FORM  10-K

                       SECURITIES  AND  EXCHANGE  COMMISSION
                             Washington,  D.C.  20549
(Mark  One)

[X]  ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934
For  the  fiscal  year  ended  June  30,  2001
                                        OR

[  ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d) OF THE SECURITIES
      EXCHANGE  ACT  OF  1934
For  the  transition  period  from        to
                                   ------    ------

Commission  file  number  1-8824
                             CLAYTON  HOMES,  INC.
     (Exact  name  of  registrant  as  specified  in  its  charter)

Delaware                               62-1671360
----------------------------------    ----------------------------------------
(State  or  other  jurisdiction       (I.R.S.  Employer Identification  Number)
of  incorporation or  organization)


5000  Clayton  Road
Maryville,  Tennessee                  37804
----------------------------------    ----------------------------------------
(Address  of  principal  executive    (Zip  Code)
offices)

Registrant's  telephone  number,  including  area  code:  865-380-3000
Securities  registered  pursuant  to  Section  12(b)  of  the  Act:

                                              Name  of  each  exchange  on
Title  of  each  class                        which  registered
-----------------------------------------     --------------------------------
COMMON  STOCK,  $.10  PAR VALUE PER SHARE     NEW YORK STOCK EXCHANGE


      Securities  registered  pursuant  to  section  12(g)  of  the  Act:  None

Indicate  by check mark whether 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]

Aggregate  market  value  of  the  voting  stock  held  by non-affiliates of the
registrant  on  August  15,  2001,  was approximately $1,501,377,348 (99,693,051
shares  at  closing  price  on  the  NYSE  of  $15.06).

Shares  of  common  stock,  $.10 par value, outstanding on August 15, 2001, were
138,089,368.

Exhibit  index  appears  on  pages  14-15.

                DOCUMENTS  INCORPORATED  BY  REFERENCE

<TABLE>
<CAPTION>

Part of Form 10-K                                      Documents from which portions are incorporated by reference
-----------------------------------------------------  -----------------------------------------------------------------
<S>                                                    <C>
Part II (except for Item 5)                            Annual Report to Shareholders for fiscal year ended June 30, 2001

Part III                                               Proxy Statement relating to Company's
                                                       Annual Meeting of Shareholders on October 30, 2001
</TABLE>


                                        1
<PAGE>

                             CLAYTON  HOMES,  INC.

                                    PART  I

ITEM  1.  BUSINESS.

GENERAL

Clayton  Homes,  Inc.  and its subsidiaries (the Company) produce, sell, finance
and  insure primarily low to medium-priced manufactured homes.  The Company's 20
manufacturing plants produce homes which are marketed in 33 states through 1,012
retailers, of which 297 are Company-owned sales centers and 81 are Company-owned
community  sales  offices.  Installment  financing  and  insurance  products are
offered to its home buyers and those buying from selected independent retailers.
Such  financing  is  provided  through  its  wholly-owned  finance  subsidiary,
Vanderbilt  Mortgage  and Finance, Inc. (VMF).  The Company acts as agent, earns
commissions  and reinsures risks on physical damage, family protection, and home
buyer  protection  insurance  policies issued by a non-related insurance company
(ceding  company) in connection with its home sales.  The Company also develops,
owns,  and  manages  manufactured  housing  communities.

The Company is a Delaware corporation whose predecessor was incorporated in 1968
in  Tennessee.  Its  principal  executive  offices  are  located near Knoxville,
Tennessee.

The  following  table  indicates the percentage of revenue derived from sales by
Company-owned  retail  centers,  sales  to  independent  retailers and financial
services  operations  and  other income for each of the last three fiscal years.

<TABLE>
<CAPTION>

                                              YEAR ENDED JUNE 30,
<S>                                       <C>       <C>       <C>
                                            2001      2000      1999
                                           ------    ------    ------
Sales by Company-owned retail centers
  and communities                            54%       55%       53%
Sales to independent retailers               19%       22%       25%
Financial services and other                 27%       23%       22%
                                           ------    ------    ------
Total                                       100%      100%      100%
                                           ------    ------    ------
</TABLE>

For information relating to the Company's four major business segments, see Note
11  to  the  Consolidated Financial Statements in the Company's Annual Report to
Shareholders.

MANUFACTURED  HOMES

A  manufactured home made by the Company is a factory-built, completely finished
dwelling.  Constructed to be transported by truck, the home is mounted on wheels
attached  to  its  frame.  Manufactured  homes  are  designed  to  be permanent,
owner-occupied  residences  sited  and  attached  to  utilities.

The  Company  manufactures a variety of single and multi-section homes in a wide
price range.  Retail prices range from $10,000 to $75,000 with sizes from 500 to
2,400  square  feet.

The  Company  markets  homes  under  the names of Clayton and Norris.   Included
standard  features  are  central  heating,  range,  refrigerator,  and
color-coordinated  window, wall and floor treatments.  Optional features include
central  air  conditioning,  wood-burning fireplaces, hardwood floors, whirlpool
tubs,  entertainment  systems,  microwaves,  dishwashers,  washers  and  dryers,
skylights  and  furniture.

MANUFACTURING  OPERATIONS

The  Company manufactures homes in 20 facilities, ranging in size from 63,000 to
194,000  square  feet.  See "Item 2. Properties" for a listing by location.  The
Company's  manufactured  homes  are  built  in  its  plants  using assembly-line
techniques. Completion of a home ordinarily takes two days.  Homes are generally
produced  to  fill  orders  received  from  independent and Company-owned retail
centers;  therefore  the  Company  does  not  normally  maintain  a  significant
inventory of homes at its plants.  Completed homes are transported to the retail
centers  by  independent  carriers.

                                        2
<PAGE>

The  Company's  plants  operate  on  a  one-shift-per-day  basis, normally for a
five-day week, with the capacity to produce approximately 35,000 homes per year.
During  the  fiscal year ended June 30, 2001, the Company produced 19,701 homes.

The  principal  materials  utilized in the production of the Company's homes are
steel, aluminum, wood, fiberglass, carpet, vinyl floor covering, hardware items,
appliances  and  electrical  items.  The Company purchases these and other items
from  a  number  of supply sources, and it believes that the materials and parts
necessary  for  the  construction  and assembly of its homes will remain readily
available  from  these  sources.  In  the  event that any of these items are not
readily  available  or are available at a higher cost than could be passed on to
consumers,  the  operations  of  the  Company  could  be  adversely  affected.

The  Company  offers  one  year limited warranty programs covering manufacturing
defects  in  materials or workmanship in a home.  Warranties covering appliances
and  equipment  installed  in  the  homes  generally  are  obligations  of  the
manufacturers  of such items and not those of the Company.  Warranty and service
costs  during  the  years ended June 30, 2001, June 30, 2000, and June 30, 1999,
amounted  to  approximately  $14,193,000,  $14,589,000,  and  $16,085,000,
respectively.

The  backlog  of  firm  orders  for homes manufactured by the Company, including
orders  from  Company-owned  retail  centers,  was approximately $35,000,000 and
$16,000,000  on  June  30, 2001, and 2000, respectively.  Based on the Company's
production  rate,  approximately  three  weeks would be required to fill backlog
orders  at  June  30,  2001.

SALES  OF  HOMES  MANUFACTURED  BY  THE  COMPANY

The  following  table  sets  forth  manufacturing  sales  and other data for the
periods  indicated.

<TABLE>
<CAPTION>
                                                                 YEAR  ENDED JUNE 30,
                                                               2001      2000      1999
                                                               ----      ----      ----
<S>                                                          <C>       <C>        <C>
Number of homes sold to independent retailers                  9,119    12,247    14,980
Number of homes shipped to Company-owned retail centers       10,804    14,101    13,364
                                                              ------    ------    ------
Total                                                         19,923    26,348    28,344
                                                              ======    ======    ======
Number of plants operating                                        20        20        19
Number of independent retailers                                  634       707       671
Number of Company-owned communities                               81        76        75
Number of Company-owned retail centers                           297       318       306
</TABLE>

COMPANY  RETAIL  OPERATIONS

As  of  June  30,  2001, the Company sold homes through 297 Company-owned retail
centers  in  23  states.  In  addition  to  selling  homes built by the Company,
virtually  all  of  these  retail  centers  sell new homes manufactured by other
companies  and  previously-owned  manufactured  homes.

The  following  table  indicates  the number of Company-owned retail centers and
certain  information  relating to homes sold during the last three fiscal years.

<TABLE>
<CAPTION>
                                                           YEAR ENDED JUNE 30,
                                                          2001     2000     1999
                                                         -------  -------  -------
<S>                                                      <C>      <C>      <C>
Number of Company-owned retail centers                       297      318      306
Number of new homes sold (including homes built by the
    Company and by other manufacturers)                   12,346   14,022   14,894
Average retail price of new homes sold                   $43,643  $43,892  $41,173
Number of previously-owned homes sold                      3,556    3,910    4,580
</TABLE>

All  of  the  Company-owned  retail centers employ salespeople who are primarily
compensated  on  a  commission  basis.  The  retail  centers  do  not  have
administrative  staffs  since most administrative functions are performed at the
Company's  corporate  headquarters.

                                        3
<PAGE>

To  provide  customers  a  wider price range of homes, the Company purchases and
acquires  on  trade  previously-owned  homes  from  individuals  and  from other
retailers,  as  well  as  foreclosed  homes  from  lenders  throughout its trade
territory.

Homes  sold  by  Company-owned  retail  centers are delivered to the homeowners'
sites  by  trucks  either  owned  by  the  Company  or leased for the particular
delivery.  The  purchase price of the home may include delivery and setup of the
home at the retail homeowner's site.  Electrical, water, and gas connections are
performed  by  licensed  technicians.

INDEPENDENT  RETAILERS

In  the  years  ended  June 30, 2001, and 2000, 46% of homes manufactured by the
Company  were  sold  to  its  independent  retailers.  As  of June 30, 2001, the
Company  supplied  634  independent  retailers  in  32  states  with homes.  The
Company's  independent  retailer  network enables it to distribute homes to more
markets,  more  quickly,  without as large an investment in management resources
and  overhead  expenses as is required with Company-owned retail centers.  Sales
to  independent retailers ensure the Company that its homes are competitive with
other  manufacturers in terms of consumer acceptability, product design, quality
and  price.

The  Company's  finance subsidiary, VMF, provides financing for retail customers
of  select  independent  retailers  with  terms  and conditions similar to those
provided  to  Company-owned locations.  In addition, VMF also provides inventory
financing  for  certain  independent  retailers.

The  Company  establishes relationships with independent retailers through sales
representatives  from  its  manufacturing  plants.  These  representatives visit
independent  retailers  in  assigned  areas  to solicit orders for the Company's
homes.  The  area  is  generally  limited  to a 500 mile radius from each of the
Company's  manufacturing  plants  due  to  the  relatively  significant  cost of
transporting  a  home.  Depending  on the cost of the home and the manufacturing
competition  within  the  area,  a  home may be competitively shipped shorter or
longer  distances.  During  each  of  the  last  three  fiscal years no retailer
accounted  for  more  than  2%  of  the  Company's  consolidated  revenues.

The  Company's  independent  retailers  generally  provide  their  own inventory
financing,  allowing  the  Company to receive payment for homes within two weeks
after the home is constructed.  The Company does not require agreements with its
independent  retailers, and the relationship between the Company and each of its
independent  retailers  may  be  terminated  at  any  time by either party.  The
Company  believes its relationships with independent retailers are good, and has
experienced  relatively  little turnover among independent retailers in the past
several  years.  The Company generally has little control over the operations of
independent  retailers.

Typically  the  Company  neither  provides  inventory financing arrangements for
independent  retailer  purchases  nor  consigns  homes.  As  is customary in the
industry,  lenders  financing  independent  retailer  purchases require that the
Company  execute  repurchase  agreements  which  provide  that,  in the event of
retailer  default  under  the  retailer's  inventory financing arrangements, the
Company  will  repurchase  homes  for the amount remaining unpaid to the lender,
excluding  interest  and repossession costs. Historically, any homes repurchased
under  such  agreements  are  immediately  resold  to other retailers, including
Company-owned  retail centers, at approximately the repurchase price. During the
last five fiscal years, the Company has incurred no significant losses resulting
from  these  contingent  obligations,  but there can be no assurance that losses
will  not  occur  in  the  future.

FINANCIAL  SERVICES

The  Company  believes  that  the  ability to make financing available to retail
purchasers  is a material factor affecting the market acceptance of its product.
The  Company  facilitates retail sales by offering various finance and insurance
programs.  The  following  table reflects the relative percentages of homes sold
by  Company-owned retail centers which were financed through the Company, either
by  VMF  or  by  conventional  lenders,  and  those  sales made to customers who
arranged  their  own  financing  or  paid  cash.

                                        4
<PAGE>

<TABLE>
<CAPTION>
                                   YEAR ENDED JUNE 30,
                                2001      2000      1999
                               -----     -----     -----
<S>                           <C>       <C>       <C>
VMF                              74%       76%       72%
Conventional lenders              2%        3%        7%
Customer arranged or cash        24%       21%       21%
                               -----     -----     -----
Total                           100%      100%      100%
                               =====     =====     =====
</TABLE>

VMF  also  purchases  and  originates  manufactured housing installment contract
receivables  (also  referred  to  as  manufactured  housing  contracts)  on  an
individual  basis  from  independent  retailers.  Retailers  submit  home  buyer
applications  to  VMF for approval and, provided that credit reports, employment
verification,  and  income  and  debt  analysis  meet VMF's criteria, a contract
purchase  commitment  is  issued  to  the  selling  retailer.

VMF  makes  bulk  purchases  of  manufactured  housing  contracts from banks and
commercial lenders. It also performs, on behalf of other institutions, servicing
of  manufactured housing contracts that were not purchased or originated by VMF.
These purchases and servicing arrangements may relate to the portfolios of other
lenders  or  finance  companies,  governmental  agencies, or other entities that
purchase  and  hold  manufactured  housing  contracts.

UNDERWRITING  POLICIES.  Retail customers of the Company who express a desire to
obtain  financing  by  or through the Company complete a credit application form
which  is  initially  reviewed  by  the  manager  of  the retail center and then
forwarded  to  VMF.

VMF's  underwriting  guidelines require that each applicant's credit, residence,
employment  history  and  income  to  debt  payment  ratios  meet  predetermined
guidelines.  If  in the judgment of the VMF credit manager an applicant does not
meet  minimum underwriting criteria, there must be other determining criteria in
order  for an applicant to be approved.  Credit managers confirm that the credit
investigation  gives  a  complete  and  up-to-date accounting of the applicant's
creditworthiness  and  are  encouraged  to  obtain  second opinions on loans for
relatively  large  dollar  amounts or those which tend to rank lower in terms of
underwriting  criteria.  Generally,  the  sum of the monthly installment housing
obligation,  which  includes the manufactured home loan payment and monthly site
costs,  should  not  exceed  35%  of  the  applicant's  gross  monthly  income.

With  respect  to  those  home  buyers  which  are approved, VMF requires a down
payment  in  the  form  of  cash,  the  trade-in  value  of  a  previously-owned
manufactured home, and/or the estimated value of equity in real property pledged
as  additional  collateral.  For  previously-owned homes, the trade-in allowance
accepted  by  the  retailer  must  be  consistent  with the value of the home as
determined  by  VMF  in  light  of current market conditions.  The value of real
property pledged as additional collateral is estimated by licensed appraisers or
by  retail  personnel,  who are not appraisers but are familiar with the area in
which the property is located.  The average down-payment for 2001 was 19% of the
purchase price, while the minimum down-payment for qualified buyers was 5%.  The
purchase  price  includes  the  stated cash sale price of the manufactured home,
sales  or  other  taxes  and  fees  and  set-up  costs.

The  balance  of  the purchase price is financed using various installment sales
contracts  or  mortgage  instruments  providing  for  a  purchase money security
interest in the manufactured home and a mortgage on any real property pledged as
additional  collateral.  Normally,  the  contracts  provide  for  equal  monthly
payments,  generally over a period of seven to thirty years at fixed or variable
rates  of  interest.  VMF  believes  the  typical manufactured home purchaser is
primarily  sensitive to the amount of the monthly payment and not necessarily to
the  underlying  interest  rate.

The  Company  offers  a bi-weekly payment program which provides for 26 payments
per  year,  allowing  home  buyers  the  convenience  of electronically drafting
payments  from  their  checking  accounts while reducing the overall term of the
loan.  The  Company  believes  that such financing options are attractive to the
customer  and  improve  market  acceptance  of  its  homes  as  well  as improve
delinquency  and  repossession  experience.

During  the  last  13  fiscal  years,  VMF  was  the  most significant source of
financing  for purchasers of homes sold by the Company-owned retail centers.  In
fiscal  1988,  VMF originated 5,692 contracts and in fiscal 2001, VMF originated
21,720  contracts.  At  June  30,  2001, VMF was servicing approximately 148,000

                                        5
<PAGE>

contracts  with  an  aggregate dollar amount of $4.3 billion.  VMF originated or
purchased  approximately  138,000  of  these  contracts with an aggregate dollar
amount of $4.1 billion.  The Company expects that VMF will continue to originate
a  significant  portion  of  the  financing  for  purchasers  of  its  homes.

The  volume  of manufactured housing contracts originated by VMF for the periods
indicated  below  and certain other information at the end of such periods is as
follows:

<TABLE>
<CAPTION>
                                                 CONTRACT ORIGINATIONS
                                                   YEAR ENDED JUNE 30,
                                              2001       2000        1999
                                            ---------  ---------  -----------
<S>                                         <C>        <C>        <C>
Principal balance of contracts originated
  (in thousands)                            $815,058   $982,570   $1,085,484
Number of contracts originated                21,720     26,161       30,165
Average contract size                       $ 37,526   $ 37,559   $   35,985
Average interest rate                          11.67%     10.85%       10.40%
</TABLE>

The following table indicates the number of loans (in thousands) serviced by VMF
on  the  dates  indicated:

<TABLE>
<CAPTION>
                                              LOANS SERVICED (IN THOUSANDS)
                                                    YEAR ENDED JUNE 30,
                                               2001       2000        1999
                                               ----       ----        ----
<S>                                           <C>        <C>         <C>
Originated and purchased loans serviced         138        130         120
Master servicing contracts                       10         12          15
                                               ----       ----        ----
Total                                           148        142         135
</TABLE>

VMF  FUNDING.  VMF draws on its short-term credit facilities with the Company to
fund  manufactured home loans, while long-term financing is obtained through the
capital  markets.  In  fiscal  2001,  VMF  completed  three  public offerings of
asset-backed  securities  totaling  $886  million.  In excess of $6.4 billion of
securities  have  been  issued  and  sold  since  1991.

VMF's  capital  market activity, the primary source of permanent funding for its
lending activities, is in the form of asset-backed securities issued through its
special purpose entity.  These securities, which are sold in public markets, are
collateralized  by  manufactured housing receivables which are either originated
or acquired by VMF.  Certain of these receivables are originated and subserviced
by  other  entities.  With  respect  to  the  securitized  pools  that  contain
receivables  originated  or  acquired by other entities, VMF is servicer for all
loans  in the pools, with a subservicing arrangement on some loans originated or
acquired  from  other  entities.

Loans  insured  by the Federal Housing Administration (FHA) or guaranteed by the
Veterans  Administration  (VA)  are  permanently  funded  through the Government
National  Mortgage  Association  (GNMA)  pass-through  program.  Under  the GNMA
program,  installment  sales  contracts are warehoused by VMF and then pooled in
denominations  of  approximately $2,500,000 to collateralize the issuance by VMF
of  securities  guaranteed  by GNMA under the provisions of the National Housing
Act.  Under the GNMA program, VMF retains the servicing of the installment sales
contracts and is responsible for passing through payments under the contracts to
GNMA  security  holders.  During  the  fiscal  year  ended  June  30,  2001, VMF
originated  installment  sales  contracts  eligible for financing under the GNMA
program  having aggregate principal balances of $1,647,000. As of June 30, 2001,
VMF was servicing 226 GNMA pools totaling $85 million in principal balances. Use
of  FHA  financing  minimizes  the  Company's  contingent  liability  for  these
installment  sales  contracts  because  of  the government-insured nature of the
loans. Accordingly, the Company believes that the use of this form of financing,
for  customers  who  qualify,  increases  the  marketability of its manufactured
homes.

Certain  of  the agreements related to borrowings include covenants with respect
to  the  Company's  financial  condition and corporate existence. The Company is
contingently  liable  as guarantor on installment contract receivables sold with
recourse.  At  June  30,  2001,  and 2000, the outstanding principal balances of
these  receivables  totaled  approximately  $84  million  and  $117  million,
respectively.  There  were  no  receivables sold with recourse in 2001, 2000 and
1999.

                                        6
<PAGE>

ACQUIRED  CONTRACTS  AND SERVICING ARRANGEMENTS.  Certain acquired contracts are
originated  by  banks or commercial lenders, and acquired indirectly or directly
by  VMF.  The  acquired  contracts  are  purchased  on the basis of underwriting
criteria  that  may  be  different  from  and  may  not  be  as  strict as VMF's
underwriting  criteria.

In  fiscal  1994  and  1998,  VMF  became  the  servicer  of  20,180  and 10,013
manufactured  housing  installment  sales  contracts  with approximate principal
balances  of  $285  million  and $267 million, respectively.  VMF acts solely as
servicer  with  respect  to these contracts and, thus, has no ownership interest
nor contingent liability related to these portfolios.  At June 30, 2001, VMF was
servicing  approximately  10,000  of  these  installment sales contracts with an
approximate  principal  balance  of  $188  million.

DELINQUENCY  AND  REPOSSESSION  EXPERIENCE.  VMF  performs  recordkeeping  and
collection  activities  on  all  loans  that  it originates or purchases through
portfolio  acquisitions.  Although  the terms of the installment sales contracts
vary  according to the financial institutions which purchase the contracts, most
contracts provide that the failure to make a payment as scheduled is an event of
default which gives rise to the right to repossess the home.  However, generally
the  Company  does  not  repossess  the  home  until  payments  are three months
delinquent, unless the borrower does not have apparent ability to bring payments
current,  in  which  case  repossession may occur sooner.  The Company generally
follows  the  same policy with respect to loans insured by the FHA or guaranteed
by  the  VA,  although  the Company must also file a notice of claim within nine
months  after default with the agency to preserve its rights under the programs.

The  following  table  sets  forth  delinquent  installment sales contracts as a
percentage  of  the  total  number  of  installment sales contracts on which the
Company  provided  servicing  and  was  either contingently liable or owner.  An
account  is  considered  delinquent  if any payment is past-due 30 days or more.

<TABLE>
<CAPTION>
                                         DELINQUENCY PERCENTAGE AT JUNE 30,
                                               2001      2000     1999
                                               ----      ----     ----
<S>                                           <C>      <C>      <C>
Total delinquencies as percentage of
  contracts outstanding
  All contracts                                 2.59%    2.19%    2.07%
  Contracts originated by VMF                   2.12     1.67     1.84
  Contracts acquired from other institutions    4.89     4.88     3.14
</TABLE>

The  following  table  sets  forth information related to loan loss/repossession
experience  for  all  installment  contract  receivables on which the Company is
either  owner  or  contingently  liable:

<TABLE>
<CAPTION>
                                                      YEAR ENDED JUNE 30,
                                                  2001      2000       1999
                                                  ----      ----       ----
<S>                                             <C>        <C>        <C>
Net losses as percentage of average
  loans outstanding
     All contracts                                1.8%       1.4%       1.4%
     Contracts originated by VMF                  1.7%       1.2%       1.0%
     Contracts acquired from other institutions   2.5%       2.8%       3.7%
Number of contracts in repossession
     All contracts                               2,652      2,231      1,857
     Contracts originated by VMF                 2,191      1,774      1,374
     Contracts acquired from other institutions    461        457        483
Total number of contracts in repossession as
  percentage of total contracts                  1.93%      1.72%      1.54%
</TABLE>

The  Company  pays the unpaid balance of an installment sales contract for which
it  is  liable upon repossession of the home.  The Company believes that as long
as  it  is  able  to sell repossessed homes promptly at satisfactory prices, the
costs associated with remarketing these homes can be mitigated.  There can be no
assurance  that  the  Company's  future  results  with respect to the payoff and
resale  of  repossessed  homes will be consistent with its past experience.  See
Note  6  to the Consolidated Financial Statements in the Company's Annual Report
to  Shareholders.

                                        7
<PAGE>

INSURANCE  OPERATIONS.  The  Company  acts  as  agent on physical damage, family
protection,  and  home  buyer  protection  plan  insurance  policies  written by
unaffiliated  insurance  companies  (ceding  companies)  for  purchasers  of its
manufactured  homes.  During  the  fiscal  year ended June 30, 2001, the Company
acted  as  the  agent  on  physical  damage,  family  protection, and home buyer
protection policies on approximately 67%, 54%, and 78%, respectively, of Company
retail  sales.  Physical  damage  and home buyer protection plan policies issued
through  the  Company's  agency  are  reinsured  through Vanderbilt Property and
Casualty  Insurance  Co.,  LTD (VPAC), a wholly-owned subsidiary of the Company.

The family protection insurance policies issued through the Company's agency are
reinsured  through  Vanderbilt  Life  and  Casualty  Insurance Co., LTD, (VLAC),
Midland  States  Life Insurance Company (MSLC) and Eastern States Life Insurance
Company  (ESLC),  which  are  majority-owned  subsidiaries  of  the  Company.

MANUFACTURED  HOUSING  COMMUNITIES

The  Company  owns  and  operates 81 manufactured home communities in 12 states.
These  communities  provide  attractive living environments to residents leasing
sites  for  manufactured homes, many of which are built and sold by the Company.
In  addition,  these  communities  also lease sites to residents who already own
their  homes.  Some  communities  also  lease or rent Company-owned manufactured
homes  and  the  sites.

In  fiscal  2001  the Communities group purchased or developed 733 home sites in
five communities and added 220 sites at existing locations, bringing total sites
owned  to 21,121 at June 30, 2001, a 5% increase from the prior year.  See "Item
2.  Properties."  Communities'  overall  revenues  were down 3% in 2001.  Rental
revenues  rose 8% and sales decreased 12%.  The following table lists the number
of community sites owned and the aggregate occupancy rate at the end of the last
three  fiscal  years:

<TABLE>
<CAPTION>

                                    JUNE 30,
                             2001     2000     1999
                             ----     ----     ----
<S>                         <C>      <C>      <C>
Homes sites owned          21,121   20,168   19,708
Occupancy rate                75%      75%      73%
</TABLE>

REGULATION

The  Company's  manufactured homes are subject to a number of federal, state and
local  laws.  Construction  of  manufactured housing is governed by the National
Mobile  Home  Construction  and  Safety  Standards  Act  of  1974.  In 1976, the
Department  of Housing and Urban Development (HUD) issued regulations under this
Act  establishing  comprehensive  national  construction  standards.  The  HUD
regulations  cover  all  aspects  of  manufactured  home construction, including
structural  integrity,  fire  safety,  wind  loads  and thermal protection.  The
Company's  manufacturing  facilities  and  the  plans and specifications for its
manufactured  homes have been approved by a HUD-designated inspection agency.  A
HUD-approved  organization  regularly  inspects the Company's manufactured homes
for  compliance during construction.  Failure to comply with the HUD regulations
could  expose  the Company to a wide variety of sanctions, including closing the
Company's  plants.  The  Company  believes the homes it manufactures comply with
all  present  HUD requirements.  In addition, certain components of manufactured
homes  are subject to regulation by the Consumer Product Safety Commission which
is  empowered,  in  certain circumstances, to ban the use of component materials
believed  to  be  hazardous  to health and to require the manufacturer to repair
defects  in  components  in  its  homes.  In  February  1983,  the Federal Trade
Commission  adopted  regulations  requiring  disclosure of a manufactured home's
insulation  specifications.

A  variety  of  laws  affect  the  sale  of  manufactured homes on credit by the
Company.  The  Federal  Consumer  Credit  Protection  Act (Truth-in-Lending) and
Regulation  Z  (issued  by the Board of Governors of the Federal Reserve System)
require  written  disclosure  of  information  relative  to  such  credit sales,
including  the amount of the annual percentage rate and the finance charge.  The
Federal  Fair  Credit  Reporting  Act  also  requires  disclosure  of  certain
information  used  as  a  basis  to  deny  credit.  The  Federal  Equal  Credit
Opportunity  Act  and  Regulation  B  (issued  by  the Board of Governors of the
Federal  Reserve  System)  prohibit  discrimination against any credit applicant
based  on  sex,  marital  status,  race,  color,  religion, national origin, age
(provided  the  applicant  has the capacity to contract), receipt of income from
any public assistance program or the good faith exercise by the applicant of any
right  under  the  Consumer  Credit  Protection  Act.  Regulation  B establishes
administrative requirements for compliance with the Equal Credit Opportunity Act
and, among other things, requires the Company to provide a customer whose credit
request has been denied with a

                                        8
<PAGE>

statement  of reasons for the denial. The Federal Trade Commission has issued or
proposed  various  Trade  Regulation Rules dealing with unfair credit practices,
collection efforts, preservation of consumers' claims and defenses and the like.
Installment  sales  contracts  eligible  for  inclusion  in the GNMA Program are
subject  to  credit  underwriting  requirements  of  the  FHA  or  the  VA.

The  movement and use of the Company's manufactured homes are subject to highway
use  laws,  ordinances  and  regulations  of  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  and  its  development  of  manufactured  housing
communities  are  also  subject  to  local  zoning  and  housing  regulations.

The  Company  is  subject  to  the  Magnuson-Moss Warranty 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. Insurance agency activities are subject to state insurance
laws  and regulations as determined by the particular insurance commissioner for
each  state  in  accordance with the McCarran-Ferguson Act.  Sales practices are
governed at both the federal and state level through various consumer protection
trade  practices  and  public  accommodation  laws  and  regulations.

VPAC  and  VLAC  are  subject  to insurance and other regulations of the British
Virgin Islands.  MSLC and ESLC are subject to insurance and other regulations of
the  Turks  and  Caicos  Islands.

COMPETITION

The  manufactured  housing  industry is highly competitive at the manufacturing,
retail  and finance levels in terms of price, service, delivery capabilities and
product  performance.  There  are  many  firms  in  direct  competition with the
Company.  The  Company  believes it has a competitive advantage over firms which
do  not  have  manufacturing,  retailing  and financing capabilities.  Since the
Company's homes are a form of low-cost housing, they compete with other forms of
such  housing  including  apartments  and conventionally-built and prefabricated
homes.  Some  of  the  Company's  competitors  are  larger  and have significant
financial  resources  while other competitors are quite small in relation to the
size  of  the  Company.  The  capital  requirements  for  entry  into  both  the
manufacturing and retail segments are relatively small, with financing available
to them.  The Company is not able to estimate the total number of competitors in
its  marketing  area.

EMPLOYEES

As  of  June  30, 2001, the Company employed 6,554 persons. Of these, 1,905 were
employed  in  retail,  3,529 in manufacturing, 580 in financial services, 455 in
communities  and  85 in executive and administrative positions. The Company does
not  have  any  collective  bargaining  agreements  and  considers  its employee
relations  to  be  good.

ITEM  2.  PROPERTIES.

The  Company's  Financial  Services operations and executive offices are located
near  Knoxville,  Tennessee  in  a wholly-owned, two-story building with 135,000
square  feet  of  space. The following table sets forth the properties which the
Company  uses for its manufacturing operations and locations of its manufactured
housing communities.  All of the buildings used for manufacturing operations are
constructed  of  fabricated  metal  on  a  concrete  slab.

                                        9
<PAGE>

LOCATION  OF  PROPERTY

<TABLE>
<CAPTION>


                               APPROXIMATE                                 APPROXIMATE
MANUFACTURING OPERATIONS       SQUARE FEET       MANUFACTURING OPERATIONS  SQUARE FEET
<S>                       <C>                    <C>                       <C>
Owned by Company                                 Owned by Company
  Arizona                                          Tennessee (continued)
    El Mirage                    123,000             Ardmore                  100,000
  Georgia                                            Rutledge                  87,000
    Waycross                     100,000             Bean Station #1          114,000
  Kentucky                                           Bean Station #2          137,000
    Hodgenville                  130,000             Andersonville            128,000
  North Carolina                                     White Pine               137,000
    Henderson                    112,000           Texas
    Oxford                        92,000             Waco #1                  148,000
    Richfield                    194,000             Waco #2                   99,000
  Tennessee                                          Bonham                   117,000
    Maynardville                 110,000             Sulphur Springs          113,000
    Savannah #1                  104,000
    Savannah #2                  109,000          Leased
                                                    Halls, Tennessee           63,000
</TABLE>

<TABLE>
<CAPTION>
                               APPROXIMATE                                 APPROXIMATE
COMMUNITIES                      ACRES          COMMUNITIES                   ACRES
<S>                          <C>                <C>                     <C>
Owned by Company                                 Owned by Company
  Arizona                                          Tennessee
    El Mirage                         35             Chattanooga                   34
    Glendale                          14             Knoxville (4)                202
    Phoenix                           47             LaVergne                      76
  Florida                                            Louisville                    41
    Gainesville (2)                  132             Millington                    29
    Jacksonville (5)                 330             Morristown                    12
    Kissimmee                         41             Maryville (2)                 34
    Mulberry (2)                     162             Powell (2)                    69
    Plant City                        38             Sevierville                  115
    Princeton                         37             Smyrna                        26
    Tallahassee                       39             Tullahoma                     18
  Georgia                                          Texas
    Douglasville (2)                  97             Arlington                     39
    Rossville                         78             Dallas (3)                   140
  Iowa                                               Denton (3)                   201
    Carter Lake                       41             Fort Worth (4)               154
  Michigan                                           Flower Mound                  18
    Kalamazoo                        126             Greenville                    40
  Missouri                                           Houston (3)                  153
    Independence                      90             Humble                        55
  North Carolina                                     Little Elm                    86
    Greensboro                        83             Pearland                      50
  Oklahoma                                           San Angelo                    90
    Edmond                            37             San Antonio (6)              294
    Enid                              20             Schertz                       71
    Lawton                            38             Wilmer                        69
    Midwest City                      25             Wylie (2)                    209
    Norman                            44           Virginia
    Oklahoma City (2)                116             Evington                      70
  South Carolina                                     Blacksburg                    38
    Columbia                          97
    Florence (2)                      97
</TABLE>

                                       10
<PAGE>

The  Company-owned  retail  centers  are three to four acre sites with a special
manufactured  office  unit  serving  as  the sales office.  The remainder of the
retail  center  site  is  devoted  to  the  display of homes.  Of the 297 retail
centers,  162  are  owned and 135 occupy leased property.   The Company does not
believe  that  any  individual  retail  sales center property is material to its
overall  business.

All  of  the properties described above are well maintained and suitable for the
purposes  for  which  they  are  being  used.  The  Company  believes  that  its
properties  are  adequate  for  its  near-term  needs.

ITEM  3.  LEGAL  PROCEEDINGS.

No  material  legal  proceedings  are  pending  other  than  routine  litigation
incidental  to  the  business  of  the Company.   The Company believes that such
proceedings  will  not have any material adverse effect on it or its operations.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SHAREHOLDERS.

No  matters were submitted to shareholders during the last quarter of the fiscal
year.

                                       11
<PAGE>
                                     PART II

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

(a)  The  Company's  Common Stock is traded on the New York Stock Exchange.  The
following  table  sets  forth, for fiscal years 2001 and 2000, respectively, the
range  of  high  and  low  closing sale prices as reported by the New York Stock
Exchange,  Inc.

<TABLE>
<CAPTION>
                             Fiscal                Fiscal
                              2001                  2000
                              ----                  ----
Quarter Ended             High      Low        High      Low
<S>                       <C>       <C>       <C>       <C>
   September             $10.00    $8.13      $11.88    $8.56
   December               12.88     8.75       11.94     8.50
   March                  14.50    12.05       10.13     7.81
   June                   15.82    11.55       10.38     7.94
</TABLE>

(b)  As  of  August 15, 2001, there were 9,687 holders of record (approximately
44,000  beneficial  holders)  of  the  Company's  Common  Stock.

(c)  It  is  the  policy  of  the  Board of Directors of the Company to reinvest
substantially all earnings in the business. At its April 2001 meeting, the Board
of  Directors  changed the Company dividend policy from quarterly payments to an
annual payment. The first annual dividend of 6.4 cents per share will be paid in
January  2002.  Future  dividend  policy  will depend on the Company's earnings,
capital  requirements, financial condition and other factors considered relevant
by  the  Board  of  Directors.  Additionally, certain of the Company's financing
agreements  have  various covenants that restrict payments which may be made for
dividends  and  other  stock  transactions.

The  following  portions of the Company's 2001 Annual Report to Shareholders are
incorporated  herein by reference (page number references are to Annual Report):

ITEM  6.  SELECTED  FINANCIAL  DATA.
Eleven  Year  Review  on  page  12.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS.
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations  on  pages  13-15.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK.
Market  Risk  on  page  14-15.

ITEM  8.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA.

 -  Quarterly  Results  (unaudited)  on  page  15.
 -  Report  of  Independent  Accountants  on  page  16.
 -  Consolidated  Balance  Sheets  on  page  16.
 -  Consolidated  Statements  of  Income  on  page  17.
 -  Consolidated  Statements  of  Shareholders'  Equity  on  page  17.
 -  Consolidated  Statements  of  Cash  Flows  on  page  18.
 -  Notes  to  the  Consolidated  Financial  Statements  on  pages  19-25.

ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE.
Not  applicable.

                                       12
<PAGE>
                            PART  III
ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT.

EXECUTIVE  OFFICERS  OF  THE  COMPANY

<TABLE>
<CAPTION>

NAME                 AGE      POSITION
<S>                  <C>      <C>
Kevin T. Clayton      38      Chief Executive Officer, President, and President, Financial Services (a)

David M. Booth        48      Executive Vice President and President, Retail (b)

Richard D. Strachan   59      Executive Vice President and President, Manufacturing (c)

John J. Kalec         51      Senior Vice President and Chief Financial Officer (d)

Allen Morgan          54      Vice President and General Manager, Communities (e)

Amber W. Krupacs      37      Vice President Finance (f)

Greg A. Hamilton      43      Vice President and Controller (g)
</TABLE>

(a)  Mr.  Clayton  has been President of Financial Services since 1995. Prior to
that  time,  he  served  in  various  management positions with the Company.  In
August  1997, he was named President and Chief Operating Officer of the Company.
In  July  1999,  he  was  named  Chief  Executive  Officer.
(b)  Mr.  Booth  has been Executive Vice President of the Company since 1997 and
President of Retail since 1995.  Prior to that time, he served as Executive Vice
President  of  Retail  and  in  other  management  positions  with  the Company.
(c)  Mr. Strachan has been Executive Vice President of the Company and President
of Manufacturing since 1998 and President of Manufacturing since 1997.  Prior to
that  time,  he served as Vice President and General Manager of Manufacturing as
well  as  other significant management positions with the Company and within the
industry.
(d) Mr. Kalec rejoined the Company in 2001. From January 2000 to August 2001, he
was  Chief  Financial  Officer and Executive Vice President of iPIX. From August
1998 to January 2000, he served as Vice President and Chief Financial Officer of
Interactive  Pictures.  Prior  to that time, he served as Senior Vice President,
Chief Financial Officer, and Secretary of Clayton Homes, Inc. from 1996 to 1998.
(e)  Prior to joining the Company in 1998, as General Manager of the Communities
Group, Mr. Morgan was Superintendent of Knox County, Tennessee Schools from 1992
to  1998.  In  September  1999,  he  was  named  Vice  President of the Company.
(f)  Ms.  Krupacs  has  been  Vice President Finance since 1998.  She joined the
Company  in  December 1993 as Tax Manager. From August 1998 through August 1999,
she  served  as  Secretary.
(g)  Mr.  Hamilton  joined  the Company in February 1997 as Corporate Controller
and was named Vice President and Controller of the Company in August 1998.  From
1984 to 1997, he served in various finance and accounting positions with Philips
Consumer  Electronics  Company.

The  Company's  executive  officers  serve  at  the  pleasure  of  the  Board of
Directors.

All  other  required  information  is incorporated by reference to the Company's
Proxy  Statement  under  the  heading  ELECTION  OF  DIRECTORS.

ITEM  11.  EXECUTIVE  COMPENSATION.
Incorporated  by  reference  to  the Company's Proxy Statement under the heading
COMPENSATION  OF  MANAGEMENT  TABLE.

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT.
Incorporated  by  reference  to the Company's Proxy Statement under the headings
ELECTION  OF  DIRECTORS  and  PRINCIPAL  STOCKHOLDERS;  SECURITY  OWNERSHIP  OF
DIRECTORS  AND  OFFICERS.

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.
Incorporated  by  reference  to  the  Company's  Proxy  Statement.

                                       13
<PAGE>
                                       PART IV

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

(a)  The following documents are filed as part of this report:

     1. Financial Statements: (Included in Annual Report - Exhibit  13).

              The following Consolidated Financial Statements of Clayton Homes,
              Inc. and its subsidiaries included in Part II, Item 8 are
              incorporated by reference to the 2001  Annual  Report  to
              Shareholders for the year ended June 30, 2001.

              Report  of  Independent  Accountants.

              Consolidated Balance Sheets - June 30, 2001, and 2000.

              Consolidated Statements of Income - years ended June 30,
              2001, 2000 and 1999.

              Consolidated Statements of Shareholders' Equity - years ended
              June 30, 2001, 2000 and 1999.

              Consolidated Statements of Cash Flows - years ended June 30,
              2001, 2000 and 1999.

              Notes to the Consolidated Financial Statements.

     3.  Exhibits:

         3.  (a)  Restated charter as amended.  (F)

             (b)  Bylaws.  (H)

         4.  (a)  Specimen stock certificates.  (H)

             (b)  The Company agrees to furnish to the Commission, upon
                  request, instruments relating to the long term debt of the
                  Company or its subsidiaries.

         10. (a)  Lease  Agreement, dated June 29, 1972, as amended, between
                  Clayton Homes, Inc. and Dean Planters Warehouse, Inc. (A)
                  (subsequently assigned to CLF, a limited partnership which
                  includes a related party).

            *(b)  1991 Employees Stock Option Plan.  (C)

            *(c)  Clayton Homes, Inc. 1997 Employees Stock Incentive Plan.  (G)

            *(d)  Director's Equity Plan.  (E)

            *(e)  Directors' Equity Plan.  (E)

            *(f)  1996 Outside Directors Equity Plan.  (D)

         13. Annual Report to Shareholders for year ended June 30, 2001. (B)

         21. List of Subsidiaries of the Registrant (filed  herewith).

         23. Consent of independent accountants (filed  herewith).
________________________________________________________________

                                       14
<PAGE>

(A)  Filed as Exhibits to Registration Statement on Form S-1 (SEC File No.
     2-83705) and incorporated by reference thereto.

(B)  For the information of the Commission only, except to the extent of
     portions specifically incorporated by reference.

(C)  Filed with Registration Statement on Form S-8 (SEC File No. 333-83565)
     and incorporated by reference thereto.

(D)  Filed with Registration Statement on Form S-8 (SEC  File No. 333-83543)
     and incorporated by reference thereto.

(E)  Filed with Registration Statement on Form S-8 (SEC  File No. 333-83545)
     and incorporated by reference thereto.

(F)  Filed with the Company's Proxy Statement for the Annual Meeting of
     Shareholders held November 14, 1996, and incorporated by reference thereto.

(G)  Filed with the Company's Proxy Statement for the Annual Meeting of
     Shareholders held November 12, 1997, and incorporated by reference thereto.

(H)  Filed with the Company's Form 10K for the fiscal year ended June 30, 1998,
     and  incorporated  by  reference  thereto.

*    Management and Director's Compensation plans.

________________________________________________________________

(b)  Reports  on  Form  8-K.
     No reports were filed in the Registrant's last quarter.

                                       15
<PAGE>

                                   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, in the City of Alcoa,
State  of  Tennessee,  on  September  21,  2001.

                                    CLAYTON  HOMES,  INC.

                                    By:     /s/  Kevin  T.  Clayton
                                            -----------------------
                                            Kevin T. Clayton
                                            Chief Executive Officer, President
                                            and President, Financial Services

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

<TABLE>
<CAPTION>
<S>                                    <C>                                <C>

/s/ James L. Clayton                          September 21, 2001          Chairman of the Board
-------------------------------------
James L. Clayton


/s/ Kevin T. Clayton                          September 21, 2001          Chief Executive Officer, President
-------------------------------------                                     and President, Financial Services
Kevin T. Clayton                                                          (Principal Executive Officer)


/s/ John J. Kalec                             September 21, 2001          Senior Vice President and
-------------------------------------                                     Chief Financial Officer
John J. Kalec


/s/ Amber W. Krupacs                          September 21, 2001          Vice President Finance
-------------------------------------
Amber W. Krupacs


/s/ Greg A. Hamilton                          September 21, 2001          Vice President and Controller
-------------------------------------
Greg A. Hamilton


/s/ B. Joe Clayton                            September 21, 2001          Director
-------------------------------------
B. Joe Clayton


/s/ Dan W. Evins                              September 21, 2001          Director
-------------------------------------
Dan W. Evins


/s/ Wilma H. Jordan                           September 21, 2001          Director
-------------------------------------
Wilma H. Jordan


/s/ Thomas N. McAdams                         September 21, 2001          Director
-------------------------------------
Thomas N. McAdams


/s/ C. Warren Neel                            September 21, 2001          Director
-------------------------------------
C. Warren Neel
</TABLE>

                                       16
<PAGE>