |
|                                                     |   |       |       |       |   |
| Net income  (loss) per outstanding                       |   |       |       |       |   |
| Common Share —  basic and fully diluted             |   | $          | (.33       | )          | $      | .02 |   |
|                                                     |   |       |       |       |   |
| Weighted average  shares outstanding                     |   | 3,745,000  |       | 3,753,000  |   |
|                                                     |   |       |       |       |   |
| Cash dividend  per share:                                |   |       |       |       |   |
|                                                     |   |       |       |       |   |
| Class A Common  Stock                                    |   | $          | .07        |       | $      | .07 |   |
|                                                     |   |       |       |       |   |
| Class B Common  Stock                                    |   | $          | .07        |       | $      | .07 |   |

 

 

5

----

 

LIBERTY HOMES, INC.

CONSOLIDATED STATEMENT OF INCOME

 

for the nine months endedSeptember 30, 2002 and 2001

 
|                                                    |   | **2002**   |       | **2001**   |     |
|---------------------------------------------------------|--------|------------|------------|------------|----------|
|                                                    |   |       |       |       |     |
| Net sales                                               |   | $          | 70,526,000 |       | $        | 86,330,000 |   |
|                                                    |   |       |       |       |     |
| Cost of sales                                           |   | 61,516,000 |       | 73,761,000 |     |
|                                                    |   |       |       |       |     |
| Gross profit                                            |   | 9,010,000  |       | 12,569,000 |     |
|                                                    |   |       |       |       |     |
| Selling,  delivery, general and administrative expenses |   | 13,170,000 |       | 14,008,000 |     |
|                                                    |   |       |       |       |     |
| Operating loss                                          |   | (4,160,000 | )          | (1,439,000 | )        |
|                                                    |   |       |       |       |     |
| Interest expense                                        |   | (130,000   | )          | (287,000   | )        |
| Interest and  other income, net                         |   | 7,000      |       | 316,000    |     |
|                                                    |   |       |       |       |     |
| Loss before  minority interest and income taxes         |   | (4,283,000 | )          | (1,410,000 | )        |
|                                                    |   |       |       |       |     |
| Minority  interest                                      |   | 143,000    |       | (44,000    | )        |
|                                                    |   |       |       |       |     |
| Income tax  benefit                                     |   | 1,456,000  |       | 531,000    |     |
|                                                    |   |       |       |       |     |
| Net loss                                                |   | (2,684,000 | )          | $          | (923,000 | ) |
|                                                    |   |       |       |       |     |
| Net loss per  outstanding                               |   |       |       |       |     |
| Common Share —  basic and fully diluted            |   | $          | (.72       | )          | $        | (.25 | ) |
|                                                    |   |       |       |       |     |
| Weighted average  shares  outstanding              |   | 3,746,000  |       | 3,753,000  |     |
|                                                    |   |       |       |       |     |
| Cash dividend  per share:                               |   |       |       |       |     |
|                                                    |   |       |       |       |     |
| Class A Common  Stock                                   |   | $          | .21        |       | $        | .21 |   |
|                                                    |   |       |       |       |     |
| Class B Common  Stock                                   |   | $          | .21        |       | $        | .21 |   |

 

 

6

----

 

LIBERTY HOMES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

for the nine months endedSeptember 30, 2002 and 2001

 
|                                                          |   | **2002**   |       | **2001**   |   |
|---------------------------------------------------------------|--------|------------|------------|------------|--------|
| Cash flows  provided by (used in) operating activities:       |   |       |       |       |   |
| Net loss                                                      |   | $          | (2,684,000 | )          | $      | (923,000 | ) |
| Adjustment to  reconcile net loss                             |   |       |       |       |   |
| Depreciation                                                  |   | 1,546,000  |       | 1,771,000  |   |
| Minority  interest in income                                  |   | (143,000   | )          | 44,000     |   |
| Net value of  retail center assets written off                |   | —     |       | 151,000    |   |
| Deferred income  taxes                                        |   | —     |       | (175,000   | )      |
| Gain on sale of  fixed assets                                 |   | (61,000    | )          | —     |   |
|                                                          |   |       |       |       |   |
| Changes in  assets and liabilities:                           |   |       |       |       |   |
| Receivables                                                   |   | 859,000    |       | (308,000   | )      |
| Inventories                                                   |   | 293,000    |       | 2,073,000  |   |
| Prepayments and  other                                        |   | 291,000    |       | 38,000     |   |
| Accounts payable                                              |   | 878,000    |       | 206,000    |   |
| Accrued  liabilities                                          |   | 169,000    |       | (790,000   | )      |
| Income taxes  payable/receivable                              |   | (705,000   | )          | 3,078,000  |   |
|                                                          |   |       |       |       |   |
| Net cash  provided by operating activities                    |   | 443,000    |       | 5,165,000  |   |
|                                                          |   |       |       |       |   |
| Cash flows  provided by (used in) investing activities        |   |       |       |       |   |
| Additions to  property, plant and equipment                   |   | (1,210,000 | )          | (353,000   | )      |
| Redemption of  short-term investment                          |   | —     |       | 50,000     |   |
| Proceeds from  sale of fixed assets                           |   | 324,000    |       | —     |   |
|                                                          |   |       |       |       |   |
| Net cash used in  investing activities                        |   | (886,000   | )          | (303,000   | )      |
|                                                          |   |       |       |       |   |
| Cash flows  provided by (used in) financing activities — |   |       |       |       |   |
| Cash dividends  paid                                          |   | (780,000   | )          | (788,000   | )      |
| Proceeds from  notes payable                                  |   | 780,000    |       | 3,393,000  |   |
| Payments of  notes payable                                    |   | (2,084,000 | )          | (5,956,000 | )      |
| Retirement of  common stock                                   |   | (54,000    | )          | —     |   |
|                                                          |   |       |       |       |   |
| Net cash used in  financing activities                        |   | (2,138,000 | )          | (3,351,000 | )      |
|                                                          |   |       |       |       |   |
| Net increase (decrease)  in cash and cash equivalents         |   | (2,581,000 | )          | 1,511,000  |   |
|                                                          |   |       |       |       |   |
| Cash and cash  equivalents at beginning of period             |   | 7,223,000  |       | 4,896,000  |   |
|                                                          |   |       |       |       |   |
| Cash and cash  equivalents at end of period                   |   | $          | 4,642,000  |       | $      | 6,407,000 |   |
|                                                          |   |       |       |       |   |
| Supplemental disclosures  of cash flow information cash       |   |       |       |       |   |
| cash received  for income taxes                               |   | $          | 750,000    |       | $      | 3,428,000 |   |
| cash paid for  interest expense                               |   | 130,000    |       | 284,000    |   |

 

 

7

----

 

**OTHERINFORMATION**

 

SHORT TERMINVESTMENTS:

 

Short-terminvestments consist of certificates of deposits with original maturitiesgreater than 90 days.

 

INVENTORIES:

 

Inventories arestated at the lower of cost or market, with cost determined on a first-in,first-out basis.  Inventories atSeptember 30, 2002 consist of: 

 

| Raw Material     |   | $         | 6,089,000  |   |
|------------------|--------|-----------|------------|--------|
| Work in Progress |   | 1,796,000 |       |
| Finished Goods   |   | 4,389,400 |       |
|             |   | $         | 12,274,000 |   |

 

NOTES PAYABLE:

 

At September 30,2002, the Company had the following notes payable:

 
| Revolving credit  line of $4,325,000 secured by retail subsidiary inventory bearing interest at  1/2% over prime rate |   | $      | 1,079,000 |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
|                                                                                                                  |   |   |      |
| Unsecured  revolving credit line of $5,000,000 bearing interest at 1/2% under prime                                   |   | — |      |
|                                                                                                                  |   | $      | 1,079,000 |   |

 

CONTINGENTLIABILITIES:

 

Repurchase Obligations

 

                The Company is contingentlyliable under terms of repurchase agreements with various financial institutionswhich provide for the repurchase of its homes sold to dealers under floorplanfinancing arrangements upon dealer default. The Company’s exposure to loss under such agreements is reduced by theresale of the repurchased home.  TheCompany has established what it believes is an appropriate level of accruals to

 

 

8

----

 

reflect current and anticipated repurchase activity.  The Company believes any losses incurredunder outstanding repurchase agreements in excess of the accruals establishedas of September 30, 2002 will not have a significant impact on the financialcondition of the Company.  However, anysubstantial increases in dealer defaults after September 30, 2002 may cause theCompany to incur additional losses due to repurchase activity.

 

REVENUERECOGNITION:

 

The Companyrecognizes revenue when the product is shipped to independent dealers.

 

Item 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.

 

Results ofOperations

 

Net sales for thethird quarter of 2002 were $23,959,000, a decrease of $6,033,000 from the samequarter of 2001.  The sales activity ofthe Company followed the industry trend during the quarter.  Statistics comparing the third quarter of2002 to the same period in 2001 and reported by the National Conference ofStates on Building Codes and Standards show the industry suffered a 15% drop inhomes shipped and a 13% drop in floors shipped.  Credit conditions in the industry continue to cause a burden onthe Company.  During the third quarter,yet another major wholesale lending source announced they were departing theindustry.  As these sources have departed,the Company’s independent dealer and developer customer base have struggled tofind replacement financing.  As aresult, these dealers and developers have been unable to replace inventoriesduring this period.  Furthermore, duringthe current quarter, retail and 

 

 

9

----

 

wholesale loandefaults have continued to provide a supply of repossessed homes for resale andthereby displaced some demand for newly manufactured homes.

 

Lower sales havereduced gross profit and resulted in increased losses.  Additionally, the Company’s earnings wereaffected by pre-tax charges of $247,000 to wind up certain retail operationsthat had been set up in 2000 to handle repurchase obligations of theCompany.  A net loss of $1,241,000resulted in the third quarter.

 

Liquidity andCapital Resources

 

Liquidity andcapital resources dropped during the nine months from the Company’s position atDecember 31, 2001.  Cash, cashequivalents and short term investments as of September 30, 2002 and December31, 2001 were $4,942,000 and $7,523,000, respectively.  Working capital as of September 30, 2002 andDecember 31, 2001 was $19,969,000 and $23,031,000, respectively.  Expenditures for operations were the mainuses of capital resources during the quarter. The Company has an unsecured $5,000,000 line of credit, which has notbeen utilized, to support its internal capital resources.  The Company anticipates that cash flow fromoperations and this credit arrangement currently in place will be sufficient tomeet the Company’s foreseeable requirements.

 

Outlook and RiskFactors

 

As indicated inthe Results of Operations section, many factors are challenging the Company andthe manufactured housing industry. Credit problems at both the wholesale and retail levels will continue tohave adverse effects until financial institutions provide more capital.  Repossessed home inventory still remainshigh and, coupled with discounts 

 

 

10

----

 

and less restrictiveunderwriting of loans for these repossessed homes, new home orders will suffer.

 

Since the Companyproduces only to dealer orders and sales backlogs are traditionally short, theorder activity at the Company is indicative of the day to day retail salesactivity of its products.  Changesaffecting retail customer demand, such as cost, availability of credit andunemployment, have an immediate effect on the Company’s operations.

 

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, usually 12 to 18 monthsfollowing delivery to the dealer, 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.  Currently, theindustry has a significant level of homeowner repossessions that will competewith future orders to factories for new homes. The Company believes the reserves accrued at September 30, 2002 areadequate for known repurchase requirements that it may have at that date.  However, any substantial increases in dealerdefaults after September 30, 2002 may cause the Company to incur additionallosses due to repurchase activity.

 

Forward Looking Information

 

The discussionabove contains forward looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These statements include statements regarding industry and companyoutlooks and risk factors.  The Companymay make other 

 

 

11

----

 

forward looking statements orally or in writing from time to time.  All such forward looking statements are notguaranties of future events or performance and involve risks anduncertainties.  Actual results maydiffer materially from those in the forward looking statements as the result ofa number of material factors.  Thesefactors include without limitation, the availability of financing credit atboth the wholesale and retail level, the availability of a competent workforce,the regulation of the industry at the federal, state and local levels, changesin interest rates, unanticipated results in pending legal proceedings and thecondition of the economy and its effect on consumer confidence.

 

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

 

The Company’s ChiefExecutive Officer and the Chief Financial Officer have reviewed the Company’ssystem of disclosure controls and procedures. This review, completed as of a date within ninety days before the filingdate of this Form 10-Q, has concluded the system of disclosure controls andprocedures has been effective in the determination of items to be reported inthis 10-Q report.  Furthermore, therehave been no significant changes in the Company’s system of internal controlssubsequent to the date of this review.

 

**PARTII — OTHER INFORMATION**

 

Item 6.  Exhibits and Reports on Form 8-K

 

No reports on Form8-K for July, August or September, 2002 have been filed.

 

 

12

----

 

**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  | November 14, 2002 |   |                                           |

##### ** **

**CERTIFICATION**

 

By signing below,each of the undersigned officers hereby certifies pursuant to 18 U.S.C. § 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, tohis or her knowledge, (i) this report fully complies with the requirements ofsection 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) theinformation contained in this report fairly represents, in all materialaspects, the financial condition and results of operations of Liberty Homes,Inc.

 

Signed this 14thday of November, 2002.

 
| /s/ MARC A. DOSMANN                |   | /s/ EDWARD J. HUSSEY               |
|------------------------------------|--------|------------------------------------|
| (Signature of  Authorized Officer) |   | (Signature of  Authorized Officer) |
|                               |   |                               |
| Marc A. Dosmann, VP —  CFO    |   | Edward J. Hussey,  President       |
| Typed Name & Title             |   | Type Name & Title              |

 

 

13

----

 

**CERTIFICATION**

 

I, Edward J. Hussey,certify that:

 

1.                                       I have reviewed this quarterly report onForm 10-Q of Liberty Homes, Inc.;

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

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

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

a.                                       designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

b.                                      evaluated the effectiveness of theregistrant’s disclosures controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

c.                                       presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

5.                                       The registrant’s other certifying officerand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent function):

a.                                       all significant deficiencies in thedesign or operation of internal controls which could adversely affect theregistrant’s ability to record, process, summarize and report financial dataand have identified for the registrant’s auditors any material weaknesses ininternal controls; and

b.                                      any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

6.                                       The registrant’s other certifying officerand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weakness.

 
| November 14, 2002 |   | /s/ EDWARD J. HUSSEY                                        |
|-------------------|--------|-------------------------------------------------------------|
| Date              |   | Edward J. Hussey,  President — Chief Executive Officer |

 

 

14

----

 

**CERTIFICATION**

 

I, Marc A. Dosmann,certify that:

 

7.                                       I have reviewed this quarterly report onForm 10-Q of Liberty Homes, Inc.;

8.                                       Based on my knowledge, this quarterlyreport does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

9.                                       Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, periods presentedin this quarterly report;

10.                                 The registrant’s other certifying officerand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

d.                                      designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

e.                                       evaluated the effectiveness of theregistrant’s disclosures controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

f.                                         presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

11.                                 The registrant’s other certifying officerand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent function):

c.                                       all significant deficiencies in the designor operation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

d.                                      any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

12.                                 The registrant’s other certifying officerand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weakness.

 
| November 14, 2002 |   | /s/ MARC A. DOSMANN                                             |
|-------------------|--------|-----------------------------------------------------------------|
| Date              |   | Marc A. Dosmann, Vice  President — Chief Financial Officer |

 

 

15

----