SKYLINE CORP
10-Q, 1997-10-10
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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, 1997

                       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            October 10, 1997  
                
                 Common stock                  9,433,144

<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 August 31, 1997 and May 31, 1997    

                    Consolidated Statements of Earnings and       4
                       Retained Earnings for the three-month
                       periods ended August 31, 1997 and 1996  

                    Consolidated Statements of Cash               5
                       Flows for the three-month period
                       ended August 31, 1997

                    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 4.   Submission of Matters to a Vote of           10
                    Security Holders                             

          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, 1997   May 31, 1997  
                                            (Unaudited)
ASSETS

Current Assets:

Cash                                           $  10,093       $   9,489

Treasury Bills, at cost plus accrued 
interest, which approximates market               77,931          71,059

Investment in U.S. Treasury Notes                 29,966          29,949

Accounts receivable, trade, less allowance
for doubtful accounts of $40                      44,693          43,360  

Inventories                                                      
  Raw materials                                    5,579           5,237  
  Work in process                                  4,892           4,756
  Finished goods                                     186               -
                                                                         
Total Inventories                                 10,657           9,993
                                                                       
Other current assets                               8,640           8,678
                                                                       
TOTAL CURRENT ASSETS                             181,980         172,528
                                                                        
Property, Plant and Equipment, at Cost:
  Land                                             5,335           5,336 
  Buildings and improvements                      55,975          55,711 
  Machinery and equipment                         23,208          22,996 
                                                                        
                                                  84,518          84,043

Less accumulated depreciation                     42,938          42,091
                                                                        
  Total Property, Plant and Equipment             41,580          41,952 
                                                                      
Other Assets                                       3,424           3,387

                                               $ 226,984       $ 217,867 
                                                                         
           
                                                                     
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

                                          August 31, 1997    May 31, 1997 
                                            (Unaudited)
Current Liabilities:
 
Accounts payable, trade                      $   9,773         $   9,742  

Accrued salaries and wages                       4,558             5,194

Accrued profit sharing                             765             2,659

Accrued marketing programs                      13,207             8,068  

Accrued warranty expense                         7,588             7,368

Other accrued liabilities                        4,052             4,906  

Income taxes                                     3,602               649  
                                                                        
TOTAL CURRENT LIABILITIES                       43,545            38,586
                                                                        

Other Deferred Liabilities                       3,194             3,060
                                                                        
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                              209,150           205,126  
Treasury stock, at cost 1,551,000 shares       (34,145)          (34,145)
      
TOTAL SHAREHOLDERS' EQUITY                     180,245           176,221 
                                               
                                             $ 226,984         $ 217,867
                                                                          
 
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, 1997 and 1996
(Unaudited)

(Dollars in thousands except per share data)

                                           1997         1996
                                           
Sales                                 $ 161,632    $ 171,536  

Cost of sales                           133,091      139,873               
                                                            
Gross profit                             28,541       31,663       
    
Selling and administrative
 expenses                                20,920       22,512           
                                                            
Operating earnings                        7,621        9,151           

Interest income                           1,473        1,626           
                                                            
Earnings before income taxes              9,094       10,777           
                                                            
Provision for income taxes:

      Federal                             2,980        3,500             
      State                                 640          810           
                                                            
                                          3,620        4,310
                                                            
Net earnings                              5,474        6,467           

Retained earnings,
 beginning of period                    205,126      190,393
                                                           
                                        210,600      196,860           

Less cash dividends paid                  1,450        1,586
                                                            
Retained earnings,
 end of period                        $ 209,150    $ 195,274
                                                             
Net earnings per share                    $ .57        $ .62 
                                                             
Cash dividends per share                  $ .15        $ .15 
                                                                   
Weighted average common
 shares outstanding                   9,666,144   10,457,221               
                                                                           
                                                 
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, 1997 and 1996
Increase (decrease) in Cash
(Unaudited)

(Dollars in thousands)

                                                     1997          1996
                                                                       
Cash Flows From Operating Activities:
  Net earnings                                  $   5,474     $   6,467 
                                                                       
  Adjustments to reconcile net earnings to
   net cash provided by operating activities:
    Interest income earned on U.S. Treasury 
     Bills and Notes                               (1,473)       (1,626)
    Depreciation                                      904           898
    Amortization of discount or premium on 
     U.S. Treasury Notes                              (17)            2 
    Working Capital Items:                                
      Accounts receivable                          (1,333)       (6,560)
      Inventories                                    (664)         (586)
      Other current assets                             38           682
      Accounts payable, trade                          31         1,863    
      Accrued liabilities                           1,975         2,309 
      Income taxes payable                          2,953         1,480    
    Other assets                                      (37)            8  
    Other deferred liabilities                        134             6   
                                                                       
    Total Adjustments                               2,511        (1,524) 
                                                                       
    Net cash provided by operating activities       7,985         4,943
                                                                       
Cash Flows From Investing Activities:
  Proceeds from sale or maturity of                
   U.S. Treasury Bills                            118,630       128,469
  Purchase of U.S. Treasury Bills                (124,420)     (131,057)
  Interest received from U.S. Treasury Notes          391           907
  Proceeds from sale of property, plant
   and equipment                                        9            44
  Purchase of property, plant and equipment          (541)         (589)
                                                                       
    Net cash used in investing activities          (5,931)       (2,226)   
                                                                       
Cash Flows From Financing Activities:
  Cash dividends paid                              (1,450)       (1,586)
  Purchase of treasury stock                            -        (7,335)
                                                                       
    Net cash used in financing activities          (1,450)       (8,921) 
                                                                       
Net increase (decrease) in cash                       604        (6,204)

Cash at beginning of year                           9,489        10,712
                                                                       
Cash at end of quarter                          $  10,093     $   4,508
                                                                           
                                                                           
          
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-month period ended August 31, 1997   
                                                                      
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, 1997, the consolidated results of operations for the 
three-month periods ended August 31, 1997 and 1996, and the consolidated
cash flows for the three-month periods ended August 31, 1997 and 1996.

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, 1997 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.
        
In the first six months of calendar 1997, the Financial Accounting
Standards Board issued three statements of financial accounting
standards pertaining to earnings per share, reporting comprehensive
income, and disclosures about segments of an enterprise.  The
Corporation has determined that the effects on the financial statements
from the adoption of these accounting standards will not be material.

Certain prior year amounts have been reclassified to conform with the
current year presentation.<PAGE>

                   Report of Independent Accountants

September 15, 1997

To The Board of Directors and Shareholders of Skyline Corporation

We have reviewed the accompanying consolidated balance sheet as of
August 31, 1997 and the related consolidated statements of earnings and
retained earnings for the three-month periods ended August 31, 1997  
and 1996 and of cash flows 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.

We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of May 31, 1997, 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 16, 1997 we expressed an unqualified opinion on
those consolidated financial statements.  In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of May 31, 1997, 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                                                             
 
Results of Operations for the Current Quarter Compared to the Same 
Quarter Last Year

Sales in the quarter ended August 31, 1997 amounted to $161,632,000, a  
5.8 percent decrease from $171,536,000 in the comparable quarter of the
prior year.  Manufactured housing sales decreased 7.4 percent to
$133,150,000 in 1997 compared to $143,724,000 in 1996.  Manufactured
housing unit sales decreased to 4,561 compared to 5,075 in 1996. 
Reduced sales in this business segment is consistent with an overall
slowdown in the manufactured housing industry that began in late 1996.  
Recreational vehicle sales increased 2.4 percent to $28,482,000 in the
first quarter of fiscal 1998 compared to $27,812,000 for the same
period last year.  Recreational vehicle unit sales increased to 2,294
compared to 2,234 in 1996. 

Cost of sales in the first quarter increased to 82.3 percent of sales
compared with 81.5 percent in 1996.  The increase in costs is due to
the larger proportion of fixed and semi-fixed costs resulting from the
decreased sales volume.

Selling and administrative expenses for the first quarter were 12.9
percent of sales compared with 13.1 percent in 1996.  The decrease is
primarily due to a reduction in marketing expenses during the period.  

Interest income amounted to $1,473,000 in the first quarter of fiscal
1998 compared to $1,626,000 one year earlier.  Interest income is
directly related to the amount available for investment and the
prevailing yields of U.S. Government securities.

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>

Liquidity and Capital Resources

At August 31, 1997 cash and short-term investments in U.S. Treasury
Bills and Notes totaled $117,990,000, an increase of $7,493,000 from
$110,497,000 at May 31, 1997.  Current assets exclusive of cash and
investments in U.S. Treasury Bills totaled $63,990,000 at August 31,
1997, a increase of $1,959,000 from the balance at May 31, 1997 of
$62,031,000.  A rise in the amount of trade accounts receivable
($1,333,000) and inventories ($664,000) was the principal reason for
the increase.  Current liabilities increased $4,959,000 from May 31,
1997 to $43,545,000 at August 31, 1997.  This change is mainly due to
increases in accrued marketing programs ($5,139,000) and income taxes
($2,953,000); along with decreases in accrued profit sharing
($1,894,000), other accrued liabilities ($854,000), and accrued
salaries and wages ($636,000).  Working capital at August 31, 1997
amounted to $138,435,000 compared to $133,942,000 at May 31, 1997. 
Capital expenditures totaled $541,000 in the first three months of
fiscal 1998 compared to $589,000 in the first three months of the prior
year.  Capital expenditures during the current fiscal year were made
primarily to replace or refurbish machinery and equipment and increase
manufacturing efficiencies.  The cash provided by operating activities
in fiscal 1998 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.

Other Matters

The consolidated financial statements included in this report reflect
transactions in the dollar values in which they were incurred and,
therefore, do not attempt to measure the impact of inflation.  However,
the Corporation believes that inflation has not had a material effect
on its operations during the past three years.  On a long-term basis
the Corporation has demonstrated an ability to adjust the selling
prices of its products in reaction to changing costs due to inflation.

<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, 1997
heretofore filed by the registrant with the Commission.

Item 4.  Submission of Matters to a Vote of Security Holders

On September 22, 1997, Skyline Corporation held it Annual Meeting of
Shareholders at which the following matters were submitted to a vote of
the security holders:

    1.   Election of Directors
         Nominee                  Votes For       Votes        Votes
                                                 Against      Withheld
         Arthur J. Decio          8,647,790       2,700         68,493
         Terrence M. Decio        8,646,790       2,700         69,493
         Jerry Hammes             8,648,005       2,700         68,278
         Ronald F. Kloska         8,647,990       2,700         68,293
         William H. Lawson        8,647,805       2,700         68,478
         David T. Link            8,644,754       2,700         71,529
         Andrew J. McKenna        8,644,875       2,700         71,408
         William H. Murschel      8,647,340       2,700         68,943
         Dale Swikert             8,646,695       2,700         68,588  

Item 6.  Exhibits and Reports on Form 8-K

No reports on Form 8-K were filed during the first quarter of fiscal
1998.  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:	October 10, 1997
                                                Joseph B. Fanchi
                                           V.P. Finance & Treasurer, 
                                            Chief Financial Officer


DATE:	October 10, 1997
                                                James R. Weigand 
                                              Corporate Controller


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