SKYLINE CORP
10-Q, 1994-10-11
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                       SECURITIES AND EXCHANGE COMMISSION


                          WASHINGTON,  D.C.      20549


                                   FORM 10-Q


                  Quarterly Report Under Section 13 or 15 (d)

                     of the Securities Exchange Act of 1934


                     For the Quarter Ended August 31, 1994


                           Commission File No. 1-4714









                              SKYLINE CORPORATION
                                                                      

             (Exact name of registrant as specified in its charter)




           INDIANA                             35-1038277     
                                                                      
 
  (State of Incorporation)          (IRS Employer Identification No.)  



      P. O. Box 743,     2520 By-Pass Road    Elkhart, IN    46515    
                                                                       

           (Address of principal executive offices)          (Zip)    








                      294-6521                   (219)
                                                         

             (Registrant's telephone number)   (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   X   No     


     Securities registered pursuant to Section 12 (b) of the Act:
                                          
                 Title of Class           Shares Outstanding
                                                            
                  Common stock                11,157,244

<PAGE>
                              SKYLINE CORPORATION

                           Form 10-Q Quarterly Report

                                     INDEX

                                                              Page No.

Part I.    Financial Information


           Item 1.  Financial Statements:
                    Consolidated Balance Sheets as
                       of August 31, 1994 and May 31, 1994      2 - 3

                    Consolidated Statements of Earnings and       4
                       Retained Earnings for the three-month
                       periods ended August 31, 1994 and 1993

                    Consolidated Statements of Cash               5
                       Flows for the three-month
                       periods ended August 31, 1994
                       and 1993

                    Notes to the Consolidated Financial           6 
                       Statements

                    Report of Independent Accountants             7

          Item 2.   Management's Discussion and Analysis        8 - 9 
                       of Financial Condition and Results 
                       of Operations


Part II.  Other Information

          Item 1.   Legal Proceedings                            10

          Item 6.   Exhibits and Reports on Form 8-K             10

          Signatures                                             10
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets


(Dollars in thousands)
                                         August 31, 1994    May 31, 1994  
                                           (Unaudited)
ASSETS

Current Assets:

Cash and temporary cash investments            $   3,843       $   9,232

Treasury Bills, at cost plus accrued 
interest, which approximates market               12,724           7,896

Accounts receivable, trade, less allowance
for doubtful accounts of $40                      43,668          44,514

Inventories                                                      
  Raw materials                                   10,223           8,399  
  Work in process                                  5,027           4,775
  Finished goods                                   3,748           2,357
                                                                          

Total Inventories                                 18,998          15,531
                                                                        
                                    
Other current assets                               6,988           6,405
                                                                        
TOTAL CURRENT ASSETS                              86,221          83,578
                                                                        

Investment in U.S. Treasury Notes                 89,914          89,912  
                                                                          
                                                                
Property, Plant and Equipment, at Cost:
  Land                                             5,193           4,525
  Buildings and improvements                      49,133          47,982
  Machinery and equipment                         22,280          19,769
                                                                        
                                                  76,606          72,276

Less accumulated depreciation                     39,838          39,946
                                                                        

  Total Property, Plant and Equipment             36,768          32,330 
                                                                          
                                                                        
Other Assets                                       2,701           2,711
                                                                        
 
                                               $ 215,604       $ 208,531 
                                                                          
            
                                                                      


The accompanying notes are a part of the consolidated financial 
statements.

















Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets


(Dollars in thousands except per share data)

LIABILITIES AND SHAREHOLDERS' EQUITY

                                          August 31, 1994    May 31, 1994 
                                            (Unaudited)
Current Liabilities:
 
Accounts payable, trade                    $    16,137        $   14,468

Accrued salaries and wages                       4,928             5,123

Accrued profit sharing                             551             2,156

Accrued marketing programs                      11,468             7,248

Other accrued liabilities                        4,625             4,852

Income taxes                                     2,449             1,972
                                                                        
                                                           
   TOTAL CURRENT LIABILITIES                    40,158            35,819
                                                                        

Other Deferred Liabilities                       2,376             2,329
Commitments and Contingencies                        -                 -

Shareholders' Equity:
 Common stock, $.0277 par value, 15,000,000
 shares authorized; issued 11,217,144 shares       312               312  
 Additional paid-in capital                      4,928             4,928
 Retained earnings                             168,883           166,196
                                              
 Treasury stock, at cost, 59,900 shares         (1,053)           (1,053)
                                                                        

TOTAL SHAREHOLDERS' EQUITY                     173,070           170,383
                                                                          
       
                                           $   215,604        $  208,531
                                                                          
          
                                                                         
 
The accompanying notes are a part of the consolidated financial
statements.<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Earnings and Retained Earnings
For the three-month periods ended August 31, 1994 and 1993
(Unaudited)

(Dollars in thousands except per share data)



                                                 
                                                   1994         1993

Sales                                       $   155,328  $   136,167       
Cost of sales                                   130,866      116,049       
                                                                      

Gross profit                                     24,462       20,118


Selling and administrative expenses              19,234       16,658
                                                                    

Operating earnings                                5,228        3,460


Interest income                                   1,488        1,441
                                                                    

Earnings before income taxes                      6,716        4,901
                                                                     

Provision for income taxes:

      Federal                                     2,180        1,570

      State                                         510          330
                                                                    

                                                  2,690        1,900
                                                                         


Net earnings                                      4,026        3,001 

Retained earnings, beginning of period          166,196      156,589 
                                                                    


                                                170,222      159,590

Less, cash dividends paid                         1,339        1,346
                                                                    

Retained earnings, end of period            $   168,883  $   158,244
                                                                           
                                                                           
            
Net earnings per share                            $ .36         $.27       
                                                                           
            
                                                                   

Cash dividends per share                          $ .12         $.12 
                                                                           
            
                                                                    

Weighted average common shares outstanding   11,157,244   11,217,144       
                                                                           
                                                                           
                                          

The accompanying notes are a part of the consolidated financial 

statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the three-month periods ended August 31, 1994 and 1993
Increase (decrease) in Cash
(Unaudited)

(Dollars in thousands)

                                                     1994          1993
                                                                       
Cash Flows From Operating Activities:
  Net earnings                                  $   4,026     $   3,001 
                                                                       

  Adjustments to reconcile net earnings to
  net cash provided by operating activities:
    Interest income earned on U.S. Treasury 
     Bills and Notes                               (1,431)       (1,363)
    Depreciation                                      784           657
    Amortization of discount or premium on 
     U.S. Treasury Notes                               (2)            5
    Working Capital Items:
      Accounts receivable                             846         1,613 
      Inventories                                  (3,467)       (2,330)
      Other current assets                           (583)         (681)
      Accounts payable, trade                       1,669         4,702    
      Accrued liabilities                           2,193         1,784 
      Income taxes payable                            477           872  
    Other assets                                       10           328  
    Other deferred liabilities                         47           251
                                                                       
    Total Adjustments                                 543         5,838 
                                                                       

    Net cash provided by operating activities       4,569         8,839 
                                                                       

Cash Flows From Investing Activities:
  Proceeds from sale or maturity of 
   U.S. Treasury Bills                             10,879             -
  Purchase of U.S. Treasury Bills                 (15,556)       (4,784)
  Interest received from U.S. Treasury Notes        1,280         1,289
  Proceeds from sale of property, plant
   and equipment                                        4             -
  Purchase of property, plant and equipment        (5,226)       (1,689)
                                                                       

    Net cash used in investing activities          (8,619)       (5,184)   

Cash Flows From Financing Activities:
  Cash dividends paid                              (1,339)       (1,346)
                                                                       
    Net cash used in financing activities          (1,339)       (1,346)
                                                                       
Net increase (decrease) in cash                    (5,389)        2,309  
Cash at beginning of year                           9,232         8,787
                                                                       
Cash at end of quarter                          $   3,843     $  11,096
                                                                           
                                                                           
          
  

The accompanying notes are a part of the consolidated financial 

statements.








Skyline Corporation and Subsidiary Companies
Notes to the Consolidated Financial Statements 
For the three-month periods ended August 31, 1994 and 1993
                                                                      
The accompanying unaudited interim consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the consolidated financial position as of
August 31, 1994 and the consolidated results of operations and changes in
cash for the three-month periods ended August 31, 1994 and 1993.

The unaudited interim consolidated financial statements included herein
have been prepared pursuant to the rules and regulations for reporting on
Form 10-Q.  Accordingly, certain information and footnote disclosures
normally accompanying the annual consolidated financial statements have
been omitted.  The interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Corporation's latest annual report on Form 10-K.

The financial data included herein has been subjected to a limited review
by Price Waterhouse LLP, the registrant's independent accountants, whose
report is included on page 7 of this filing.

Inventories are stated at cost, determined under the first-in, first-out
method, which is not in excess of market.  Physical inventory counts are
taken at the end of each reporting quarter.  

The Corporation and its subsidiaries were contingently liable at August
31, 1994 under agreements to purchase repossessed units on floor plan
financing made by financial institutions to its customers.  Losses, if
any, would be the difference between repossession cost and the resale
value of the units.  There have been no material losses in past years
under these agreements, and none are anticipated in the future.

The Corporation is a party to various pending legal proceedings in the
normal course of business.  Management believes that any losses resulting
from such proceedings would not have a material adverse effect on the
Corporation's results of operations or financial position.

                                                                           
                        Report of Independent Accountants


September 16, 1994

To The Board of Directors and
Shareholders of Skyline Corporation

We have reviewed the accompanying consolidated balance sheet as of August
31, 1994 and the related consolidated statements of earnings and retained
earnings for the three-month periods ended August 31, 1994 and 1993 and
the consolidated statements of cash flows for the three-month periods
ended August 31, 1994 and 1993 of Skyline Corporation and Subsidiary
Companies.  This financial information is the responsibility of the
company's management.

We conducted our review in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquires of persons responsible
for financial and accounting matters.  It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.  Accordingly, we do
not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.

We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of May 31, 1994, and the
related consolidated statements of earnings and retained earnings and of
cash flows for the year then ended (not presented herein), and in our
report dated June 15, 1994, we expressed an unqualified opinion on those
consolidated financial statements.  In our opinion, the information set
forth in the accompanying consolidated balance sheet information as of 
May 31, 1994, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.

PRICE WATERHOUSE LLP
Chicago, Illinois                                                          
     
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results 
of Operations
                                                                       
  

Liquidity and Capital Resources



At August 31, 1994 cash and investments in U.S. Treasury Bills totaled 
$16,567,000 a decrease of $561,000 from $17,128,000 at May 31, 1994. 
Working capital at August 31, 1994 amounted to $46,063,000 compared to
$47,759,000 at May 31, 1994.  Capital expenditures amounted to $5,226,000
in 1994 compared to $1,689,000 in the first quarter of the prior year. 
Capital expenditures were made primarily to increase manufacturing
capacity, adopt new manufacturing processes, increase manufacturing
efficiencies and replace the Company's eighteen year-old aircraft.  The
cash provided by operating activities in fiscal 1995 is expected to be
adequate to fund any capital expenditures which may become necessary
during the year.  



Results of Operations for the Three Months Ended August 31, 1994



Sales in the quarter ended August 31, 1994 amounted to $155,328,000 a 14.1
percent increase from $136,167,000 in the comparable quarter of the prior
year.  Manufactured housing sales increased 16.1 percent to $123,295,000
in 1994 compared to $106,235,000 in 1993.  Recreational vehicle sales
increased 7.0 percent to $32,033,000 in the first quarter of 1994 compared
to $29,932,000 in 1993.  Sales for the quarter reflected an improvement in
overall economic conditions which contributed to an increase in industry
wide demand for manufactured housing and recreational vehicles.

Cost of sales decreased in 1994 to 84.3 percent of sales compared with
85.2 percent in 1993.  This decrease is due to increased sales volume and
continued cost containment efforts.  Selling and administrative expenses
in 1994 increased slightly as a percentage of sales to 12.4 percent from
12.2 percent in 1993 due primarily to the costs of increased marketing
efforts.

Interest income amounted to $1,488,000 in 1994 compared to $1,441,000 in
1993.  Interest income is directly related to the amount available for
investment and the prevailing yields of U.S. Government securities.  The
increase in interest income was due to slightly higher investment levels
during the period.
<PAGE>
Income Taxes



The provision for federal income tax approximates the statutory rate and
for state income taxes reflects current state rates effective for the
period based upon activities within the taxing entities.  

<PAGE>
                                                  PART II     



Item 1.  Legal Proceedings
Information with respect to this Item for the period covered by this Form
10-Q has been previously reported in Item 3, entitled "Legal Proceedings"
of the Form 10-K for the fiscal year ended May 31, 1994, heretofore filed
by the registrant with the Commission.

Item 6.  Exhibits and reports on Form 8-K
(a) Exhibits - none 
(b) Reports on Form 8-K - no report on Form 8-K has been filed during the
    quarter ended August 31, 1994. 
                                                                      

                                                SIGNATURES

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.

                                               SKYLINE CORPORATION    





DATE:      October 11, 1994                 /S/ Joseph B. Fanchi        
                                                Joseph B. Fanchi
                                           V.P. Finance & Treasurer, 
                                            Chief Financial Officer




DATE:      October 11, 1994                 /S/ James R. Weigand        
                                                James R. Weigand 
                                              Corporate Controller

 


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