<PAGE>
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, 1996.
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 11, 1997, the aggregate market value of the voting Common Stock
Class B, held by nonaffiliates (based upon the average bid and ask prices on
such date) was approximately $3,710,514.
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 11, 1997
----- -----------------
Class A Common Stock, $1,00 par value 2,465,496
Class B Common Stock, $1.00 par value 1,740,759
The Exhibit Index is located on page 18.
1
<PAGE>
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 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
2
<PAGE>
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, 1996, 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 range from
approximately $15,000 to $40,000 and from approximately $25,000 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 1996 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
3
<PAGE>
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 1996, there were 98 companies operating 313 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. 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 subdivisions 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 production facilities in Hamilton and Tuscumbia,
4
<PAGE>
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 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 the National
5
<PAGE>
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 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
6
<PAGE>
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 1996, 1995 and 1994.
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 slightly higher than
that imposed for conventional home mortgage financing.
In 1990, the Company formed a wholly-owned subsidiary, Arcadian Financial
Services, Inc., to operate as a mortgage loan broker. After six years of
operation, the Company decided to close Arcadian during 1996. All mortgages
written during the period of operation have been sold to secondary financial
markets, servicing released.
EMPLOYEES
As of March 11, 1997, the Company had approximately 1,250 full-time
employees.
7
<PAGE>
ITEM 2. PROPERTIES.
LOCATION
Goshen, Indiana Sheridan, Oregon
Syracuse, Indiana Ocala, Florida
Yoder, Kansas Statesville, North Carolina
Dorchester, Wisconsin Hamilton, Alabama
Plant #1 Tuscumbia, Alabama
Plant #2
Leola, Pennsylvania
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. During 1996, the Company sold idle facilities
located in Thomasville, Georgia and Leola, Pennsylvania.
During 1996, the Company's majority owned subsidiary, Waverlee Homes, Inc.,
constructed a 100,000 square foot production facility in Tuscumbia, Alabama to
provide the Company with additional capacity to serve the 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
8
<PAGE>
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.
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, 1996.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's 1996 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 1996 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, 1996 and 1995 totaled $23,824,000 and
$25,857,000, respectively. Working capital was $28,172,000 at year end 1996 and
$30,724,000 at year end 1995. There was no debt at December 31, 1996 and 1995.
Historically, the Company's financing needs have been met through funds
generated internally.
Capital expenditures during 1996 were $7,245,000 compared to
9
<PAGE>
$9,464,000 in 1995. Capital expenditures were made primarily to increase
manufacturing capacity, adopt new manufacturing processes and to improve
manufacturing efficiency. The most notable item in 1996 occurred with the
construction and December opening of a production facility in Tuscumbia,
Alabama. During 1995, a second manufacturing facility was constructed in
Dorchester, Wisconsin that began production in December of that year.
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 and amended in 1996. At the end of 1996, a total of 348,000
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 sold idle plants in Georgia and Pennsylvania. The
effect of these transactions on the results of operations is discussed below.
During 1997, 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.
Results of Operations - Net sales increased to $168,139,000 in 1996 from
$164,753,000 in 1995, a $3,386,000 or 2% increase. The net sales in 1995 were
up $39,718,000 or 32% from $125,035,000 in 1994. Sales for 1996 reflected the
varied market conditions experienced by the Company and the national market. A
major decline in the Pacific Northwest market resulted in a substantial
reduction in the amount of revenue generated by the
10
<PAGE>
Company's Oregon facility. However, strong sales growth was achieved by the
Alabama plant and the two Wisconsin plants due to market demand. The remaining
Company plants also increased sales to balance out the Oregon facility's
decline. 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 during that year.
Gross profit in 1996, 1995 and 1994 was $21,356,000, $24,172,000 and
$16,872,000, respectively. Gross profit declined in 1996 as a result of the loss
of sales from the Company's Oregon plant. Although this sales loss was replaced
by the rest of the Company, with the addition of the second Dorchester,
Wisconsin plant, the cost of running nine facilities during 1996 exceeded the
cost of running eight plants during 1995 and caused some gross profit erosion.
Service costs were also up in 1996. The 1995 increase in gross profit was
principally due to increased sales volume.
Selling, general and administrative expenses have grown as a result of the
Company's expanded business. These expenses amounted to $15,845,000 in 1996,
$15,183,000 in 1995 and $11,883,000 in 1994 or 9.4%, 9.2% and 9.5% of sales,
respectively.
Interest and other income was $2,034,000 in 1996, $1,557,000 in 1995 and
$2,575,000 in 1994. During 1996, the Company sold its idle facilities in
Georgia and Pennsylvania for gains of $565,000 and $338,000, respectively.
Included in the 1994 amount is $936,000 of gain on the sale of the Company's
idle Texas facility. The remaining amounts are from the investment of cash
during the year and variances are due to varying
11
<PAGE>
interest rates and the amount of cash available to invest.
The Company had net income of $4,553,000 in 1996, compared to $6,356,000 in
1995 and $4,824,000 in 1994. Gross profit and income declined in 1996 due to
the shift in volume previously discussed. The Company's second Wisconsin plant,
opened in December, 1995, continued with start-up costs during the first part of
1996, while the start-up costs of the second Alabama plant in late 1996 also had
an adverse effect on income. The Company's financial services subsidiary,
Arcadian Financial Services, Inc., ceased operations during 1996. The losses
associated with this closing were immaterial. Finally, net income from the 1996
sale of idle facilities amounted to $551,000.
Outlook and Risk Factors - The Company plans to focus on its business
expansion through productivity improvements and cost effective capital
expenditures. The new manufacturing facility in Tuscumbia, Alabama should
facilitate the Company's growth in this market area.
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.
In a practice common to the Industry, the Company participates in
12
<PAGE>
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 necessary and some loss may
occur. Prior year losses on such repurchases have not been material nor are
they expected to be during 1997.
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 1996 Annual Report to Stockholders is an exhibit of this
filing. The information contained in the 1996, 1995 and 1994 consolidated
financial statements and footnotes thereto, together with the report thereon of
Crowe Chizek and Company LLP dated February 11, 1997, is incorporated by
reference as Item 8 of this filing.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
13
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Edward J. Hussey, age 79, 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, Michael F. Hussey and John P. Hussey.
Edward Joseph Hussey, age 49, is an attorney and a son of Edward J. Hussey.
He has been a Director of the Company 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 40, 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 48, has been a Director of the Company since 1988.
He has also held the position of President of Sky View Homes, Inc., Rocky Ford,
Colorado since 1993. Prior thereto he was Chairman of the Board of Rampart
Investigations, Colorado Springs, Colorado and Vice President of Calumet
Securities Corporation, Schererville, Indiana.
Mitchell Day, age 41, has been a Director since 1995. He has also been
President of Day Equipment Corporation, Goshen, Indiana since 1984.
Ralph D. Ray, age 64, has been employed in various management positions
with the Company for 24 years. He has been Treasurer of the Company since 1984.
14
<PAGE>
Dorothy L. Peterson, age 85, has been employed with the Company since 1952.
She was appointed Assistant Treasurer in 1985.
Marc A. Dosmann, age 44, 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 45, has served the Company in various capacities for
24 years. He was appointed to the position of Vice President of Sales in 1994.
Ronald Atkins, age 46, has served the Company in manufacturing and
purchasing functions since 1981. During 1996, he was appointed to the position
of Vice President of Purchasing.
Brian L. Christner, age 37, joined the Company in December 1994 as
Controller. Previously he was Controller at Life Treatment Centers, Inc.
ITEM 11. EXECUTIVE COMPENSATION.
The Company's Proxy Statement for the Annual Meeting of Shareholders to be
held on April 24, 1997 includes information under the caption "Executive
Compensation (SUMMARY COMPENSATION TABLE) and under the caption "Shareholder
Return Performance" (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 24, 1997 includes information regarding SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS. This section is an exhibit of this
15
<PAGE>
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 18.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three months ended December
31, 1996.
16
<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.
Liberty Homes, Inc.
(Registrant)
March 26, 1997 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, 1997
/s/ Edward Joseph Hussey Director, Vice President,
- -------------------------- Secretary & Assistant Treasurer
Edward Joseph Hussey March 26, 1997
/s/ Michael F. Hussey Director and Vice President - Finance
- -------------------------- March 26, 1997
Michael F. Hussey
17
<PAGE>
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
18
<PAGE>
EXHIBIT INDEX - CONTINUED
Pages
-----
13 Annual Report to Shareholders for 1996 20
(Except for those portions of this report which
are expressly incorporated by reference in this
Form 10-K, the information contained in such
1996 Annual Report to Shareholders is not deemed
"filed" as part of this Form 10-K).
99(a) Executive Compensation - SUMMARY COMPENSATION
TABLE 34
99(b) Shareholder Return Performance - PERFORMANCE
GRAPH 35
99(c) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS 36
* Incorporated by reference
19
<PAGE>
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; Hamilton, Alabama; and Tuscumbia, 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>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales $168,139 $164,753 $125,035 $92,623 $66,831
Net income $ 4,553 $ 6,356 $ 4,824 $ 3,265 $ 1,330
Net income per share $1.06 $1.42 $1.06 $.71 $.29
Total assets $72,166 $69,127 $61,013 $56,043 $50,801
Long term obligations -- -- -- -- --
Cash dividends per share:
Class A common stock $.28 $.28 $.28 $.25 $.24
Class B common stock $.28 $.28 $.28 $.25 $.23
</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, 1996 and 1995 totaled $23,824,000 and
$25,857,000, respectively. Working capital was $28,172,000 at year end 1996 and
$30,724,000 at year end 1995. There was no debt at December 31, 1996 and 1995.
Historically, the Company's financing needs have been met through funds
generated internally.
Capital expenditures during 1996 were $7,245,000 compared to $9,464,000 in 1995.
Capital expenditures were made primarily to increase manufacturing capacity,
adopt new manufacturing processes and to improve manufacturing efficiency. The
most notable item in 1996 occurred with the construction and December opening of
a production facility in Tuscumbia, Alabama. During 1995, a second
manufacturing facility was constructed in Dorchester, Wisconsin which began
production in December of that year.
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 and amended in 1996. At the end of 1996, a total of 348,000
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 sold idle plants in Georgia and Pennsylvania. The
effect of these transactions on the results of operations is discussed below.
20
<PAGE>
During 1997, 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.
RESULTS OF OPERATIONS - Net sales increased to $168,139,000 in 1996 from
$164,753,000 in 1995, a $3,386,000 or 2% increase. The net sales in 1995 were
up $39,718,000 or 32% from $125,035,000 in 1994. Sales for 1996 reflected the
varied market conditions experienced by the Company and the national market. A
major decline in the Pacific Northwest market resulted in a substantial
reduction in the amount of revenue generated by the Company's Oregon facility.
However, strong sales growth was achieved by the Alabama plant and the two
Wisconsin plants due to market demand. The remaining Company plants also
increased sales to balance out the Oregon facility's decline. 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
during that year.
Gross profit in 1996, 1995 and 1994 was $21,356,000, $24,172,000 and
$16,872,000, respectively. Gross profit declined in 1996 as a result of the loss
of sales from the Company's Oregon plant. Although this sales loss was replaced
by the rest of the Company, with the addition of the second Dorchester,
Wisconsin plant, the cost of running nine facilities during 1996 exceeded the
cost of running eight plants during 1995 and caused some gross profit erosion.
Service costs were also up in 1996. The 1995 increase in gross profit was
principally due to increased sales volume.
Selling, general and administrative expenses have grown as a result of the
Company's expanded business. These expenses amounted to $15,845,000 in 1996,
$15,183,000 in 1995 and $11,883,000 in 1994 or 9.4%, 9.2% and 9.5% of sales,
respectively.
Interest and other income was $2,034,000 in 1996, $1,557,000 in 1995 and
$2,575,000 in 1994. During 1996, the Company sold its idle facilities in
Georgia and Pennsylvania for gains of $565,000 and $338,000, respectively.
Included in the 1994 amount is $936,000 of gain on the sale of the Company's
idle Texas facility. The remaining amounts are 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 had net income of $4,553,000 in 1996, compared to $6,356,000 in 1995
and $4,824,000 in 1994. Gross profit and income declined in 1996 due to the
shift in volume previously discussed. The Company's second Wisconsin plant,
opened in December, 1995, continued with start-up costs during the first part of
1996, while the start-up costs of the second Alabama plant in late 1996 also had
an adverse effect on income. The Company's financial services subsidiary,
Arcadian Financial Services, Inc., ceased operations during 1996. The losses
associated with this closing were immaterial. Finally, net income from the 1996
sale of idle facilities amounted to $551,000.
21
<PAGE>
CAPITAL STOCK
The Company's Class A and Class B Common Stock are traded on the
over-the-counter market on the NASDAQ National Market System. As of March 11,
1997, there were approximately 383 holders of record of the Company's Class A
Common Stock and approximately 250 holders of record of the Company's Class B
Common Stock. The following table shows the high and low closing price per
share for the Company's Class A and Class B Common Stock for each of the
quarters in 1996 and 1995 as reported by the National Association of Securities
Dealers, Inc., as well as cash dividends declared in each quarter in 1996 and
1995.
<TABLE>
<CAPTION>
Price Per Share ($)
------------------- Cash Dividends
1996 1995 per Share
---- ---- ---------
High Low High Low 1996 1995
---- --- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter:
Class A Common 12 1/2 10 3/4 9 3/4 8 3/8 $.07 $.07
Class B Common 11 3/4 10 1/2 9 8 7/8 $.07 $.07
Second Quarter:
Class A Common 15 11 9 3/8 8 3/8 $.07 $.07
Class B Common 13 3/4 10 3/4 8 7/8 8 3/4 $.07 $.07
Third Quarter:
Class A Common 13 3/4 12 9 7/8 8 1/2 $.07 $.07
Class B Common 12 3/4 12 1/2 9 1/4 8 1/2 $.07 $.07
Fourth Quarter:
Class A Common 13 5/8 12 1/4 13 1/4 9 3/8 $.07 $.07
Class B Common 12 1/2 12 1/2 11 3/4 9 1/2 $.07 $.07
</TABLE>
22
<PAGE>
March 17, 1996
To Our Shareholders:
During 1996, Liberty Homes, Inc. generated net sales of $168,139,000. This
level of sales represents an increase of $3,386,000 or 2% over 1995. The
geographical markets served by the Company experienced a wide range of change
and the Company's sales followed accordingly. The areas served by the Company's
Oregon facility experienced substantial market decline and resulted in much
lower sales by that facility. Increased sales by the Wisconsin plants and
Alabama plant provided most of the offset to the Oregon reduction. The
Company's remaining plants increased sales to balance 1996 total net sales with
1995.
Net income dropped $1,803,000 from the 1995 level of $6,356,000 to $4,553,000.
Although the Company maintained level sales, it did so with the added expense of
the Company's second manufacturing plant in Wisconsin, which opened in December,
1995. Also, the Company experienced start-up costs in its newly opened
Tuscumbia, Alabama plant which began production in December, 1996.
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
23
<PAGE>
CONSOLIDATED BALANCE SHEET
December 31, 1996 and 1995 (Amounts in Thousands)
ASSETS
1996 1995
---- ----
CURRENT ASSETS:
Cash and cash equivalents $11,174 $10,257
Short term investments 12,650 15,600
Receivables 8,540 7,328
Refundable income taxes 142 --
Inventories 10,211 10,618
Deferred tax asset 2,054 1,841
Prepayments and other 1,192 1,009
------- -------
Total current assets 45,963 46,653
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land 1,195 1,041
Buildings and improvements 23,359 20,823
Machinery and equipment 17,413 15,359
------- -------
41,967 37,223
Less accumulated depreciation 15,764 14,749
------- -------
26,203 22,474
------- -------
$72,166 $69,127
------- -------
------- -------
The accompanying notes are an integral part of the consolidated financial
statements.
24
<PAGE>
LIBERTY HOMES, INC.
LIABILITIES
1996 1995
---- ----
CURRENT LIABILITIES:
Accounts payable $ 3,357 $ 2,573
Dividends payable 295 306
Income taxes payable 31 236
Accrued compensation & payroll taxes 2,098 2,024
Other accrued liabilities 12,010 10,790
------- -------
Total current liabilities 17,791 15,929
------- -------
DEFERRED INCOME TAXES 1,952 2,280
------- -------
CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
CAPITAL STOCK:
Class A, $1 par value,
Authorized - 7,500,000 shares
Issued and outstanding -
2,477,000 in 1996 and
2,621,000 in 1995 2,477 2,621
Class B, $1 par value,
convertible to Class A,
authorized - 3,500,000 shares
Issued and outstanding -
1,746,000 in 1996 and
1,757,000 in 1995 1,746 1,757
OTHER CAPITAL 83 83
RETAINED EARNINGS 48,117 46,457
------- -------
52,423 50,918
------- -------
$72,166 $69,127
------- -------
------- -------
25
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
For the Years Ended December 31, 1996, 1995 and 1994
(Amounts in Thousands, Except per Share Data)
1996 1995 1994
---- ---- ----
Net sales $168,139 $164,753 $125,035
Cost of sales 146,783 140,581 108,163
-------- -------- --------
Gross profit 21,356 24,172 16,872
Selling, general and
administrative expenses 15,845 15,183 11,883
-------- -------- --------
Operating income 5,511 8,989 4,989
Interest and other income 2,034 1,557 2,575
-------- -------- --------
Income before income taxes 7,545 10,546 7,564
Income tax expense 2,992 4,190 2,740
-------- -------- --------
Net income $ 4,553 $ 6,356 $ 4,824
-------- -------- --------
-------- -------- --------
Net income per outstanding
common share $1.06 $1.42 $1.06
----- ----- -----
----- ----- -----
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1996, 1995 and 1994
(Amounts in Thousands)
<TABLE>
<CAPTION>
Class A Class B
Common Common Other Retained
Stock Stock Capital Earnings Total
----- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994 2,776 1,795 83 39,465 44,119
Repurchase & Cancellation
of Class A Shares (40) (321) (361)
Net income for the year 4,824 4,824
Cash dividends-$.28 per share (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-$.28 per share (1,244) (1,244)
------ ------ ---- ------- -------
Balance December 31, 1995 2,621 1,757 83 46,457 50,918
Conversion from Class B
to Class A 11 (11) --
Repurchase and Cancellation
of Class A Shares (155) (1,697) (1,852)
Net income for the year 4,553 4,553
Cash dividends-$.28 per share (1,196) (1,196)
------ ------ ---- ------- -------
Balance December 31, 1996 $2,477 $1,746 $ 83 $48,117 $52,423
------ ------ ---- ------- -------
------ ------ ---- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
26
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994
(Amounts in Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $4,553 $ 6,356 $ 4,824
------- ------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,181 1,578 1,197
Deferred income taxes (541) (815) (869)
Gain on sale of property, plant & equipment (882) -- (944)
Changes in assets and liabilities:
Receivables (1,212) (572) (2,651)
Refundable income taxes (142) 988 881
Inventories 407 (1,257) (966)
Prepayments and other (183) (269) 123
Accounts payable 784 (494) 2,671
Accrued liabilities 1,283 4,766 657
Income taxes payable (205) 236 (865)
------- ------- -------
Total adjustments 1,490 4,161 (766)
------- ------- -------
Net cash provided by
operating activities 6,043 10,517 4,058
------- ------- -------
Cash flows from (used) in investing activities:
Additions to property, plant & equipment (7,245) (9,464) (4,616)
Investments in short term investments -- -- (3,404)
Disposal of short term investments 2,950 3,875 --
Disposal of property, plant & equipment 2,217 -- 2,998
------- ------- -------
Net cash used in investing activities (2,078) (5,589) (5,022)
------- ------- -------
Cash flows used in financing activities:
Cash dividends paid (1,196) (1,244) (1,280)
Retirement of common stock (1,852) (1,496) (361)
------- ------- -------
Net cash used in financing activities (3,048) (2,740) (1,641)
------- ------- -------
Net increase (decrease) in cash and
cash equivalents 917 2,188 (2,605)
Cash and cash equivalents, beginning of year 10,257 8,069 10,674
------- ------- -------
Cash and cash equivalents, end of year $11,174 $10,257 $ 8,069
------- ------- -------
------- ------- -------
Supplemental disclosures of cash flow
information - cash paid during
the year for income taxes $ 3,879 $ 3,793 $ 3,264
------- ------- -------
------- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
27
<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 Arcadian Financial Services, Inc., which ceased
operations in 1996 and Irish Homes, Inc., and its majority owned subsidiary,
Waverlee Homes, Inc. Upon consolidation, all intercompany accounts,
transactions and profits have been eliminated. The minority interests of
Waverlee Homes, Inc. are 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, 1996 and 1995, 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 were maintained in three
financial institutions at December 31, 1996.
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.
28
<PAGE>
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 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-funded workers' compensation insurance program and group medical benefit
plan. The Company maintains excess loss coverage on the workers' compensation
and medical benefit programs through various insurance contracts.
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, 1996, 1995 and 1994 was 4,300,000 shares,
4,467,000 shares and 4,569,000 shares, respectively. The Board of Directors
have approved a stock repurchase program authorizing the Company to repurchase
up to 500,000 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, 1996, 348,000 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:
(Amounts in Thousands)
1996 1995 1994
---- ---- ----
Deferred tax asset $2,054 $1,841 1,045
Deferred tax (liability) (1,952) (2,280) (2,290)
Valuation allowance
for deferred tax asset -- -- (9)
------ ------ -------
Net deferred tax asset (liability) $ 102 $ (439) $(1,254)
------ ------ -------
------ ------ -------
The tax effects of principal temporary differences and carry forwards are shown
in the following table:
1996 1995 1994
---- ---- ----
Nondeductible accruals & reserves $1,998 $1,781 $ 967
Accelerated tax depreciation (1,896) (2,220) (2,244)
State net operating loss carry forward -- -- 18
Other, net -- -- 14
------ ------ -------
Subtotal 102 (439) (1,245)
Valuation allowances for
deferred tax asset -- -- (9)
------ ------ -------
$ 102 $ (439) $(1,254)
------ ------ -------
------ ------ -------
29
<PAGE>
The components of income tax expense are as follows:
(Amounts in Thousands)
1996 1995 1994
---- ---- ----
Current:
Federal $ 2,915 $4,068 $3,040
State 618 937 569
Deferred:
Federal (454) (664) (705)
State (87) (142) (151)
Change in valuation allowance -- (9) (13)
------- ------ ------
$ 2,992 $4,190 $2,740
------- ------ ------
------- ------ ------
Income tax expense results in effective tax rates of 39.6 percent in 1996; 39.7
percent in 1995; and 36.2 percent in 1994; and reconciles with the statutory
United States federal income tax rate in 1996, 1995 and 1994, of 34 percent, as
follows:
<TABLE>
<CAPTION>
Percent of Income
Income Tax Expense Before Income Taxes
------------------ -------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statutory
federal rate $2,565 $3,586 $2,572 34.0 34.0 34.0
State income taxes, net of
federal tax effect 351 519 267 4.6 4.9 3.5
Other 76 85 (99) 1.0 .8 (1.3)
------ ------ ------ ---- ---- ----
$2,992 $4,190 $2,740 39.6 39.7 36.2
------ ------ ------ ---- ---- ----
------ ------ ------ ---- ---- ----
</TABLE>
5. CONTINGENT LIABILITIES:
REPURCHASE OBLIGATIONS
The Company is contingently liable as of December 31, 1996 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, 1996 for which it has received or expects
notification of repurchase. The Company's repurchase losses for 1996 and 1995
were not material. The Company believes any additional losses incurred under
outstanding repurchase agreements in excess of the accrual established as of
December 31, 1996, will not have a significant impact on the financial condition
of the Company.
OTHER CONTINGENCIES
Letters of Credit totaling $4,325,000 have been issued in conjunction with the
Company's self-funded workers' compensation program.
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.
6. RETIREMENT PLAN
The Company has 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
30
<PAGE>
plan. The expense for this plan for the year ended December 31, 1996, 1995 and
1994 was $227,000, $248,000 and $95,000, respectively.
7. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
The Company's results of operations in 1996 and 1995 by quarter, are as follows
(Amounts in Thousands):
Quarter Ended Year
------------------------------------------- Ended
Mar. 31 June 30 Sept. 30 Dec. 31 Dec. 31
------- ------- -------- ------- -------
1996:
Net sales $38,146 $45,673 $45,403 $38,917 $168,139
Gross profit 4,946 6,075 5,803 4,532 21,356
Net income 890 1,607 1,364 692 4,553
Net income per share $.20 $.37 $.32 $.17 $1.06
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
During 1996, the Company sold its idle Georgia facility for a net after tax gain
of $345,000 or $.08 per share in the second quarter and sold its idle
Pennsylvania facility for a net after tax gain of $206,000 or $.05 per share in
the fourth quarter.
31
<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, 1996 and 1995 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, 1996. 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
Crowe Chizek and Company LLP
Elkhart, Indiana
February 11, 1997
32
<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
Share-holder 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., Rocky
Ford, Colorado
Mitchell Day President of Day Equipment Corporation,
Goshen, Indiana
OFFICERS
Edward J. Hussey, President
Edward Joseph Hussey, Vice President and Secretary
Michael F. Hussey, Vice President - Finance and Assistant Secretary
Marc A. Dosmann, Vice President and Chief Financial Officer
Bruce A. McMillan, Vice President - Sales
Ron Atkins, Vice President - Purchasing
Ralph D. Ray, Treasurer
Brian L. Christner, Controller
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.
33
<PAGE>
ITEM 11 EXECUTIVE COMPENSATION
ITEM 402(a)(3)
SUMMARY OF COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Name & ----------------------- ----------------------
Principal 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. 1996 $240,000 $442,000 -- -- -- --
Hussey 1995 240,000 454,400 -- -- -- --
Chairman 1994 180,000 235,400 -- -- -- --
& President
Edward Jos 1996 104,000 273,200 -- -- -- $13,086
Hussey 1995 83,200 253,192 -- -- -- 9,250
VP & Sec 1994 72,800 134,398 -- -- -- 5,800
Michael F. 1996 104,000 273,200 -- -- -- 13,086
Hussey 1995 83,200 253,192 -- -- -- 9,250
VP - 1994 72,800 134,398 -- -- -- 5,800
Finance
Marc A. 1996 66,300 68,040 -- -- -- --
Dosmann 1995 52,800 70,968 -- -- -- --
VP - CFO 1994 -- -- -- -- -- --
Bruce A. 1996 66,300 63,040 -- -- -- --
McMillan 1995 62,400 76,144 -- -- -- --
VP - Sales 1994 61,100 54,800 -- -- -- --
</TABLE>
34
<PAGE>
ITEM 11 - CONTINUED
ITEM 401(l)
PERFORMANCE GRAPH
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Class A Common Stock 100 155 199 202 279 305
Class B Common Stock 100 193 242 236 329 358
Dow Jones Equity Index 100 109 119 120 166 206
Dow Jones Home Construction Index 100 129 164 111 166 159
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, 1991 and all
dividends were reinvested.
35
<PAGE>
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Name & Address of Amount & Nature of
Title of Class Beneficial Owner Beneficial Ownership % of Class
- -------------- ---------------- -------------------- ----------
ITEM 403(a)
------------
Class B Hussey Investments LP 880,881 50.6%
Common Stock PO Box 35
Goshen IN 46527 (1) (2)
ITEM 403(b)
------------
Class A Hussey Endeavors LP 593,000 24.1%
Common Stock PO Box 35
Goshen IN 46527 (1) (2)
Class A Edward J. Hussey 660,219 26.8%
Common Stock PO Box 35
Goshen IN 46527 (1)
Class A Edward Joseph Hussey 616,400 25.0%
Common Stock PO Box 35
Class B Goshen IN 46527 (2)
Common Stock 945,653 54.3%
Class A Michael F. Hussey 615,835 25.0%
Common Stock PO Box 35
Class B Goshen IN 46527 (2)
Common Stock 945,088 54.3%
Class A All Directors and 1,300,454 52.8%
Common Stock Officers as a Group
Class B 1,009,860 58.0%
Common Stock
(1) Edward J. Hussey is a limited partner in both Hussey Investments LP and
Hussey Endeavors LP and accordingly has a pecuniary interest in the shares of
Class B Common Stock owned by Hussey Investments LP and Class A Common Stock
owned by Hussey Endeavors LP. 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 general partners
of Hussey Endeavors LP. Accordingly, they share voting and investment control
over the 880,881 shares of Class B Common Stock owned by Hussey Investments LP
and the 593,000 shares of Class A Common Stock owned by Hussey Endeavors LP.
Total shares listed for individuals includes the beneficial ownership.
36
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,824
<SECURITIES> 0
<RECEIVABLES> 8,540
<ALLOWANCES> 0
<INVENTORY> 10,211
<CURRENT-ASSETS> 45,963
<PP&E> 41,967
<DEPRECIATION> 15,764
<TOTAL-ASSETS> 72,166
<CURRENT-LIABILITIES> 17,791
<BONDS> 0
0
0
<COMMON> 4,223
<OTHER-SE> 48,200
<TOTAL-LIABILITY-AND-EQUITY> 72,166
<SALES> 168,139
<TOTAL-REVENUES> 168,139
<CGS> 146,783
<TOTAL-COSTS> 15,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,545
<INCOME-TAX> 2,992
<INCOME-CONTINUING> 4,553
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,553
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
