SKYLINE CORP
10-Q, 1995-01-13
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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 November 30, 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:
                                          
                                          Shares Outstanding
                Title of Class             January 13, 1995  
                 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 November 30, 1994 and May 31, 1994      2 - 3

                    Consolidated Statements of Earnings and       4
                       Retained Earnings for the three and
                       six-month periods ended November 30,
                       1994 and 1993

                    Consolidated Statements of Cash               5
                       Flows for the six-month periods
                       ended November 30, 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)
                                        November 30, 1994    May 31, 1994 
                                           (Unaudited)
ASSETS

Current Assets:

Cash and temporary cash investments            $   6,272       $   9,232

Treasury Bills, at cost plus accrued 
interest, which approximates market                7,836           7,896

Accounts receivable, trade, less allowance
for doubtful accounts of $40                      40,281          44,514

Inventories                                                      
  Raw materials                                   10,064           8,399  
  Work in process                                  5,615           4,775
  Finished goods                                   7,762           2,357
                                                                          

Total Inventories                                 23,441          15,531
                                                                        
                                    
Other current assets                               7,733           6,405
                                                                        
TOTAL CURRENT ASSETS                              85,563          83,578
                                                                        

Investment in U.S. Treasury Notes                 89,917          89,912  
                                                                          
                                                                
Property, Plant and Equipment, at Cost:
  Land                                             5,262           4,525
  Buildings and improvements                      52,081          47,982
  Machinery and equipment                         22,726          19,769
                                                                        
                                                  80,069          72,276

Less accumulated depreciation                     40,279          39,946
                                                                        

  Total Property, Plant and Equipment             39,790          32,330 
                                                                          
                                                                        
Other Assets                                       2,724           2,711
                                                                        
 
                                               $ 217,994       $ 208,531 
                                                                          
            
                                                                      


The accompanying notes are a part of the consolidated financial 
statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets


(Dollars in thousands except per share data)

LIABILITIES AND SHAREHOLDERS' EQUITY

                                        November 30, 1994    May 31, 1994 
                                           (Unaudited)
Current Liabilities:
 
Accounts payable, trade                    $    14,437        $   14,468

Accrued salaries and wages                       4,871             5,123

Accrued profit sharing                           1,116             2,156

Accrued marketing programs                      13,948             7,248

Other accrued liabilities                        5,379             4,852

Income taxes                                        49             1,972
                                                                        
                                                           
   TOTAL CURRENT LIABILITIES                    39,800            35,819
                                                                        

Other Deferred Liabilities                       2,416             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                             171,591           166,196
                                              
 Treasury stock, at cost, 59,900 shares         (1,053)           (1,053)
                                                                        

TOTAL SHAREHOLDERS' EQUITY                     175,778           170,383
                                                                          
       
                                           $   217,994        $  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 and six-month periods ended November 30, 1994 and 1993
(Unaudited)

(Dollars in thousands except per share data)


                            Three-months Ended      Six-months Ended
                               November 30,           November 30,       
                             1994       1993        1994       1993

Sales                      $ 164,475  $ 145,311    $ 319,803  $ 281,478

Cost of sales                138,798    121,716      269,664    237,765    
                                                                       

Gross profit                  25,677     23,595       50,139     43,713


Selling and administrative

 expenses                     20,453     17,992       39,687     34,650
                                                                       


Operating earnings             5,224      5,603       10,452      9,063

Interest income                1,523      1,475        3,011      2,916
                                                                       


Earnings before income taxes   6,747      7,078       13,463     11,979
                                                                       


Provision for income taxes:

      Federal                  2,190      2,330        4,370      3,900
  
      State                      510        475        1,020        805
                                                                       

                               2,700      2,805        5,390      4,705
                                                                       



Net earnings                   4,047      4,273        8,073      7,274

Retained earnings,

 beginning of period         168,883    158,244      166,196    156,589
                                                                       


                             172,930    162,517      174,269    163,863


Less, cash dividends paid      1,339      1,346        2,678      2,692
                                                                       

Retained earnings,

 end of period             $ 171,591  $ 161,171    $ 171,591  $ 161,171
                                                                          
                                                                     
Net earnings per share         $ .36      $ .38        $ .72      $ .65    
                                                                       
                                                                           
       

Cash dividends per share       $ .12      $ .12        $ .24      $ .24
                                                                       
                                                                    

Weighted average common

 shares outstanding       11,157,244 11,217,144   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 six-month periods ended November 30, 1994 and 1993
Increase (decrease) in Cash
(Unaudited)

(Dollars in thousands)

                                                     1994          1993
                                                                       
Cash Flows From Operating Activities:
  Net earnings                                  $   8,073     $   7,274 
                                                                       

  Adjustments to reconcile net earnings to
  net cash provided by operating activities:
    Interest income earned on U.S. Treasury 
     Bills and Notes                               (2,867)       (2,767)
    Depreciation                                    1,569         1,330
    Amortization of discount or premium on 
     U.S. Treasury Notes                               (5)           11
    Working Capital Items:
      Accounts receivable                           4,233         3,681 
      Inventories                                  (7,910)       (6,395)
      Other current assets                         (1,328)       (1,243)
      Accounts payable, trade                         (31)        6,159    
      Accrued liabilities                           5,935         5,542 
      Income taxes payable                         (1,923)          (84)   
    Other assets                                      (13)          287  
    Other deferred liabilities                         87           322
                                                                       
    Total Adjustments                              (2,253)        6,843 
                                                                       

    Net cash provided by operating activities       5,820        14,117 
                                                                       

Cash Flows From Investing Activities:
  Proceeds from sale or maturity of 
   U.S. Treasury Bills                             18,879             -
  Purchase of U.S. Treasury Bills                 (18,556)       (8,699)
  Interest received from U.S. Treasury Notes        2,604         2,577
  Proceeds from sale of property, plant
   and equipment                                       38             -
  Purchase of property, plant and equipment        (9,067)       (3,020)
                                                                       

    Net cash used in investing activities          (6,102)       (9,142)   
                                                                       

Cash Flows From Financing Activities:
  Cash dividends paid                              (2,678)       (2,692)
                                                                       
    Net cash used in financing activities          (2,678)       (2,692)
                                                                       
Net increase (decrease) in cash                    (2,960)        2,283  
Cash at beginning of year                           9,232         8,787
                                                                       
Cash at end of quarter                          $   6,272     $  11,070
                                                                           
                                                                           
          
  

The accompanying notes are a part of the consolidated financial 
statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to the Consolidated Financial Statements 
For the three and six-month periods ended November 30, 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
November 30, 1994 and the consolidated results of operations and changes
in cash for the three and six-month periods ended November 30, 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 November
30, 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.
<PAGE>
                                                                           
                        Report of Independent Accountants


December 15, 1994

To The Board of Directors and
Shareholders of Skyline Corporation

We have reviewed the accompanying consolidated balance sheet as of
November 30, 1994 and the related consolidated statements of earnings and
retained earnings for the three-month and six-month periods ended November
30, 1994 and 1993 and the consolidated statements of cash flows for the  
six-month periods ended November 30, 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                                                          
<PAGE>
     
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results 
of Operations
                                                                       
  


Liquidity and Capital Resources



At November 30, 1994 cash and investments in U.S. Treasury Bills totaled 
$14,108,000 a decrease of $3,020,000 from $17,128,000 at May 31, 1994. 
This decrease was due primarily to an increase in inventories and capital
additions.  Working capital at August 31, 1994 amounted to $45,763,000
compared to $47,759,000 at May 31, 1994.  Capital expenditures amounted to
$9,067,000 in 1994 compared to $3,020,000 in the first half 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 are expected to be
adequate to fund any capital expenditures which may become necessary
during the year.  





Results of Operations for the Quarter and Six-months Ended

November 30, 1994



Sales in the quarter ended November 30, 1994 amounted to $164,475,000 a
13.2 percent increase from $145,311,000 in the comparable quarter of the
prior year.  Manufactured housing sales increased 14.8 percent to
$132,113,000 in 1994 compared to $115,038,000 in 1993.  Manufactured
housing unit sales increased to 5,323 compared to 5,150 in 1993.
Recreational vehicle sales increased 6.9 percent to $32,362,000 in the
second quarter of fiscal 1995 compared to $30,273,000 in fiscal 1994. 
Recreational vehicle unit sales increased to 2,544 compared to 2,536 in
fiscal 1994.

Sales during the first half of fiscal 1995 amounted to $319,803,000 a 13.6
percent increase from $281,478,000 in the comparable period of the prior
year.  Manufactured housing sales increased 15.4 percent to $255,408,000
in 1994 compared to $221,273,000 in 1993.  Manufactured housing unit sales
increased to 10,398 compared to 10,005 in 1993. Recreational vehicle sales
increased 7.0 percent to $64,395,000 in the first half of fiscal 1995
compared to $60,205,000 in fiscal 1994.  Recreational vehicle unit sales
increased to 5,307 compared to 5,304 in 1993.

Sales for the quarter and the first half of fiscal 1995 reflected an
improvement in overall economic conditions which contributed to an
increase in industry wide demand for manufactured housing and non-
motorized recreational vehicles in most parts of the country.


Cost of sales in the second quarter increased slightly to 84.4 percent of
sales compared with 83.8 percent in 1993, while the cost of sales for the
first half of the year was very comparable to the prior year (84.3 percent
in fiscal 1995 vs 84.5 percent in fiscal 1994).  The increase in costs for
the quarter was caused by additional costs associated with increasing
production at recently expanded facilities and a few plants not currently
achieving the results expected. 

Selling and administrative expenses for the second quarter were 12.4
percent of sales for both years.  Selling and administrative expenses in
the first half of fiscal 1995 increased slightly as a percentage of sales
to 12.4 percent from 12.3 percent in fiscal 1994 due primarily to the
costs of increased marketing efforts.

Interest income amounted to $1,523,000 in the second quarter of fiscal
1995 compared to $1,475,000 one year earlier.  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 and yields during the period.

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 report on Form 8K was filed on September 20, 1994, reporting the
election of directors and officers at the Annual Meeting of Shareholders
on September 19, 1994.
The Exhibit filed as part of this report is listed below.

    Exhibit No.     Description            
       27           Financial Data Schedule

                                                                

                                                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:      January 13, 1995                 /S/ Joseph B. Fanchi        
                                                Joseph B. Fanchi
                                           V.P. Finance & Treasurer, 
                                            Chief Financial Officer




DATE:      January 13, 1995                 /S/ James R. Weigand        
                                                James R. Weigand 
                                              Corporate Controller

 


<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          MAY-31-1995
<PERIOD-END>                               NOV-30-1994
<CASH>                                           6,272
<SECURITIES>                                     7,836
<RECEIVABLES>                                   40,321
<ALLOWANCES>                                      (40)
<INVENTORY>                                     23,441
<CURRENT-ASSETS>                                85,563
<PP&E>                                          80,069
<DEPRECIATION>                                  40,279
<TOTAL-ASSETS>                                 217,994
<CURRENT-LIABILITIES>                           39,800
<BONDS>                                              0
<COMMON>                                           312
                                0
                                          0
<OTHER-SE>                                     175,466
<TOTAL-LIABILITY-AND-EQUITY>                   217,994
<SALES>                                        319,803
<TOTAL-REVENUES>                               319,803
<CGS>                                          269,664
<TOTAL-COSTS>                                   39,687
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                             (3,011)
<INCOME-PRETAX>                                 13,463
<INCOME-TAX>                                     5,390
<INCOME-CONTINUING>                              8,073
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     8,073
<EPS-PRIMARY>                                      .72
<EPS-DILUTED>                                      .72
        

</TABLE>


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