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 February 29, 1996
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 April 12, 1996
Common stock 10,572,544
<PAGE>
SKYLINE CORPORATION
Form 10-Q Quarterly Report
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements: 2 - 3
Consolidated Balance Sheets as
of February 29, 1996 and May 31, 1995
Consolidated Statements of Earnings and 4
Retained Earnings for the three and
nine-month periods ended February 29,
1996 and February 28, 1995
Consolidated Statements of Cash 5
Flows for the nine-month periods
ended February 29, 1996 and
February 28, 1995
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)
February 29, 1996 May 31, 1995
(Unaudited)
ASSETS
Current Assets:
Cash $ 9,487 $ 10,754
Treasury Bills, at cost plus accrued
interest, which approximates market 44,648 29,157
Accounts receivable, trade, less allowance
for doubtful accounts of $40 49,318 45,374
Inventories
Raw materials 6,223 6,751
Work in process 4,874 4,468
Finished goods 341 3,586
Total Inventories 11,438 14,805
Other current assets 6,009 7,246
TOTAL CURRENT ASSETS 120,900 107,336
Investment in U.S. Treasury Notes 59,909 59,917
Property, Plant and Equipment, at Cost:
Land 5,220 5,278
Buildings and improvements 57,659 57,502
Machinery and equipment 22,199 24,391
85,078 87,171
Less accumulated depreciation 40,978 41,915
Total Property, Plant and Equipment 44,100 45,256
Other Assets 3,068 2,955
$ 227,977 $ 215,464
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
February 29, 1996 May 31, 1995
(Unaudited)
Current Liabilities:
Accounts payable, trade $ 11,919 $ 9,962
Accrued salaries and wages 5,974 5,662
Accrued profit sharing 1,921 2,408
Accrued marketing programs 16,847 8,192
Other accrued liabilities 8,823 6,142
Income taxes 233 880
TOTAL CURRENT LIABILITIES 45,717 33,246
Other Deferred Liabilities 2,598 2,486
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 185,788 176,187
Treasury stock, at cost, 644,600 shares
at February 29, 1996 and 96,500 shares
at May 31, 1995
(11,366) (1,695)
TOTAL SHAREHOLDERS' EQUITY 179,662 179,732
$ 227,977 $ 215,464
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 nine-month periods ended February 29, 1996
and February 28, 1995
(Unaudited)
(Dollars in thousands except per share data)
Three-months Ended Nine-months Ended
February 29/28 February 29/28
1996 1995 1996 1995
Sales $ 138,562 $ 150,657 $ 474,886 $ 470,460
Cost of sales 115,666 127,871 392,365 397,536
Gross profit 22,896 22,786 82,521 72,924
Selling and administrative
expenses 19,179 19,838 64,588 59,525
Operating earnings 3,717 2,948 17,933 13,399
Interest income 1,497 1,343 4,623 4,355
Earnings before income taxes 5,214 4,291 22,556 17,754
Provision for income taxes:
Federal 1,690 1,390 7,375 5,760
State 390 320 1,689 1,340
2,080 1,710 9,064 7,100
Net earnings 3,134 2,581 13,492 10,654
Retained earnings,
beginning of period 183,931 171,591 176,187 166,196
187,065 174,172 189,679 176,850
Less cash dividends paid 1,277 1,339 3,891 4,017
Retained earnings,
end of period $ 185,788 $ 172,833 $ 185,788 $ 172,833
Net earnings per share $ .30 $ .23 $1.25 $ .96
Cash dividends per share $ .12 $ .12 $ .36 $ .36
Weighted average common
shares outstanding 10,613,331 11,151,144 10,756,836 11,155,233
The accompanying notes are a part of the consolidated financial
statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the nine-month periods ended February 29, 1996 and February 28, 1995
Increase (decrease) in Cash
(Unaudited)
(Dollars in thousands)
1996 1995
Cash Flows From Operating Activities:
Net earnings $ 13,492 $ 10,654
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Interest income earned on U.S. Treasury
Bills and Notes (4,484) (4,216)
Depreciation 2,553 2,481
Amortization of discount or premium on
U.S. Treasury Notes 8 (7)
Working Capital Items:
Accounts receivable (3,944) 363
Inventories 3,367 (9,129)
Other current assets 1,237 719
Accounts payable, trade 1,957 (805)
Accrued liabilities 11,161 7,763
Income taxes payable (647) (1,868)
Other assets (113) (111)
Other deferred liabilities 112 118
Total Adjustments 11,207 (4,692)
Net cash provided by operating activities 24,699 5,962
Cash Flows From Investing Activities:
Proceeds from sale or maturity of
U.S. Treasury Bills 145,496 26,776
Proceeds from maturity of U.S. Treasury Notes - 30,000
Purchase of U.S. Treasury Bills (159,090) (50,646)
Interest received from U.S. Treasury Notes 2,587 3,828
Proceeds from sale of property, plant
and equipment 590 38
Purchase of property, plant and equipment (1,987) (12,885)
Net cash used in investing activities (12,404) (2,889)
Cash Flows From Financing Activities:
Cash dividends paid (3,891) (4,017)
Purchase of treasury stock (9,671) (642)
Net cash used in financing activities (13,562) (4,659)
Net decrease in cash (1,267) (1,586)
Cash at beginning of year 10,754 9,232
Cash at end of quarter $ 9,487 $ 7,646
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 nine-month periods ended February 29, 1996
and February 28, 1995
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
February 29, 1996 and the consolidated results of operations and changes
in cash for the three and nine-month periods ended February 29, 1996 and
February 28, 1995.
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 February
29, 1996 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
March 15, 1996
To The Board of Directors and Shareholders of Skyline Corporation
We have reviewed the accompanying consolidated balance sheet as of
February 29, 1996 and the related consolidated statements of earnings and
retained earnings for the three-month and nine-month periods ended
February 29, 1996 and February 28, 1995 and the consolidated statements of
cash flows for the nine-month periods ended February 29, 1996 and February
28, 1995 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 inquiries 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.
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 February 29, 1996 cash and investments in U.S. Treasury Bills totaled
$54,135,000, an increase of $14,224,000 from $39,911,000 at May 31, 1995.
Current assets exclusive of cash and investments in U.S. Treasury Bills
totaled $66,765,000 at February 29, 1996, a decrease of $660,000 from the
balance at May 31, 1995 of $67,425,000. Increases in trade accounts
receivable ($3,944,000) were offset by reductions in finished goods
inventories ($3,245,000). Current liabilities increased $12,471,000 from
May 31, 1995 to $45,717,000 at February 29, 1996. This increase in
current liabilities can mainly be attributed to increased marketing
program accruals ($8,655,000). Working capital at February 29, 1996
amounted to $75,183,000 compared to $74,090,000 at May 31, 1995. Capital
expenditures totaled $1,987,000 in 1996 compared to $12,885,000 in the
first nine months of the prior year. Capital expenditures during the
current fiscal year were made primarily to increase manufacturing
capacity, adopt new manufacturing processes and increase manufacturing
efficiencies. Cash was also used to purchase $9,671,000 of Company stock
in fiscal 1996. The cash provided by operating activities in fiscal 1996
is expected to be adequate to fund any capital expenditures and treasury
stock purchases during the year. Historically, the Corporation's
financing needs have been met through funds generated internally.
Results of Operations for the Quarter and Nine-months Ended
February 29, 1996
Sales in the quarter ended February 29, 1996 amounted to $138,562,000, an
8.0 percent decrease from $150,657,000 in the comparable quarter of the
prior year. Manufactured housing sales decreased 1.9 percent to
$114,818,000 in 1996 compared to $117,011,000 in 1995. Manufactured
housing unit sales decreased to 4,250 compared to 4,583 in 1995.
Recreational vehicle sales decreased 29.4 percent to $23,744,000 in the
third quarter of fiscal 1996 compared to $33,646,000 in fiscal 1995.
Recreational vehicle unit sales decreased to 1,898 compared to 2,785 in
fiscal 1995.
Sales during the first nine months of fiscal 1996 amounted to $474,886,000
a 0.9 percent increase from $470,460,000 in the comparable period of the
prior year.
<PAGE>
Manufactured housing sales increased 9.1 percent to $406,195,000 in 1996
compared to $372,419,000 in 1995. Manufactured housing unit sales
increased to 15,277 compared to 14,981 in 1995. Recreational vehicle sales
decreased 29.9 percent to $68,691,000 in the first nine months of fiscal
1996 compared to $98,041,000 in fiscal 1995. Recreational vehicle unit
sales decreased to 5,535 compared to 8,092 in 1995.
Sales for the third quarter were negatively affected by unusually severe
weather conditions in many areas of the country. Sales for the first nine
months of fiscal 1996, exclusive of the effects of the severe weather,
reflect continuing strong demand for manufactured housing in most sections
of the country and a continued industry slowdown in the RV marketplace.
Cost of sales in the third quarter decreased to 83.5 percent of sales
compared with 84.9 percent in 1995, while the cost of sales for the first
nine months of both years were very comparable to the quarters (82.6
percent in fiscal 1996 and 84.5 percent in fiscal 1995). The decrease in
costs is due to efficiencies gained by increased sales volume, higher
product selling prices in the manufactured housing segment, and continued
cost containment efforts.
Selling and administrative expenses for the third quarter were 13.8
percent of sales compared with 13.2 percent in 1995. Selling and
administrative expenses in the first nine months of fiscal 1996 increased
as a percentage of sales to 13.6 percent from 12.7 percent in fiscal 1995.
Both increases are due primarily to the costs of increased marketing
efforts.
Interest income amounted to $1,497,000 in the third quarter of fiscal 1996
compared to $1,343,000 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
higher investment levels and yields during the period.
Income Taxes
The provision for federal income taxes approximates the statutory rate and
for state income taxes reflects current state rates effective for the
period based upon activities within the taxable 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, 1995, heretofore filed
by the registrant with the Commission.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter of 1996. 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: April 12, 1996
Joseph B. Fanchi
V.P. Finance & Treasurer,
Chief Financial Officer
DATE: April 12, 1996
James R. Weigand
Corporate Controller
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