SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549

FORM 10-Q

(Mark One)

ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2001.

- or -

o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From ________ to _______.

Commission File Number 0-5555

LIBERTY HOMES, INC.
(Exact name of registrant as specified in its charter)

Indiana	35-1174256

(State of Incorporation)	(IRS Employer Identification No.)

PO Box 35, Goshen, Indiana	46527

(Address of principal executive offices)	(ZIP Code)

(219) 533-0431
(Registrant's telephone number, including area code)

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 ý No o

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 August 3, 2001

Class A Common Stock, $1.00 par value	2,086,645

Class B Common Stock, $1.00 par value	1,666,222

INDEX

Part I – Consolidated Financial Information (Unaudited)

Item 1.	Consolidated Financial Statements – Liberty Homes, Inc.

	Consolidated Balance Sheet, as of June 30, 2001 and December 31, 2000
	Consolidated Statement of Income, for the three months ended June 30, 2001 and 2000
	Consolidated Statement of Income, for the six months ended June 30, 2001 and 2000
	Consolidated Statement of Cash Flows for the six months ended June 30, 2001 and 2000
	Other Information
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Part II – Other Information

Item 6.	Exhibits and Reports on Form 8–K

	Signature

PART I – CONSOLIDATED FINANCIAL INFORMATION

General
The consolidated financial statements and footnotes thereto listed in the Index on page 2 of this report have been prepared using generally accepted accounting principles applied on a basis consistent with 2000. The results of operations for the interim period presented are not necessarily indicative of results to be expected for the year. The information furnished herein reflects all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods.

LIBERTY HOMES, INC.
CONSOLIDATED BALANCE SHEET
as of June 30, 2001 and December 31, 2000

				June 30,		December 31,
ASSETS				2001		2000

	Current assets:
		Cash and cash equivalents		$	5,162,000	$	4,896,000
		Short term investments		300,000		350,000
		Receivables		11,835,000		11,259,000
		Inventories		15,578,000		17,422,000
		Deferred tax asset		2,671,000		2,480,000
		Income taxes refundable		458,000		3,643,000
		Prepayments and other		2,076,000		2,026,000

			Total current assets	38,080,000		42,076,000



	Property, plant and equipment:

		Land		2,422,000		2,422,000
		Buildings and improvements		29,559,000		29,678,000
		Machinery and equipment		21,809,000		21,570,000

				53,790,000		53,670,000

		Less accumulated depreciation		27,188,000		25,977,000

				26,602,000		27,693,000

	Total assets			$	64,682,000	$	69,769,000

					June 30,		December 31,
LIABILITIES					2001		2000

	Current liabilities:
		Accounts payable			$	3,914,000	$	3,659,000
		Notes payable			2,986,000		5,209,000
		Accrued compensation & payroll taxes			1,444,000		1,416,000
		Other accrued liabilities			6,715,000		8,353,000


				Total current liabilities	15,059,000		18,637,000

	Deferred income taxes				2,530,000		2,530,000

	Minority interest in subsidiaries				1,043,000		1,020,000

	Contingent liabilities (see notes)				--		--


SHAREHOLDERS’ EQUITY
	Capital Stock:
			Class A, $1 par value Authorized-7,500,000 Shares Issued & outstanding-2,087,000 in 2001 & 2,083,000 in 2000


					2,087,000		2,083,000
			Class B, $1 par value Authorized-3,500,000 Shares Issued & outstanding-1,666,000 in 2001 & 1,670,000 in 2000


					1,666,000		1,670,000

	Other capital				83,000		83,000

	Retained earnings				42,214,000		43,746,000

					46,050,000		47,582,000

Total liabilities and shareholders’ equity					$	64,682,000	$	69,769,000

LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended June 30, 2001 and 2000
____________

		2001			2000


Net sales		$	31,577,000		$	35,999,000

Cost of sales		26,738,000			31,680,000


	Gross profit	4,839,000			4,319,000

Selling, delivery, general and administrative expenses		4,656,000			5,525,000


	Operating income (loss)	183,000			(1,206,000		)

Interest expense		(96,000		)	(89,000		)
Interest and other income		112,000			196,000


	Income before (loss) minority interest and income taxes	199,000			(1,099,000		)

Minority interest		(17,000		)	31,000

Income tax benefit (expense)		(75,000		)	439,000


	Net income (loss)	$	107,000		$	(629,000	)


Net income (loss) per outstanding Common Share – basic and fully diluted		$	.03		$	(.16	)


Weighted average shares outstanding		3,753,000			3,899,000


Cash dividend per share:

	Class A Common Stock	$	.07		$	.07

	Class B Common Stock	$	.07		$	.07

LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the six months ended June 30, 2001 and 2000
____________

		2001			2000


Net sales		$	56,338,000		$	73,472,000

Cost of sales		48,411,000			64,832,000


	Gross profit	7,927,000			8,640,000

Selling, delivery, general and administrative expenses
		9,517,000			11,072,000


	Operating loss	(1,590,000		)	(2,432,000		)

Interest expense		(226,000		)	(89,000		)
Interest and other income		238,000			430,000


	Loss before minority interest and income taxes	(1,578,000		)	(2,091,000		)

Minority interest		(23,000		)	(17,000		)

Income tax benefit		594,000			836,000


	Net loss	$	(1,007,000	)	$	(1,272,000	)


Net loss per outstanding Common Share – basic and fully diluted		$	(.27	)	$	(.33	)


Weighted average shares outstanding		3,753,000			3,902,000

Cash dividend per share:

	Class A Common Stock	$	.14		$	.14


	Class B Common Stock	$	.14		$	.14

LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended June 30, 2001 and 2000
_______________

			2001			2000

Cash flows provided by (used in) operating activities:
	Net loss		$	(1,007,000	)	$	(1,272,000	)
	Adjustment to reconcile net loss to net cash used in operating activities
		Depreciation	1,227,000			1,380,000
		Deferred income taxes	(191,000		)	--
		Minority interest	23,000			17,000
		Net value of retail center assets written off	151,000			--
	Changes in assets and liabilities:
		Receivables	(576,000		)	(5,158,000		)
		Income taxes payable/receivable	3,185,000			(905,000		)
		Inventories	1,844,000			(4,471,000		)
		Prepayments and other	(50,000		)	38,000
		Accounts payable	255,000			2,446,000
		Other current liabilities	(1,610,000		)	(3,226,000		)


Net cash provided by (used in) operating activities			3,251,000			(11,151,000		)


Cash flows provided by (used in) investing activities
	Additions to property, plant and equipment		(287,000		)	(1,865,000		)
	Redemption of short-term investments		50,000			6,150,000


Net cash provided by (used in) investing activities			(237,000		)	4,285,000


Cash flows provided by (used in) financing activities
	Cash dividends paid		(525,000		)	(545,000		)
	Proceeds from notes payable		2,833,000			4,651,000
	Payments of notes payable		(5,056,000		)	--
	Retirement of common stock		--			(246,000		)


Net cash provided by (used in) financing activities			(2,748,000		)	3,860,000


Net increase (decrease) in cash and cash equivalents			266,000			(3,006,000		)


Cash and cash equivalents at beginning of period			4,896,000			10,555,000


Cash and cash equivalents at end of period			$	5,162,000		$	7,549,000


Supplemental disclosures of cash flow information.
	Cash paid income taxes		$	--		$	74,000
	Cash received for income taxes refunds		3,445,000			--
	Cash paid for interest expense		223,000			80,000

OTHER INFORMATION

SHORT TERM INVESTMENTS:

Short-term investments consist primarily of certificates of deposits with original maturities greater than 90 days.

INVENTORIES:

Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventories at June 30, 2001 consist of:

Raw material	$	6,092,000

Work in Progress	2,063,000

Finished Goods	7,423,000

	$	15,578,000

NOTES PAYABLE:

At June 30, 2001, the Company had the following notes payable:

Revolving credit lines of $10,000,000 secured by retail subsidiary inventory bearing interest at ½% over prime rate	$	2,986,000

Unsecured revolving credit line of $5,000,000 Bearing interest at ½% under prime	- -

	$	2,986,000

CONTINGENT LIABILITIES:

Repurchase Obligations

The Company is contingently liable 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 believes any losses incurred under outstanding repurchase agreements in excess of the accruals established as of June 30, 2001 will not have a significant impact on the financial condition of the Company. However, any substantial increases in dealer defaults after June 30, 2001 may cause the Company to incur additional losses due to repurchase activity.

REVENUE RECOGNITION:

The Company recognizes revenue when the product is shipped to independent dealers.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Net sales for the second quarter of 2001 were $31,577000, a decrease of $4,422,000 from the same quarter of 2000. The sales activity of the Company followed the industry trend during the quarter. Statistics comparing the second quarter of 2001 to the same period in 2000 and reported by the National Conference of States on Building Codes and Standards show the industry suffered a 28% drop in homes shipped and a 26% drop in floors shipped. Tightened credit at both the wholesale and retail levels continued to dampen the ability of the industry to rebound from its two year slump. Furthermore, retail and wholesale loan defaults continue to provide a supply of repossessed homes to be offered for resale, which has displaced some demand for newly manufactured homes.

During the second quarter of 2001 lower margin resulting from the reduction in sales continued to create a challenge to generate income. However as the Company continued its cost control measures in response to the soft market, a net income of $107,000 resulted for the quarter.

Liquidity and Capital Resources

Liquidity and capital resources remained fairly stable and consistent with the Company’s position at December 31, 2000. Cash, cash equivalents and short term investments as of June 30, 2001 and December 31, 2000 were $5,462,000 and $5,246,000, respectively. Working capital as of June 30, 2001 and December 31, 2000 was $23,021,000 and $23,439,000, respectively. Expenditures for property, plant and equipment were minimal during the quarter. The Company anticipates that cash flow from operations and credit arrangements currently in place will be sufficient to meet the Company’s foreseeable requirements.

Outlook and Risk Factors

The dynamics that propelled the manufacturing component of the industry into its current slump, tight credit and competition with repossessed homes, will continue to affect near term performance. These factors adversely affect new home orders resulting in lower sales. While these lower sales have created significant challenges to attain profitability, the resultant cost controls and reduction of the industry’s manufacturing capacity will bear favorable results in a market upturn.

Since the Company produces only to dealer orders and sales backlogs are traditionally short, the order activity at the Company is indicative of the day to day retail sales activity of its products. Changes affecting retail customer demand, such as cost, availability of credit and unemployment, may 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 periods ranging from one to one and one-half years after delivery to the dealer, if the dealer defaults on its financing obligations. The Company believes the reserves accrued at June 30, 2001 are adequate for known repurchase requirements at that date. However, any substantial increases in dealer defaults after June 30, 2001 may cause the Company to incur additional losses due to repurchase activity.

Forward Looking Information

The discussion above contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding industry and company outlooks and risk factors. The Company may make other forward looking statements orally or in writing from time to time. All such forward looking statements are not guaranties of future events or performance and involve risks and uncertainties. Actual results may differ materially from those in the forward looking statements as the result of a number of material factors. These factors include without limitation, the availability of financing credit at both the wholesale and retail level, the availability of a competent workforce, the regulation of the industry at the federal, state and local levels, changes in interest rates, unanticipated results in pending legal proceedings and the condition of the economy and its effect on consumer confidence.

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8–K

No reports on Form 8–K for April, May or June, 2001 have been filed.

SIGNATURE

Pursuant to the requirements 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



	BY: /s/ MARC A. DOSMANN

	Marc A. Dosmann
	Vice President – Chief Financial Officer
	(Principal Financial and Accounting Officer)

Dated August 14, 2001

LIBERTY HOMES INC 10-Q