<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, 1997.
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 13, 1998, 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 $2,748,000.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Shares of Outstanding
Class at March 13, 1998
----- -----------------
<S> <C>
Class A Common Stock, $1,00 par value 2,257,096
Class B Common Stock, $1.00 par value 1,730,759
</TABLE>
The Exhibit Index is located on page 14.
1
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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 moved 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 moved
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 more 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. Lumber for walls, roofs, ceilings and floors, steel, wood or vinyl
siding, 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 to numerous independent dealers, most of
whom also sell competing products. In the year ended December 31, 1997, the
Company's largest dealer accounted for approximately three 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 $29,000 to $50,000 and from approximately $25,000 to
$80,000 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 1997 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
3
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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 1997, there were 89 companies operating
323 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.
During 1997, the Company formed Gipper Development Company, LLC, a
majority owned entity, which is developing a manufactured housing community
in Northern Indiana. The development includes only homes manufactured by
4
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the Company.
In 1994, the Company formed Waverlee Homes, Inc., a majority owned
subsidiary, which operates production facilities in Hamilton and Tuscumbia,
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 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
5
<PAGE>
factor for transportation.
The construction of manufactured homes, and the plumbing, heating and
electrical systems installed therein, are subject to 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.
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 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 1997,
6
<PAGE>
1996 and 1995.
Retail customers often finance their purchases with funds borrowed from
banks, finance companies and savings and loan associations. Such retail
finance arrangements sometimes 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 13, 1998, the Company had approximately 1,300 full-time
employees.
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.
The Company owns all of its properties in fee simple and believes that
its facilities and equipment contained therein are well maintained and
7
<PAGE>
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.
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, 1997.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's 1997 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 1997 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.
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company's 1997 Annual Report to Stockholders is an exhibit of this
filing. The information contained in this report under the title
Management's Discussion and Analysis of Financial Condition and Results of
Operations is incorporated by reference as Item 7 of this filing.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's 1997 Annual Report to Stockholders is an exhibit of this
filing. The information contained in the 1997, 1996 and 1995 consolidated
financial statements and footnotes thereto, together with the report thereon
of Crowe Chizek and Company LLP dated February 9, 1998, is incorporated by
reference as Item 8 of this filing.
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 80, 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 50, 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 &
9
<PAGE>
Davis P.C., where he is still a shareholder.
Michael F. Hussey, age 41, 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 49, has been a Director of the Company since 1988.
He has also held the position of President of I.M. Homes, Inc., Rocky Ford,
Colorado since 1997. Prior thereto, he was President of Sky View Homes,
Inc., Chairman of the Board of Rampart Investigations, and Vice President of
Calumet Securities Corporation.
Mitchell Day, age 42, has been a Director since 1995. He has also been
President of Day Equipment Corporation, Goshen, Indiana since 1984.
Ralph D. Ray, age 65, has been employed in various management positions
with the Company for 29 years. He has been Treasurer of the Company since
1984.
Dorothy L. Peterson, age 86, has been employed with the Company since
1952. She was appointed Assistant Treasurer in 1985.
Marc A. Dosmann, age 45, 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 46, 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 47, has served the Company in manufacturing and
purchasing functions since 1981. During 1996, he was appointed to the
10
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position of Vice President of Purchasing.
Brian L. Christner, age 38, 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 23, 1998 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 23, 1998 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.
In 1997, The Company sold its product to I.M. Homes, Inc., Rocky Ford,
Colorado. I.M. Homes is owned by David M. Huffine, a director of the
Company. Sales by the Company to I.M. Homes were arms length transactions and
represent less than one percent of the Company's sales.
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
11
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index located on page 17.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 1997.
12
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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, 1998 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, 1998
/s/ Edward Joseph Hussey Director, Vice President,
- ----------------------------- Secretary & Assistant Treasurer
Edward Joseph Hussey March 26, 1998
/s/ Michael F. Hussey Director and Vice President - Finance
- ----------------------------- March 26, 1998
Michael F. Hussey
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Pages
-----
<S> <C> <C>
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
14
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EXHIBIT INDEX - CONTINUED
Pages
-----
13 Annual Report to Shareholders for 1997 16
(Except for those portions of this report which
are expressly incorporated by reference in this
Form 10-K, the information contained in such
1997 Annual Report to Shareholders is not deemed
"filed" as part of this Form 10-K).
21 List of Subsidiaries 32
27 Financial Data Schedule 33
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
</TABLE>
* Incorporated by reference
15
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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; 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>
1997 1996 1995 1994 1993
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Sales $ 167,837 $168,139 $164,753 $125,035 $92,623
Net income $ 3,034 $ 4,553 $ 6,356 $ 4,824 $ 3,265
Net income per share $.74 $1.06 $1.42 $1.06 $.71
Total assets $71,482 $72,166 $69,127 $61,013 $56,043
Long term obligations -- -- -- -- --
Cash dividends per share:
Class A common stock $.28 $.28 $.28 $.28 $.25
Class B common stock $.28 $.28 $.28 $.28 $.25
</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, 1997 and 1996 totaled $21,047,000 and
$23,824,000, respectively. Working capital was $27,621,000 at year end 1997
and $28,172,000 at year end 1996. There was no debt at December 31, 1997 and
1996. Historically, the Company's financing needs have been met through funds
generated internally.
After building a new production facility in each of the preceding three
years, no new facilities were built with the $2,697,000 of 1997 capital
expenditures. Projects that were funded during 1997 covered new manufacturing
processes, production efficiency improvements, repair or replacement of
existing equipment and expansion of the Company's manufactured housing
community developments. Capital expenditures during 1996 totaled $7,245,000.
The most notable item during 1996 was the construction of a manufacturing
facility in Tuscumbia, Alabama which began production in December of that
year.
Additionally, the Company continued its efforts to repurchase shares of its
16
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Class A and Class B Common Stock under a program approved by its Board of
Directors in 1994 and amended in 1996 and 1997. At the end of 1997, a total
of 563,000 Class A Common Shares and 15,000 Class B 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 1998, 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 during 1997 were $167,837,000, a $302,000
decrease from 1996 net sales of $168,139,000. Net sales in 1996 were up
$3,386,000 or 2% from $164,753,000 in 1995. During 1997, varied results were
experienced throughout the Company and the national market. The Company as
well as the industry experienced slight declines from 1996 levels. When
compared to industry production, as reported by the Manufactured Housing
Institute, the Company's year to year production change percentage comparison
was the same as the industry year to year comparison for the aggregate of
those states in which the Company operates. Individually, the percentage
change compared favorably in four of the states and compared unfavorably in
the other four states in which the Company operates.
Sales from the Company's Pennsylvania operation declined in 1997 along with
sales by the industry as a whole in the markets served by that plant. The
strong growth which produced much of the Company's 1996 sales increase
continued into 1997 with favorable results in the market served by the
Company's two Alabama plants. Also, the decline in the Company's Pacific
Northwest market that began in 1996, bottomed out and began improving during
the second half of 1997.
Gross profit in 1997, 1996 and 1995 was $20,246,000, $21,356,000 and
$24,172,000, respectively. The Company added new plants in Hamilton, Alabama
in January 1995, in Dorchester, Wisconsin in January 1996, and in Tuscumbia,
Alabama in December 1996. As net sales remained relatively constant in 1997,
1996 and 1995, the Company was unable to spread these additional costs over a
larger sales base. Therefore, gross profits in 1997 and 1996 declined
$1,110,000 and $2,816,000 respectively.
Selling, general and administrative expenses have grown as a result of the
Company's increased number of facilities. These expenses amounted to
$16,366,000 in 1997, $15,845,000 in 1996 and $15,183,000 in 1995, or 9.8%,
9.4% and 9.2% of net sales respectively.
Interest and other income was $941,000 in 1997, $2,034,000 in 1996 and
$1,557,000 in 1995. During 1996, the Company sold its idle facilities in
17
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Georgia and Pennsylvania for pre-tax gains totaling $903,000. The remaining
amounts are income 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 $3,034,000 in 1997 compared to $4,553,000 in
1996, and $6,356,000 in 1995. While the manufactured housing industry sales
and the Company's sales have remained practically the same in each of these
years, the Company's costs have increased.
OUTLOOK AND RISK FACTORS - 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 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 1998.
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.
CAPITAL STOCK
The Company's Class A and Class B Common Stock are traded on the NASDAQ
National Market System. As of March 13, 1998, there were approximately 355
holders of record of the Company's Class A Common Stock and approximately 240
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 1997 and 1996 as reported by
the National Association of Securities Dealers, Inc., as well as cash
dividends declared in each quarter in 1997 and 1996.
18
<PAGE>
<TABLE>
<CAPTION>
Price per Share ($)
------------------- Cash Dividends
1997 1996 per Share
---- ---- ---------
High Low High Low 1997 1996
---- --- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter:
Class A Common 12 3/4 9 3/4 12 1/2 10 3/4 $.07 $.07
Class B Common 13 3/16 11 3/4 11 3/4 10 1/2 $.07 $.07
Second Quarter:
Class A Common 10 3/4 9 1/8 15 11 $.07 $.07
Class B Common 10 1/2 10 13 3/4 10 3/4 $.07 $.07
Third Quarter:
Class A Common 10 1/4 9 13 3/4 12 $.07 $.07
Class B Common 10 3/4 9 1/2 12 3/4 12 1/2 $.07 $.07
Fourth Quarter:
Class A Common 10 1/2 8 1/8 13 5/8 12 1/4 $.07 $.07
Class B Common 10 9 12 1/2 12 1/2 $.07 $.07
</TABLE>
19
<PAGE>
March 17, 1998
To Our Shareholders:
During 1997, Liberty Homes, Inc. generated net sales of $167,837,000. This
amount represents a small decrease of $302,000 from the prior year. Sales
declines in the New England and Mid-Atlantic area were experienced by the
Company's Pennsylvania Division and the industry. The Oregon Division and
its Pacific Northwest market continued to decline into 1997, but reversed
course before year end. During the same time, the two Alabama Divisions
continued with significant sales increases.
Net income for 1997 declined to $3,034,000 from $4,553,000 in 1996. The
Company has aggressively expanded its production capacity by completing a new
manufacturing facility at the end of each of the three preceding years.
While these increased costs and level sales have caused income to slip, the
Company is now in good position to expand its marketing efforts with the
support of an updated and expanded manufacturing base.
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
20
<PAGE>
CONSOLIDATED BALANCE SHEET
December 31, 1997 and 1996 (Amounts in Thousands)
<TABLE>
<CAPTION>
ASSETS
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $15,797 $11,174
Short term investments 5,250 12,650
Receivables 8,303 8,540
Refundable income taxes -- 142
Inventories 11,982 10,211
Deferred tax asset 2,206 2,054
Prepayments and other 1,450 1,192
------- -------
Total current assets 44,988 45,963
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land 1,280 1,195
Buildings and improvements 24,921 23,359
Machinery and equipment 18,463 17,413
------- -------
44,664 41,967
Less accumulated depreciation 18,170 15,764
------- -------
26,494 26,203
------- -------
$71,482 $72,166
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
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LIBERTY HOMES, INC.
<TABLE>
<CAPTION>
LIABILITIES
1997 1996
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,340 $ 3,357
Dividends payable 279 295
Income taxes payable 170 31
Accrued compensation
& payroll taxes 2,276 2,098
Other accrued liabilities 12,302 12,010
------- -------
Total current liabilities 17,367 17,791
------- -------
DEFERRED INCOME TAXES 2,154 1,952
------- -------
CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
CAPITAL STOCK:
Class A, $1 par value,
Authorized - 7,500,000 shares
Issued and outstanding -
2,262,000 in 1997 and
2,477,000 in 1996 2,262 2,477
Class B, $1 par value,
convertible to Class A,
authorized - 3,500,000 shares
Issued and outstanding -
1,731,000 in 1997 and
1,746,000 in 1996 1,731 1,746
OTHER CAPITAL 83 83
RETAINED EARNINGS 47,885 48,117
------- -------
51,961 52,423
------- -------
$71,482 $72,166
------- -------
------- -------
</TABLE>
22
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
For the Years Ended December 31, 1997, 1996 and 1995
(Amounts in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net sales $167,837 $168,139 $164,753
Cost of sales 147,591 146,783 140,581
-------- -------- --------
Gross profit 20,246 21,356 24,172
Selling, general and
administrative expenses 16,366 15,845 15,183
-------- -------- --------
Operating income 3,880 5,511 8,989
Interest and other income 941 2,034 1,557
-------- -------- --------
Income before income taxes 4,821 7,545 10,546
Income tax expense 1,787 2,992 4,190
-------- -------- --------
Net income $ 3,034 $ 4,553 $ 6,356
-------- -------- --------
-------- -------- --------
Net income per outstanding
common share $.74 $1.06 $1.42
-------- -------- --------
-------- -------- --------
</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1997, 1996 and 1995
(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, 1995 $2,736 $1,795 $83 $42,688 $47,302
Repurchase & Cancellation 38 (38) --
of Class A Shares (153) (1,343) (1,496)
Net income for the year 6,356 6,356
Cash dividends-$.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-$.28 per share (1,196) (1,196)
------- ------- ------- -------- -------
Balance December 31, 1996 2,477 1,746 83 48,117 52,423
Repurchase and Cancellation
of Class A & Class B Shares (215) (15) (2,133) (2,363)
Net income for the year 3,034 3,034
Cash dividends-$.28 per share (1,133) (1,133)
------- ------- ------- -------- -------
Balance December 31, 1997 $2,262 $1,731 $83 $47,885 $51,961
------- ------- ------- -------- -------
------- ------- ------- -------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1997, 1996 and 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,034 $ 4,553 $ 6,356
------- ------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,406 2,181 1,578
Deferred income taxes 50 (541) (815)
Gain on sale of property, plant & equipment -- (882) --
Changes in assets and liabilities:
Receivables 237 (1,212) (572)
Inventories (1,771) 407 (1,257)
Prepayments and other (258) (183) (269)
Accounts payable (1,017) 784 (494)
Accrued liabilities 454 1,283 4,766
Accrued income taxes 281 (347) 1,224
------- ------- -------
Total adjustments 382 1,490 4,161
------- ------- -------
Net cash provided by
operating activities 3,416 6,043 10,517
------- ------- -------
Cash flows from (used) in investing activities:
Additions to property, plant & equipment (2,697) (7,245) (9,464)
Disposal of short term investments 7,400 2,950 3,875
Disposal of property, plant & equipment -- 2,217 --
------- ------- -------
Net cash provided by (used in)
investing activities 4,703 (2,078) (5,589)
------- ------- -------
Cash flows used in financing activities:
Cash dividends paid (1,133) (1,196) (1,244)
Retirement of common stock (2,363) (1,852) (1,496)
------- ------- -------
Net cash used in financing activities (3,496) (3,048) (2,740)
------- ------- -------
Net increase in cash and
cash equivalents 4,623 917 2,188
Cash and cash equivalents, beginning of year 11,174 10,257 8,069
------- ------- -------
Cash and cash equivalents, end of year $15,797 $11,174 $10,257
------- ------- -------
------- ------- -------
Supplemental disclosures of cash flow
information - cash paid during
the year for income taxes $ 1,503 $ 3,879 $ 3,793
------- ------- -------
------- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
24
<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
subsidiaries, Waverlee Homes, Inc., and Gipper Development Company, LLC.
Upon consolidation, all intercompany accounts, transactions and profits have
been eliminated. The minority interests of Waverlee Homes, Inc. and Gipper
Development Company, LLC 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, 1997 and 1996, 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, 1997.
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. When assets are retired or disposed, 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
25
<PAGE>
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.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board (the "Board")
adopted Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("FAS 128"), which establishes standards for computing and presenting
earnings per share ("EPS") by replacing the presentation of primary EPS with
a presentation of basic EPS. In addition, FAS 128 requires dual presentation
of basic and diluted EPS on the face of the income statement and requires a
reconciliation of the numerator and denominator of the diluted EPS
calculation. The Company will adopt FAS 128 in fiscal 1998 and does not
expect its adoption will result in reporting materially different EPS amounts
than those reported under current accounting pronouncements.
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 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,
26
<PAGE>
1997, 1996 and 1995 was 4,085,000 shares, 4,300,000 shares, and 4,467,000
shares, respectively. The Board of Directors have approved a stock
repurchase program authorizing the Company to repurchase up to 800,000
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, 1997, 563,000 shares of Class A Common Stock and 15,000 shares of Class B
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)
1997 1996 1995
------ ------ -------
<S> <C> <C> <C>
Deferred tax asset $2,206 $2,054 $1,841
Deferred tax (liability) (2,154) (1,952) (2,280)
------ ------ -------
Net deferred tax asset (liability) $ 52 $ 102 $ (439)
------ ------ -------
------ ------ -------
</TABLE>
The tax effects of principal temporary differences and carry forwards are
shown in the following table:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Nondeductible accruals & reserves $2,152 $1,998 $1,781
Accelerated tax depreciation (2,100) (1,896) (2,220)
------ ------ ------
$ 52 $ 102 $ (439)
------ ------ ------
------ ------ ------
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
(Amounts in Thousands)
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Current:
Federal $ 1,687 $ 2,915 $4,068
State 50 618 937
Deferred:
Federal 39 (454) (664)
State 11 (87) (142)
Change in valuation allowance -- -- (9)
------- ------- ------
$1,787 $ 2,992 $4,190
------- ------- ------
------- ------- ------
</TABLE>
Income tax expense results in effective tax rates of 37.1 percent in 1997;
39.6 percent in 1996; and 39.7 percent in 1995; and reconciles with the
statutory United States federal income tax rate in 1997, 1996 and 1995, of 34
percent, as follows:
<TABLE>
<CAPTION>
Percent of Income
Income Tax Expense Before Income Taxes
------------------ -------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statutory
federal rate $1,639 $2,565 $3,586 34.0 34.0 34.0
State income taxes, net of
federal tax effect 117 351 519 2.4 4.6 4.9
Other 31 76 85 .7 1.0 .8
------ ------ ------ ---- ---- ----
$1,787 $2,992 $4,190 37.1 39.6 39.7
------ ------ ------ ---- ---- ----
------ ------ ------ ---- ---- ----
</TABLE>
27
<PAGE>
The state income tax rates for 1997 were lower than historical rates due to
tax credits booked in 1997.
5. CONTINGENT LIABILITIES:
REPURCHASE OBLIGATIONS
The Company is contingently liable as of December 31, 1997 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, 1997 for which it has
received or expects notification of repurchase. The Company's repurchase
losses for 1997, 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, 1997, will not have a
significant impact on the financial condition of the Company.
OTHER CONTINGENCIES
Letters of Credit totaling $3,325,000 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 plan. The expense for this plan for the year ended
December 31, 1997, 1996 and 1995 was $222,000, $227,000, and $248,000,
respectively.
7. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
The Company's results of operations in 1997 and 1996 by quarter, are as
follows (Amounts in Thousands except per share data):
<TABLE>
<CAPTION>
Quarter Ended Year
-------------------------------------- Ended
Mar. 31 June 30 Sept. 30 Dec. 31 Dec. 31
------- ------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
1997:
Net sales $35,131 $46,188 $43,861 $42,657 $167,837
Gross profit 3,807 5,807 4,800 5,832 20,246
Net income 244 1,068 534 1,188 3,034
Net income per share $.06 $.26 $.13 $.29 $.74
28
<PAGE>
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
</TABLE>
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.
29
<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, 1997 and 1996 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, 1997.
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, 1997 and 1996, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
Crowe Chizek and Company LLP
Elkhart, Indiana
February 9, 1998
30
<PAGE>
BOARD OF DIRECTORS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AND EMPLOYER
<S> <C>
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 PC, Merrillville, Indiana
Michael F. Hussey Vice President - Finance and Assistant Secretary of
Liberty Homes, Inc.
David M. Huffine President of I.M. Homes, Inc., Rocky Ford, Colorado
Mitchell Day President of Day Equipment Corporation, Goshen, Indiana
</TABLE>
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 PC
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.
31
<PAGE>
LIST OF SUBSIDIARIES
Waverlee Homes, Inc., incorporated in Alabama
Irish Homes, Inc., incorporated in Indiana
Gipper Development Company, LLC, organized in Indiana
32
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 21,047
<SECURITIES> 0
<RECEIVABLES> 8,303
<ALLOWANCES> 0
<INVENTORY> 11,982
<CURRENT-ASSETS> 44,988
<PP&E> 44,664
<DEPRECIATION> 18,170
<TOTAL-ASSETS> 71,482
<CURRENT-LIABILITIES> 17,367
<BONDS> 0
0
0
<COMMON> 3,993
<OTHER-SE> 47,968
<TOTAL-LIABILITY-AND-EQUITY> 71,482
<SALES> 167,837
<TOTAL-REVENUES> 167,837
<CGS> 147,591
<TOTAL-COSTS> 16,366
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,821
<INCOME-TAX> 1,787
<INCOME-CONTINUING> 3,034
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,034
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
<PAGE>
ITEM 11 EXECUTIVE COMPENSATION
ITEM 402(a) (3)
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------------
Long Term Compensation
----------------------
Name & Other Stock Long Term All
Principal Annual Options Incentive Other
Position Year Salary Bonus(1) Comp. & Awards Payouts Comp(2)
- --------- ---- -------- --------- ------ -------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward J. 1997 $240,000 $344,000 -- -- -- --
Hussey 1996 240,000 442,000 -- -- -- --
Chairman 1995 240,000 454,400 -- -- -- --
& President
Edward Jos 1997 114,400 258,640 -- -- -- $17,341
Hussey 1996 104,000 273,200 -- -- -- 13,086
VP & Sec 1995 83,200 253,192 -- -- -- 9,250
Michael F. 1997 114,400 258,640 -- -- -- 17,341
Hussey 1996 104,000 273,200 -- -- -- 13,086
VP - 1995 83,200 253,192 -- -- -- 9,250
Finance
Marc A. 1997 68,900 56,340 -- -- -- --
Dosmann 1996 66,300 68,040 -- -- -- --
VP & CFO 1995 52,800 70,968 -- -- -- --
Bruce A. 1997 68,900 51,340 -- -- -- --
McMillan 1996 66,300 63,040 -- -- -- --
VP - Sales 1995 62,400 76,144 -- -- -- --
</TABLE>
34
<PAGE>
ITEM 11 - CONTINUED
ITEM 401(l)
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Class A Common Stock 100 128 130 180 196 129
Class B Common Stock 100 125 122 170 185 152
Dow Jones Equity Index 100 110 111 152 188 251
Dow Jones Home Construction Index 100 127 87 129 124 191
</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, 1992 and all
dividends were reinvested.
35
<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
- -------------- ----------------- -------------------- ----------
ITEM 403(a)
-----------
<S> <C> <C> <C>
Class B Hussey Investments LP 880,881 50.9%
Common Stock PO Box 35
Goshen IN 46527 (1) (2)
ITEM 403(b)
-----------
Class A Hussey Endeavors LP 868,000 38.5%
Common Stock PO Box 35
Goshen IN 46527 (1) (2)
Class A Edward J. Hussey 385,219 17.1%
Common Stock PO Box 35
Goshen IN 46527 (1)
Class A Edward Joseph Hussey 891,400 39.5%
Common Stock PO Box 35
Class B Goshen IN 46527 (2)
Common Stock 945,653 54.6%
Class A Michael F. Hussey 890,835 39.5%
Common Stock PO Box 35
Class B Goshen IN 46527 (2)
Common Stock 945,088 54.6%
Class A All Directors and 1,300,454 57.6%
Common Stock Officers as a Group
Class B 1,009,860 58.3%
Common Stock
</TABLE>
(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 868,000 shares of Class A Common Stock owned by
Hussey Endeavors LP. Total shares listed for individuals includes the
beneficial ownership.
36
