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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
- ----- OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
- ----- OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ________ TO _______.
Commission File Number 0-5555
LIBERTY HOMES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1174256
(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. BOX 35, GOSHEN, INDIANA 46527-0035
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (219) 533-0431
Securities registered pursuant to Section 12 (g) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Class A Common Stock NASDAQ
Class B Common Stock NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No____
----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) 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 ]
As of March 1, 1996, the aggregate market value of the voting Common Stock
Class B, held by nonaffiliates (based upon its closing transaction price on
the Composite Tape on such date) was approximately $8,314,814.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Shares of Outstanding
Class at March 1, 1996
----- ----------------
Class A Common Stock, $1,00 par value 2,609,996
Class B Common Stock, $1.00 par value 1,757,259
The Exhibit Index is located on page 21.
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PART I
ITEM 1. BUSINESS
Liberty Homes, Inc. (the "Company") was organized as an
Indiana corporation in 1970 as the successor to a business
founded in 1941. The Company designs, manufactures and sells at
wholesale throughout most of the United States a broad line of
manufactured homes under various trade names. Constructed on a
wheel-mounted under-carriage, a manufactured home is a
relocatable factory-built dwelling which, when towed to a
location, properly set up and connected to utilities, provides
permanent housing. A manufactured home may also consist of two
or more units which are towed separately and when securely joined
together are called multi-sectional housing.
A manufactured home is to be distinguished from a travel
trailer, motor home or other recreational vehicle which is
generally used for living accommodations during relatively short
periods, primarily for vacation and recreational purposes.
The Company's typical manufactured home contains a living
room, dining area, kitchen equipped with range and refrigerator,
two, three, four or five bedrooms, and one or more baths complete
with tub and/or shower, flush toilet and lavatory. The homes are
equipped with central heating, carpeting, a choice of coordinated
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colors and interior decoration, and a wide range of floor plans.
Single section homes are 12, 14, 15 or 16 feet wide and vary in
overall length from 36 to 80 feet (including about 4 feet for the
hitch). Multi-section homes are two or three 12, 14, 15 or 16
foot wide sections, with overall lengths ranging from 36 to 80
feet (including about 4 feet for the hitch).
The Company utilizes assembly line techniques in the
production of its homes. Steel for frames, axles, tires, steel,
wood or vinyl siding, lumber, ceiling materials, windows,
furniture, electrical and plumbing fixtures, and many other items
are purchased from numerous suppliers for fabrication or
assembly. Sources of material are readily available and the
Company is not dependent upon any particular supplier for its raw
materials or component parts.
The Company sells its products through its employee-salesmen
to numerous independent dealers, most of whom also sell competing
products. In the year ended December 31, 1995, the Company's
largest dealer accounted for approximately four percent of the
Company's sales. The Company generally manufactures its homes
only after receipt of orders from its dealers, and sales backlogs
in the manufactured housing industry are traditionally short.
Retail prices for the Company's single section homes
typically
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range from approximately $15,000 to $40,000 and from
approximately $20,000 to $65,000 for multi-sections. The
Company's homes generally fall within the lower price range of
the industry.
Manufactured homes were sold by the Company during
1995 to dealers in most of the continental United States.
Transportation charges from the point of manufacture to the
dealer are an important factor in the cost of a manufactured
home and often influence a dealer's preference for similar
products. In general, most retail outlets are located within a
500 mile radius of the manufacturing facility serving the
dealer.
In each of the geographical areas in which the Company
operates, it faces direct competition from other manufacturers,
some of whom are larger than the Company and possess greater
financial resources. This group of competitors consists of
manufacturers who compete with the Company on a national level as
well as many others who are only regional in scope. According to
data from the National Conference of States on Building Codes and
Standards (NCSBCS) at the end of 1995, there were 92 companies
operating 285 facilities producing manufactured housing in the
United States. Due to transportation complexities, none of the
Company's products, and very little of the industry's product, is
shipped outside the United States. According to the US
Department
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of Commerce, Building Products Division, in 1994, the
latest full year statistics available, a total of 909 units with
a sales value of $13,137,000 were exported by the industry.
Since the manufactured homes sold by the Company are a form of
housing, changes in factors which influence the national housing
market usually affect the Company's business, either beneficially
or adversely.
In addition, the quality and number of manufactured home
parks with space available for new homes sometimes affect the
market for manufactured homes. Manufactured home parks and
placement of manufactured homes on real-estate type scattered
sites or sub-divisions are generally subject to local zoning
ordinances and other local regulations. Any limitation of the
availability of space for manufactured homes due to any cause,
including such local ordinances, could adversely affect the
Company's business.
In 1994, the Company formed Waverlee Homes, Inc., a majority
owned subsidiary, which operates a production facility in
Hamilton, Alabama. This operation incorporates many state-of-
the-art manufacturing concepts and enhances the Company's ability
to serve the market in the South Central United States.
In 1988, the Company's wholly-owned subsidiary, Irish Homes,
Inc., commenced operations to develop subdivisions using the
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Company's manufactured homes. The homes located within
subdivisions include a garage and are placed on a foundation with
the landscaping, concrete and other work, performed on site by
independent contractors.
The Company's ability to sell to its dealers is dependent to
a considerable degree upon the availability and terms of
financing both to its dealers and to the retail customers of its
dealers. Consequently, increases in interest rates or tightening
of credit through governmental action or otherwise, could
adversely affect the Company's business. Conversely, a lowering
of interest rates or relaxation of credit restraints could
improve the Company's business.
Because of their size and weight, manufactured homes are
generally transported by specially modified trucks. Most states
require special permits for the movement of such homes.
Typically, these permits prescribe the roads to be used, speed
limits, hours during which travel is permitted, types of
signaling devices which must be used, and other such
restrictions, primarily for safety purposes. Seasonal weather
conditions can also be a factor for transportation.
The construction of manufactured homes, and the plumbing,
heating and electrical systems installed therein, are subject to
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the National Manufactured Home Construction and Safety Standards
promulgated by the U.S. Department of Housing and Urban
Development (HUD) pursuant to authority granted them by the
National Manufactured Home Construction and Safety Standards Act
of 1974. HUD has also promulgated lengthy and complex
regulations to implement and enforce the construction standards,
and there are substantial penalties for deviations from the
regulations.
In 1985, HUD promulgated a regulation regarding the content
of formaldehyde in certain products used in manufactured homes.
This regulation provides, among other things, that a warning
notice regarding the health effects of formaldehyde be posted in
the home. The Company believes that this regulation has
adversely affected the sale of its homes, although it is unable
to quantify the impact on sales.
Additionally, in 1994, HUD promulgated regulations
specifying minimum requirements for energy loss (insulation) and
structural soundness in high wind zones of the country. These
regulations increased the cost of units sold by varying amounts
depending in which area of the United States the unit is sold.
The cost of complying with these regulations has been passed on
to the consumer.
Dealers who purchase from the Company generally obtain
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inventory financing from financial institutions (usually banks or
finance companies) on a "floor plan" basis whereby the financial
institution obtains a lien upon, or title to, all or part of a
dealer's inventory. To assist dealers in obtaining such
financing, the Company, in accordance with trade practice,
generally enters into repurchase agreements with lending
institutions whereby the Company, during the period (generally
not in excess of one year) pending sale to a retail customer,
agrees to repurchase a home so financed in the event of the
dealer's default and subsequent inability to repay the amount
borrowed from the financial institution. In the event of
repurchase, the Company will experience a loss if the repurchase
price paid to the financial institution plus any related costs of
repossession (e.g., freight, repairs) exceed the proceeds
received by the Company from resale of the home repurchased. The
Company's losses under these dealer repurchase agreements were
not significant for 1995, 1994 and 1993.
Retail customers often finance their purchases with
funds borrowed from banks, finance companies and savings and
loan associations. Such retail finance arrangements frequently
call for an effective interest rate higher than that imposed
for conventional home mortgage financing.
In 1990, the Company formed a wholly-owned subsidiary,
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Arcadian Financial Services, Inc., to operate as a mortgage loan
broker. The mortgages written include, but are not limited to,
the Company's products at the retail level. All mortgages
written are sold to secondary financial markets, servicing
released.
EMPLOYEES
As of February 24, 1996, the Company had approximately 1,220
full-time employees.
ITEM 2. PROPERTIES.
LOCATION
- --------
Goshen, Indiana Sheridan, Oregon
Syracuse, Indiana Plant #1
Thomasville, Georgia Plant #2
Yoder, Kansas Ocala, Florida
Dorchester, Wisconsin Statesville, North Carolina
Plant #1 Hamilton, Alabama
Plant #2
Leola, Pennsylvania
Plant #1
Plant #2
All of the Company's facilities are manufacturing
facilities, except for the Goshen, Indiana location which is the
Company's executive office and engineering and design center. As
a result of declining market and industry conditions, the Company
suspended production at its Leola, Pennsylvania facility #1 in
1987; and the Thomasville, Georgia facility in 1990. The Company
is pursuing the sale of these idle facilities.
The Company is planning major construction projects in 1996.
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The existing Yoder, Kansas plant will undergo a major renovation
and 54,000 square foot addition in order to aid manufacturing
efficiencies and provide more capacity for the expanding market.
The Company's majority owned subsidiary, Waverlee Homes, Inc.,
plans to construct a 100,000 square foot production facility in
Northern Alabama to provide the Company with additional capacity
to serve the strong South Central United States market.
The Company owns all of its properties in fee simple and
believes that its facilities and equipment contained therein are
well maintained and in good condition. All of the Company's
manufacturing facilities are intended for the manufacture of
manufactured homes, and in the Company's judgment, all are
adequate for their current use.
The Company's plants currently in production are utilized
during one shift per day.
ITEM 3. LEGAL PROCEEDINGS.
The Company is party to various legal proceedings from the
normal course of operations. The Company has provided for
anticipated losses resulting from the litigation. In
management's opinion, the Company has adequate legal defenses and
does not believe these suits will materially affect the Company's
operations or financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security
holders for the three months ended December 31, 1995.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's 1995 Annual Report to Shareholders is an
exhibit of this filing. The information under the caption
"Capital Stock" of the report is incorporated by reference as
Item 5 of this filing.
ITEM 6. SELECTED FINANCIAL DATA.
The Company's 1995 Annual Report to Shareholders is an
exhibit of this filing. The information under the caption
"Selected Financial Data" of the report is incorporated by
reference as Item 6 of this filing.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources - Cash and cash equivalents
and short term investments as of December 31, 1995 and 1994
totaled $25,857,000 and $27,544,000, respectively. Working
capital was $30,827,000 at year end 1995 and $35,004,000 at year
end 1994. There was no debt at December 31, 1995 and 1994.
Historically, the Company's financing needs have been met through
funds generated
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internally.
Capital expenditures during 1995 were $9,464,000 compared to
$4,616,000 in 1994. Capital expenditures were made primarily to
increase manufacturing capacity, adopt new manufacturing
processes and to improve manufacturing efficiency.
Additionally, the Company continued its efforts to
repurchase shares of its Class A and Class B Common Stock under a
program approved by its Board of Directors in 1994. At the end
of 1995, a total of 193,000 Class A Common Shares had been
repurchased and cancelled. The Company plans to continue such
repurchases on the open market or in negotiated transactions at
management's discretion.
During 1996, the Company anticipates that cash flow from
operations and cash reserves will be sufficient to meet the
requirements for capital expenditures, working capital, stock
repurchases and dividend payments. It also continues to pursue
the sale of its idle plants in Georgia and Pennsylvania.
Results of Operations - The Company achieved record sales
and income for 1995. The Company's capital expansion program has
taken advantage of the growing manufactured housing industry.
Consumer confidence and the general availability of favorable
home financing programs have provided growth opportunities to the
industry and to
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the Company. During 1995, the Company's Alabama
facility, opened in November 1994, began contributing to the
profitability of the Company while the re-opened Kansas facility
experienced significant growth.
Net sales increased to $164,753,000 in 1995 from
$125,035,000 in 1994, a $39,718,000 or 32% increase. The net
sales in 1994 were up $32,412,000 or 35% from $92,623,000 in
1993. The markets served by the Alabama and Kansas facilities
provided the majority of 1995 growth while the Company's sales in
the remaining markets grew at a more modest pace. Sales
improvement in 1994 was evenly spread in all the Company's
markets.
Gross profit in 1995, 1994 and 1993 was $24,172,000,
$16,872,000 and $14,843,000, respectively. The increases were
principally due to increased sales volume which provided more
dollars of gross profit but also spread fixed cost over a larger
volume. Start up costs in the new Alabama facility negatively
affected gross profit in 1994 and for a portion of 1995. The
Company was unable to pass on some material cost increases in
1994 due to sales order backlogs which resulted in some erosion
of margins in that year.
Selling, general and administrative expenses have grown in
1995 and 1994 as a result of the Company's expanded business.
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These expenses amounted to $15,183,000 in 1995, $11,883,000 in
1994 and $10,071,000 in 1993 or 9.2%, 9.5% and 10.8% of sales,
respectively.
Interest and other income was $1,660,000 in 1995, $2,575,000
in 1994 and $875,000 in 1993. Included in the 1994 amount is
$936,000 of gain on the sale of the Company's idle Texas
facility. The remaining amounts are primarily from the
investment of cash during the year and variances are due to
varying interest rates and the amount of cash available to
invest.
The Company generated net income in 1995 of $6,356,000 which
was a $1,532,000 or 32% increase over 1994, which included a net
after tax gain of $552,000 on the sale of the Company's Texas
facility. Improved sales volume and margins provided most of
this growth. Investment income was stable with a higher rate of
return earned on a lower average investment amount. Start up
operating losses in the Alabama facility were experienced in 1994
and part of 1995. However, for 1995, the facility contributed to
the profitability of the Company. The net income for 1994 was
$4,824,000, a $1,559,000 or 48% increase over net income of
$3,265,000 in 1993.
The Alabama expansion in 1994 was done through Waverlee
Homes, Inc., a majority owned subsidiary established in 1994. The
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minority interest in the consolidated earnings and financial
position of the Company were immaterial in 1994.
Outlook and Risk Factors - The Company plans to focus on its
business expansion through productivity improvements and cost
effective capital expenditures. A new manufacturing facility in
northern Alabama and expansion and renovation of the Kansas
facility should facilitate the Company's growth in these market
areas.
The Company believes consumer housing needs and favorable
retail financing for its homes has had a positive impact on the
Company. It should be noted, however, sales backlogs are
traditionally short, and dealer inventories do not fluctuate
substantially. Order activity at the Company is indicative of
the day to day retail sales activity of its products. Any
changes affecting retail customer demand, such as cost,
availability of favorable credit and unemployment, have an
immediate effect on the Company's operations.
The Company participates in several dealer financing
programs which require it to repurchase homes which remain unsold
and in dealer inventory for a period of up to one year after
delivery to the dealer, if the dealer defaults on its financing
obligations. Repurchased units are resold, although some
discounting may be
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necessary and some loss may occur. Prior year losses on such
repurchases have not been material nor are they expected to be
during 1996.
The manufactured housing industry is regulated by the U.S.
Department of Housing and Urban Development (HUD). HUD has in
the past issued regulations which affected the content and
therefore cost of manufactured homes. Such increases in cost can
have an adverse effect on the industry and the Company. However,
the Company is unable to quantify the direct impact on the
Company's sales. The likelihood of future regulatory activity by
HUD is unknown and consequently there can be no assessment of
potential future adverse effects of new HUD regulations if such
regulations do occur.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's 1995 Annual Report to Stockholders is an
exhibit of this filing. The information contained in the 1995,
1994 and 1993 consolidated financial statements and footnotes
thereto, together with the report thereon of Crowe Chizek and
Company LLP dated February 13, 1996, is incorporated by reference
as Item 8 of this filing.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Edward J. Hussey, age 78, has been President, Chairman of
the Board and a Director of the Company (or it predecessors)
since 1960, and is the father of Edward Joseph Hussey and Michael
F. Hussey.
Edward Joseph Hussey, age 48, is an attorney and a son of
Edward J. Hussey. He has been a Director of the Company and
Assistant Treasurer since 1981, Secretary of the Company since
1985 and was named Vice President of the Company in 1990. In
September, 1987, he began employment with the Company on a full
time basis. Since 1975, he has been associated with the law firm
of Hodges & Davis P.C., where he is still a shareholder.
Michael F. Hussey, age 39, has been employed by the Company since
1980. He was named Vice President of Finance in 1984 and became
a Director in 1988. He is the son of Edward J. Hussey.
David M. Huffine, age 47, has been a Director of the
Company since 1988. He has also held the position of President
of Sky View Homes, Inc., Colorado Springs, Colorado since 1993.
Prior thereto
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he was Chairman of the Board of Rampart Investigations,
Colorado Springs, Colorado and Vice President of Calumet
Securities Corporation, Schererville, Indiana.
Mitchell Day, age 40, has been a Director since 1995. He
has also been President of Day Equipment Corporation, Goshen,
Indiana since 1984.
Ralph D. Ray, age 63, has been employed in various
management positions with the Company for 24 years. He has been
Treasurer of the Company since 1984.
Dorothy L. Peterson, age 84, has been employed with the
Company since 1952. She was appointed Assistant Treasurer in
1985.
Marc A. Dosmann, age 43, joined the Company in February,
1995 as Vice President and Chief Financial Officer. From
January, 1990 to February, 1995, he was Corporate Controller of
Leer, Inc.
Bruce A. McMillan, age 44, has served the Company
in various capacities for 24 years. He was appointed to the
position of Vice President of Sales in 1994.
ITEM 11. EXECUTIVE COMPENSATION.
The Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 25, 1996 includes information
under the caption "Executive Compensation (SUMMARY COMPENSATION
TABLE) and under the caption "Shareholder Return Performance"
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(PERFORMANCE GRAPHS). Those sections are exhibits of this filing
and are incorporated by reference as Item 11 of this filing.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 25, 1996 includes information
regarding SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. This
section is an exhibit of this filing and is incorporated by
reference as Item 12 of this filing.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) 3. EXHIBITS
The exhibits filed with this Form 10-K are listed in the
exhibit index located on page 21.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three months
ended December 31, 1995.
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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.
Liberty Homes, Inc.
(Registrant)
March 26, 1996 By: /S/ MARC A. DOSMANN
-------------------
Marc A. Dosmann
Vice President - CFO
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
/s/ Edward J. Hussey President, Director, Chairman
- ------------------------ of the Board of Directors
Edward J. Hussey (Principal Executive Officer)
March 26, 1996
/s/ Edward Joseph Hussey Director, Vice President,
- ------------------------ Secretary & Assistant Treasurer
Edward Joseph Hussey March 26, 1996
/s/ Michael F. Hussey Director and Vice President - Finance
- ------------------------ March 26, 1996
Michael F. Hussey
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EXHIBIT INDEX
PAGES
-----
3(a) Articles of Incorporation of the Company.
(File #0-5555, Form 10-K for the year ended
December 31, 1984) *
3(b) Amendment to Articles of Incorporation.
(File #0-5555, Form 10-Q for the quarter ended
March 31, 1985, Exhibit 4). *
3(c) By-laws of the Company.
(File #0-5555, Form 10-K for the year ended
December 31, 1987) *
10(a) Employment Agreement between the Company *
and Edward Joseph Hussey dated September
14, 1993 (File #0-5555, Form 10-K for
the year ended December 31, 1993).
10(b) Employment Agreement between the Company *
and Michael F. Hussey dated September
14, 1993 (File #0-5555, Form 10-K for
the year ended December 31, 1993).
10(c) Split-Dollar Insurance Plan effective June 11, *
1993 between the Company and Nancy A. Parrish
and Michael F. Hussey, Trustees for the
Edward Joseph Hussey 1993 Irrevocable
Trust (File #0-5555, Form 10-K for the year
ended December 31, 1993)
10(d) Split-Dollar Insurance Plan effective June 11, *
1993 between the Company and Nancy A. Parrish
and John P. Hussey, Trustees for the Michael F.
Hussey 1993 Irrevocable Trust
21
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EXHIBIT INDEX - CONTINUED
PAGES
-----
13 Annual Report to Shareholders for 1995 23
(Except for those portions of this report which
are expressly incorporated by reference in this
Form 10-K, the information contained in such
1995 Annual Report to Shareholders is not deemed
"filed" as part of this Form 10-K).
27 Financial Data Schedule
99(a) Executive Compensation - SUMMARY COMPENSATION
TABLE 37
99(b) Shareholder Return Performance - PERFORMANCE
GRAPH 38
99(c) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS 39
* Incorporated by reference
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THE COMPANY
LIBERTY HOMES, INC. and Subsidiaries design, manufacture and sell a broad
line of single and multi-section manufactured homes to numerous independent
dealers throughout most of the United States. The Company currently operates
manufacturing plants in Syracuse, Indiana; Yoder, Kansas; Dorchester,
Wisconsin; Leola, Pennsylvania; Sheridan, Oregon; Ocala, Florida;
Statesville, North Carolina; and Hamilton, Alabama. Corporate offices,
including engineering and design facilities, are located in Goshen, Indiana.
SELECTED FINANCIAL DATA
as of or for the year ending December 31,
(Amounts in Thousands Except per Share Data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales $164,753 $125,035 $92,623 $66,831 $51,797
Net income $ 6,356 $ 4,824 $ 3,265 $ 1,330 $ 68
Net income per share $1.42 $1.06 $.71 $.29 $.01
Total assets $ 69,127 $ 61,013 $56,043 $50,801 $48,235
Long term obligations -- -- -- -- --
Cash dividends per share:
Class A common stock $.28 $.28 $.25 $.24 $.24
Class B common stock $.28 $.28 $.25 $.23 $.20
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES - Cash and cash equivalents and short term
investments as of December 31, 1995 and 1994 totaled $25,857,000 and
$27,544,000, respectively. Working capital was $30,827,000 at year end 1995
and $35,004,000 at year end 1994. There was no debt at December 31, 1995 and
1994. Historically, the Company's financing needs have been met through
funds generated internally.
Capital expenditures during 1995 were $9,464,000 compared to $4,616,000 in
1994. Capital expenditures were made primarily to increase manufacturing
capacity, adopt new manufacturing processes and to improve manufacturing
efficiency.
Additionally, the Company continued its efforts to repurchase shares of its
Class A and Class B Common Stock under a program approved by its Board of
Directors in 1994. At the end of 1995, a total of 193,000 Class A Common
Shares had been repurchased and cancelled. The Company plans to continue
such repurchases on the open market or in negotiated transactions at
management's discretion.
During 1996, the Company anticipates that cash flow from operations and cash
reserves will be sufficient to meet the requirements for capital
expenditures, working capital, stock repurchases and dividend payments. It
also continues to pursue the sale of its idle plants in Georgia and
Pennsylvania.
RESULTS OF OPERATIONS - The Company achieved record sales and income for
1995. Consumer confidence and the general availability of favorable home
financing programs have provided growth opportunities to the industry and to
the Company.
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During 1995, the Company's Alabama facility, opened in November 1994, began
contributing to the profitability of the Company while the re-opened Kansas
facility experienced significant growth.
Net sales increased to $164,753,000 in 1995 from $125,035,000 in 1994, a
$39,718,000 or 32% increase. The net sales in 1994 were up $32,412,000 or
35% from $92,623,000 in 1993. The markets served by the Alabama and Kansas
facilities provided the majority of 1995 growth while the Company's sales in
the remaining markets grew at a more modest pace. Sales improvement in 1994
was evenly spread in all the Company's markets.
Gross profit in 1995, 1994 and 1993 was $24,172,000, $16,872,000 and
$14,843,000, respectively. The increases were principally due to increased
sales volume which provided more dollars of gross profit but also spread
fixed cost over a larger volume. Start up costs in the new Alabama facility
negatively affected gross profit in 1994 and for a portion of 1995. The
Company was unable to pass on some material cost increases in 1994 due to
sales order backlogs which resulted in some erosion of margins in that year.
Selling, general and administrative expenses have grown in 1995 and 1994 as a
result of the Company's expanded business. These expenses amounted to
$15,183,000 in 1995, $11,883,000 in 1994 and $10,071,000 in 1993 or 9.2%,
9.5% and 10.8% of sales, respectively.
Interest and other income was $1,660,000 in 1995, $2,575,000 in 1994 and
$875,000 in 1993. Included in the 1994 amount is $936,000 of gain on the
sale of the Company's idle Texas facility. The remaining amounts are
primarily from the investment of cash during the year and variances are due
to varying interest rates and the amount of cash available to invest.
The Company generated net income in 1995 of $6,356,000 which was a $1,532,000
or 32% increase over 1994, which included a net after tax gain of $552,000 on
the sale of the Company's Texas facility. Improved sales volume and margins
provided most of this growth. Investment income was stable with a higher
rate of return earned on a lower average investment amount. Start up
operating losses in the Alabama facility were experienced in 1994 and part of
1995. However, for 1995, the facility contributed to the profitability of
the Company. The net income for 1994 was $4,824,000, a $1,559,000 or 48%
increase over net income of $3,265,000 in 1993.
The Alabama expansion in 1994 was done through Waverlee Homes, Inc., a
majority owned subsidiary established in 1994. The minority interest in the
consolidated earnings and financial position of the Company were immaterial
in 1994.
24
<PAGE>
CAPITAL STOCK
The Company's Class A and Class B Common Stock are traded on the
over-the-counter market on the NASDAQ National Market System. As of January
22, 1996, there were approximately 407 holders of record of the Company's
Class A Common Stock and approximately 262 holders of record of the Company's
Class B Common Stock. The following table shows the high and low bid of the
price per share for the Company's Class A and Class B Common Stock for each
of the quarters in 1995 and 1994 as reported by the National Association of
Securities Dealers, Inc., as well as cash dividends declared in each quarter
in 1995 and 1994. The high and low bid prices set forth below reflect
inter-dealer prices without retail mark-up, mark-down or commissions and may
not represent actual transactions.
<TABLE>
<CAPTION>
PRICE PER SHARE ($)
------------------- CASH DIVIDENDS
1995 1994 PER SHARE
---- ---- ---------
HIGH LOW HIGH LOW 1995 1994
---- --- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter:
Class A Common 9 3/4 8 3/8 10 7/8 9 1/2 $.07 $.07
Class B Common 9 8 7/8 10 7/8 9 5/8 $.07 $.07
Second Quarter:
Class A Common 9 3/8 8 3/8 10 1/2 9 1/8 $.07 $.07
Class B Common 8 7/8 8 3/4 10 5/8 9 $.07 $.07
Third Quarter:
Class A Common 9 7/8 8 1/2 10 1/4 9 1/4 $.07 $.07
Class B Common 9 1/4 8 1/2 10 9 3/4 $.07 $.07
Fourth Quarter:
Class A Common 13 1/4 9 3/8 9 7/8 8 5/8 $.07 $.07
Class B Common 11 3/4 9 1/2 9 3/8 8 5/8 $.07 $.07
</TABLE>
25
<PAGE>
March 17, 1996
To Our Shareholders:
Net sales for 1995 were $164,753,000 compared to $125,035,000 in 1994. The
increase of $39,718,000 represents a 32% increase and results from continued
overall market improvement and also the operation of the Company's Alabama
plant opened in November, 1994, which came on line successfully. Net income
increased by $1,532,000, or 32%, from the 1994 level of $4,824,000 to
$6,356,000 in 1995. The increase in net income is the result of Company's
increased sales and improved margins.
The Company completed the construction of a new production facility in
Wisconsin during 1995 and began production in December, 1995. Additionally,
a major renovation was completed in October, 1995 at the Indiana production
facility.
We want to take this opportunity to thank our shareholders, employees and
suppliers for their efforts and continuing support.
Very truly yours,
LIBERTY HOMES, INC.
Edward J. Hussey
President
pkm
26
<PAGE>
CONSOLIDATED BALANCE SHEET
December 31, 1995 and 1994 (Amounts in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
ASSETS
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $10,257 $ 8,069
Short term investments 15,600 19,475
Receivables 7,328 6,756
Refundable income taxes -- 988
Inventories 10,618 9,361
Deferred tax asset 1,841 1,036
Prepayments and other 1,009 740
------- -------
Total current assets 46,653 46,425
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land 1,041 1,041
Buildings and improvements 20,823 14,902
Machinery and equipment 15,359 12,042
------- ------
37,223 27,985
Less accumulated depreciation 14,749 13,397
------- -------
22,474 14,588
------- -------
$69,127 $61,013
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
27
<PAGE>
LIBERTY HOMES, INC.
LIABILITIES
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,573 $ 3,067
Dividends payable 306 320
Income taxes payable 236 --
Accrued compensation & payroll taxes 2,024 1,242
Other accrued liabilities 10,687 6,792
------- -------
Total current liabilities 15,826 11,421
------- -------
DEFERRED INCOME TAXES 2,280 2,290
------- -------
CONTINGENT LIABILITIES
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 103 --
SHAREHOLDERS' EQUITY
CAPITAL STOCK:
Class A, $1 par value,
Authorized - 7,500,000 shares
Issued and outstanding -
2,621,000 in 1995 and
2,736,000 in 1994 2,621 2,736
Class B, $1 par value,
convertible to Class A,
authorized - 3,500,000 shares
Issued and outstanding -
1,757,000 in 1995 and
1,795,000 in 1994 1,757 1,795
OTHER CAPITAL 83 83
RETAINED EARNINGS 46,457 42,688
------- -------
50,918 47,302
------- -------
$69,127 $61,013
------- -------
------- -------
</TABLE>
28
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
For the Years Ended December 31, 1995, 1994 and 1993
(Amounts in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $164,753 $125,035 $92,623
Cost of sales 140,581 108,163 77,780
-------- -------- -------
Gross profit 24,172 16,872 14,843
Selling, general and
administrative expenses 15,183 11,883 10,071
-------- -------- -------
Operating income 8,989 4,989 4,772
Interest and other income 1,660 2,575 875
-------- -------- -------
Income before income taxes
and minority interest 10,649 7,564 5,647
Minority interest in income
of consolidated subsidiary 103 -- --
Income tax expense 4,190 2,740 2,382
-------- -------- -------
Net income $ 6,356 $ 4,824 $ 3,265
-------- -------- -------
-------- -------- -------
Net income per outstanding
common share $1.42 $1.06 $.71
-------- -------- -------
-------- -------- -------
</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1995, 1994 and 1993
(Amounts in Thousands)
<TABLE>
<CAPTION>
Class A Class B
Common Common Other Retained
Stock Stock Capital Earnings Total
----- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 $2,722 $1,849 $83 $37,343 $41,997
Conversion from Class B
to Class A 54 (54) --
Net income for the year 3,265 3,265
Cash dividends-$.25 per share
for Class A & Class B (1,143) (1,143)
------ ------ ---- ------- -------
Balance, December 31, 1993 2,776 1,795 83 39,465 44,119
Repurchase & Cancellation
of Class A Shares (40) (321) (361)
Net income for the year 4,824 4,824
Cash dividends-$.28 per share
for Class A & Class B (1,280) (1,280)
------ ------ ---- ------- -------
Balance, December 31, 1994 2,736 1,795 83 42,688 47,302
Conversion from Class B
to Class A 38 (38) --
Repurchase and cancellation
of Class A Shares (153) (1,343) (1,496)
Net income for the year 6,356 6,356
Cash dividends-$.28 per share
for Class A & Class B (1,244) (1,244)
------ ------ --- ------- -------
Balance December 31, 1995 $2,621 $1,757 $ 83 $46,457 $50,918
------ ------ --- ------- -------
------ ------ --- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
29
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1995, 1994 and 1993
(Amounts in Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 6,356 $ 4,824 $ 3,265
------- ------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,578 1,197 930
Deferred income taxes (815) (869) 318
Minority interest in net income 103 -- --
Gain on sale of property, plant & equipment -- (944) --
Changes in assets and liabilities:
Receivables (572) (2,651) (1,356)
Refundable income taxes 988 881 --
Inventories (1,257) (966) (1,302)
Prepayments and other (269) 123 (617)
Accounts payable (494) 2,671 2,090
Accrued liabilities 4,663 657 178
Income taxes payable 236 (865) 865
------- ------- -------
Total adjustments 4,161 (766) 1,106
------- ------- -------
Net cash provided by
operating activities 10,517 4,058 4,371
------- ------- -------
Cash flows from (used) in investing activities:
Additions to property, plant & equipment (9,464) (4,616) (725)
Investments in short term investments -- (3,404) (16,071)
Disposal of short term investments 3,875 -- --
Disposal of property, plant & equipment -- 2,998 --
------- ------- -------
Net cash used in investing activities (5,589) (5,022) (16,796)
------- ------- -------
Cash flows used in financing activities:
Cash dividends paid (1,244) (1,280) (1,097)
Retirement of common stock (1,496) (361) --
------- ------- -------
Net cash used in financing activities (2,740) (1,641) (1,097)
------- ------- -------
Net increase (decrease) in cash and
cash equivalents 2,188 (2,605) (13,522)
Cash and cash equivalents, beginning of year 8,069 10,674 24,196
------- ------- -------
Cash and cash equivalents, end of year $10,257 $ 8,069 $10,674
------- ------- -------
------- ------- -------
Supplemental disclosures of cash flow
information - cash paid during
the year for income taxes $ 3,793 $ 3,264 $ 1,199
------- ------- -------
------- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Irish Homes, Inc. and Arcadian Financial
Services, Inc. and its majority owned subsidiary, Waverlee Homes, Inc. Upon
consolidation, all intercompany accounts, transactions and profits have been
eliminated. The effect of the minority interest at December 31, 1994 was
immaterial.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments which are readily
convertible to known amounts of cash and have original maturities within three
months from date of purchase. These investments are carried at cost which
approximates market value.
SHORT-TERM INVESTMENTS
At December 31, 1995 and 1994, short term investments consisted primarily of
certificates of deposit with original maturities of 90 days to 12 months and
readily convertible to cash. These investments are carried at cost which
approximate fair market value. The Company intends to hold the certificates of
deposit until maturity. The Company's investments are maintained in four
financial institutions.
INVENTORIES
Inventories, consisting principally of raw materials, are stated at the lower
of cost or market, with cost determined on a first-in, first-out basis.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost. Depreciation is taken over
the estimated useful life of the asset and is provided principally on the
straight line method, using lives of 25-33 years for buildings and improvements
and 3-10 years for machinery and equipment. When assets are retired or
disposed of, the related cost and accumulated depreciation is removed from the
accounts and any resulting gain or loss is included in operations. Operations
are charged with all maintenance, repairs and rearrangement expenses, while
betterments and renewals which increase the productive capacity of assets are
capitalized and depreciated.
PRODUCT WARRANTY COSTS
Estimated warranty obligations are provided at the time of sale.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
Under this method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of ending assets and liabilities. The
effect on deferred taxes of a change in tax rates is recognized in income in
the period that includes the enactment date.
DELIVERY COSTS
Revenues and expenses related to delivery of the Company's products are
included in selling, general and administrative expenses in the statement of
operations.
2. NATURE OF BUSINESS, RISKS AND UNCERTAINTIES:
The Company designs, manufactures and sells at wholesale a broad line of single
and multi-section manufactured homes to numerous independent dealers in the
United
31
<PAGE>
States who utilize floorplan financing arrangements with lending institutions.
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain assets, liabilities, revenues and expenses. Such estimates
primarily relate to unsettled transactions and events as of the date of the
financial statements. Accordingly, upon settlement, actual amounts may differ
from estimated amounts. The most notable assumptions included in the financial
statements involve product warranty costs, potential repurchase obligations on
dealer floorplan financing arrangements and reserves set for the Company's
self-insured Workers' Compensation Insurance Program.
3. CAPITAL STOCK:
The shares of Class A Common Stock have no voting rights and are not
convertible; the shares of Class B Common Stock have voting rights of one vote
per share and are convertible into Class A Common Stock on a one for one basis.
The Class A Shares may carry a preferential dividend rate. However, in no
event will the dividend rate be less than the Class B shares. The weighted
average of all shares outstanding at December 31, 1995, 1994 and 1993 was
4,467,000 shares, 4,569,000 shares and 4,571,000 shares, respectively. On
November 2, 1994, the Board of Directors approved a stock repurchase program
authorizing the Company to repurchase up to 300,000 outstanding shares of its
Class A and Class B Common Shares on the open market or in negotiated
transactions at management's discretion. At December 31, 1995, 193,000 shares
of Class A Common Stock had been repurchased and canceled under this program.
4. INCOME TAXES:
The net deferred tax liability in the accompanying balance sheet includes the
following amounts of deferred tax assets and liabilities:
<TABLE>
<CAPTION>
(Amounts in Thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Deferred tax liability $2,280 $2,290 $2,966
Deferred tax asset (1,841) (1,045) (865)
Valuation allowance
for deferred tax asset -- 9 22
------ ------ ------
Net deferred tax liability $ 439 $1,254 $2,123
------ ------ ------
------ ------ ------
</TABLE>
The tax effects of principal temporary differences and carry forwards are shown
in the following table:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Accelerated tax depreciation $ 2,220 $2,244 $2,911
Nondeductible accruals & reserves (1,781) (967) (690)
State net operating loss carry forward -- (18) (25)
Charitable contribution carry forward -- -- (18)
Other, net -- (14) (77)
------ ------ ------
Subtotal 439 1,245 2,101
Valuation allowances for
deferred tax asset -- 9 22
------ ------ ------
$ 439 $1,254 $2,123
------ ------ ------
------ ------ ------
</TABLE>
32
<PAGE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
(Amounts in Thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $4,068 $3,040 $1,999
State 937 569 561
Tax benefit of minimum tax credit -- -- (293)
Tax benefit of operating
loss carry forward -- -- (203)
Deferred:
Federal (664) (705) 263
State (142) (151) 196
Change in valuation allowance (9) (13) (141)
------ ------ ------
$4,190 $2,740 $2,382
------ ------ ------
------ ------ ------
</TABLE>
Income tax expense results in effective tax rates of 39.5 percent in 1995; 36.2
percent in 1994; and 42.2 percent in 1993; and reconciles with the statutory
United States federal income tax rate in 1995, 1994 and 1993, of 34 percent, as
follows:
<TABLE>
<CAPTION>
Percent of Income
Income Tax Expense Before Income Taxes
------------------ -------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statutory
federal rate $3,603 $2,572 $1,920 34.0 34.0 34.0
State income taxes, net of
federal tax effect 519 267 260 4.9 3.5 4.6
Other 68 (99) 202 .6 (1.3) 3.6
------ ------ ------ ---- ---- ----
$4,190 $2,740 $2,382 39.5 36.2 42.2
------ ------ ------ ---- ---- ----
------ ------ ------ ---- ---- ----
</TABLE>
5. CONTINGENT LIABILITIES:
REPURCHASE OBLIGATIONS
The Company is contingently liable as of December 31, 1995 under terms of
repurchase agreements with various financial institutions which provide for the
repurchase of its homes sold to dealers under floor plan financing arrangements
upon dealer default. The Company's exposure to loss under such agreements is
reduced by the resale of the repurchased home. The Company has provided for
losses on homes as of December 31, 1995 for which it has received or expects
notification of repurchase. The Company's repurchase losses for 1995 and 1994
were not material. The Company believes any additional losses incurred under
outstanding repurchase agreements in excess of the accrual established as of
December 31, 1995, will not have a significant impact on the financial
condition of the Company.
OTHER CONTINGENCIES
Letters of Credit totaling $4,000,000 have been issued to the Company's
insurance carrier who has underwritten one of the Company's self-insurance
programs.
The Company is party to various legal proceedings from the normal course of
operations. The Company has provided for anticipated losses resulting from the
litigation. In management's opinion, the Company has adequate legal defenses
and does not believe these suits will materially affect the Company's
operations or financial position.
33
<PAGE>
6. RETIREMENT PLAN
During 1994, the Company implemented a 401(k) retirement plan which covers
substantially all employees. The Company has agreed to match a portion of the
employee contributions made to the plan. The expense for this plan for the
year ended December 31, 1995 and 1994 was $224,000 and $95,000, respectively.
7. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
The Company's results of operations in 1995 and 1994 by quarter, are as follows
<TABLE>
<CAPTION>
(Amounts in Thousands):
Quarter Ended Year
------------------------------------------------------- Ended
Mar. 31 June 30 Sept. 30 Dec. 31 Dec. 31
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
1995:
Net sales $39,146 $43,407 $41,675 $40,525 $164,753
Gross profit 4,522 6,285 6,687 6,678 24,172
Net Income 902 1,834 2,011 1,609 6,356
Net income per share $.20 $.41 $.45 $.36 $1.42
1994:
Net sales $28,875 $31,898 $32,020 $32,242 $125,035
Gross profit 4,307 4,909 4,554 3,102 16,872
Net income 1,128 1,872 1,160 664 4,824
Net income per share $.25 $.41 $.25 $.15 $1.06
</TABLE>
During the second quarter of 1994, the Company sold its Texas facility for a
net gain after taxes of $552,000 or $.12 per share.
34
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Liberty Homes, Inc.
Goshen, Indiana
We have audited the accompanying consolidated balance sheets of Liberty Homes,
Inc. and Subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Liberty Homes, Inc.
and Subsidiaries as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Crowe Chizek and Company LLP
Elkhart, Indiana
February 13, 1996
35
<PAGE>
BOARD OF DIRECTORS
NAME PRINCIPAL OCCUPATION AND EMPLOYER
Edward J. Hussey Chairman of the Board and President of Liberty
Homes, Inc.
Edward Joseph Hussey Vice President, Secretary and Assistant Treasurer
of Liberty Homes, Inc. and Shareholder in the law
firm of Hodges & Davis P.C. in Merrillville, Indiana
Michael F. Hussey Vice President - Finance and Assistant Secretary of
Liberty Homes, Inc.
David M. Huffine President of Sky View Homes, Inc., Colorado Springs,
Colorado
Mitchell Day President of Day Equipment Corporation, Goshen,
Indiana
OFFICERS
Edward J. Hussey, President
Edward Joseph Hussey, Vice President, Secretary and Assistant Treasurer
Michael F. Hussey, Vice President - Finance and Assistant Secretary
Marc A. Dosmann, Vice President and Chief Financial Officer
Bruce A. McMillan, Vice President - Sales
Ralph D. Ray, Treasurer
Dorothy L. Peterson, Assistant Treasurer
REGISTRAR & TRANSFER AGENT
Harris Bank, Shareholder Services
Chicago, Illinois
(312) 461-3309
AUDITORS
Crowe Chizek and Company LLP
Elkhart, Indiana
LEGAL COUNSEL
Hodges & Davis P.C.
Merrillville, Indiana
Barnes & Thornburg
Fort Wayne, Indiana
ANNUAL REPORT ON FORM 10-K
The Liberty Homes, Inc. Annual Report on Form 10-K filed with the Securities
and Exchange Commission is available to shareholders at no charge upon written
request to Liberty Homes, Inc., PO Box 35, Goshen, Indiana 46527-0035,
Attention: Marc A. Dosmann.
36
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 25,827
<SECURITIES> 0
<RECEIVABLES> 7,328
<ALLOWANCES> 0
<INVENTORY> 10,618
<CURRENT-ASSETS> 46,653
<PP&E> 37,223
<DEPRECIATION> 14,749
<TOTAL-ASSETS> 69,127
<CURRENT-LIABILITIES> 15,826
<BONDS> 0
0
0
<COMMON> 4,378
<OTHER-SE> 46,540
<TOTAL-LIABILITY-AND-EQUITY> 69,127
<SALES> 164,753
<TOTAL-REVENUES> 164,753
<CGS> 140,581
<TOTAL-COSTS> 15,183
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,546
<INCOME-TAX> 4,190
<INCOME-CONTINUING> 6,356
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,356
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
</TABLE>
<PAGE>
ITEM 11 EXECUTIVE COMPENSATION
ITEM 402(a)(3)
SUMMARY OF COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Name & ------------------------------- ------------------------
Principle Other Stock Long Term All
Position Annual Options Incentive Other
Year Salary Bonus Comp. & Awards Payouts Comp.
---- -------- -------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Edward J. 1995 $240,000 $454,400 -- -- -- --
Hussey 1994 180,000 235,000 -- -- -- --
Chairman 1993 120,000 123,000 -- -- -- --
& President
Edward Jos 1995 83,200 253,192 -- -- -- $9,250
Hussey 1994 72,800 134,398 -- -- -- 5,800
VP & Sec 1993 62,400 131,200 -- -- -- 2,100
Michael F. 1995 83,200 253,192 -- -- -- 9,250
Hussey 1994 72,800 134,398 -- -- -- 5,800
VP - 1993 62,400 131,200 -- -- -- 2,100
Finance
Bruce A. 1995 62,400 76,144 -- -- -- --
McMillan 1994 61,100 54,800 -- -- -- --
VP - 1993 59,800 55,036 -- -- -- --
Sales
Ralph D. 1995 58,500 74,010 -- -- -- --
Ray 1994 55,900 52,220 -- -- -- --
Treasurer 1993 53,300 51,200 -- -- -- --
</TABLE>
37
<PAGE>
ITEM 11 - CONTINUED
ITEM 401(l)
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Class A Common Stock 100 113 175 225 229 316
Class B Common Stock 100 120 232 290 283 395
Dow Jones Equity Index 100 132 144 158 159 221
Dow Jones Home Construction Index 100 174 224 285 194 288
</TABLE>
Assuming that the value of the investment in Liberty Homes, Inc. Class A and
Class B Common Stock and each index was $100 on December 31, 1990 and all
dividends were reinvested.
38
<PAGE>
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
Name & Address of Amount & Nature of
Title of Class Beneficial Owner Beneficial Ownership % of Class
- -------------- ----------------- -------------------- ----------
<S> <C> <C> <C>
ITEM 403(a)
-----------
Class B Hussey Investments LP 880,881 50.2%
Common Stock PO Box 35
Goshen IN 46527 (1) (2)
ITEM 403(b)
-----------
Class A Edward J. Hussey 1,253,219 48.5%
Common Stock PO Box 35
Goshen IN 46527 (1)
Class A Edward Joseph Hussey 23,400 .9%
Common Stock PO Box 35
Class B Goshen IN 46527 (2)
Common Stock 945,653 53.9%
Class A Michael F. Hussey 22,835 .9%
Common Stock PO Box 35
Class B Goshen IN 46527 (2)
Common Stock 945,088 53.8%
Class A Ralph D. Ray 1,000 less than
Common Stock PO Box 35 1%
Goshen IN 46527
Class A All Directors and 1,300,454 50.3%
Common Stock Officers as a Group
Class B 1,009,860 57.5%
Common Stock
</TABLE>
(1) Edward J. Hussey is a limited partner in Hussey Investments LP and
accordingly has a pecuniary interest in the shares of Class B Common Stock
owned by Hussey Investments LP but Edward J. Hussey has no voting or
investment power over such shares and accordingly disclaims beneficial
ownership of such shares.
(2) Edward Joseph Hussey, Michael F. Hussey, John P. Hussey and Nancy A.
Parrish are the general partners of Hussey Investments LP and accordingly
share voting and investment control over the 880,881 shares of Class B Common
Stock owned by that limited partnership. Total shares listed for individuals
include this beneficial ownership.
39
