FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 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.)
2520 Bypass Road, Elkhart, Indiana 46514
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 219-294-6521
Securities registered pursuant to section 12(b) of the Act:
Shares Outstanding Name of each Exchange on
Title of Class July 17, 1997 which Registered
Common Stock 9,666,144 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
None
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
X
The aggregate market value of the voting stock held by non-affiliates of
the registrant (8,089,579 shares) based on the closing price on the New
York Stock Exchange on July 17, 1997 was $201,733,876.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE:
Title Form 10-K
Proxy Statement dated August 8, 1997 Part III, Items 10 - 12
for Annual Meeting of Shareholders to
be held September 22, 1997.
<PAGE>
(This page left intentionally blank)
<PAGE>
FORM 10-K
CROSS-REFERENCE INDEX
Certain information required to be included in this Form 10-K is also
included in the registrant's Proxy Statement used in connection with its
1997 Annual Meeting of Shareholders to be held on September 22, 1997 (its
"1997 Proxy Statement"). The following cross-reference index shows the
page locations in the 1997 Proxy Statement of that information which is
incorporated by reference into this Form 10-K and the page location in this
Form 10-K of that information not incorporated by reference. All other
sections of the 1997 Proxy Statement are not required in this Form 10-K and
should not be considered a part hereof.
1997
Form Proxy
10-K Statement
PART I
Item 1. Business........................... 6
Item 2. Properties......................... 11
Item 3. Legal Proceedings.................. 12
Item 4. Submission of Matters to a Vote
of Security Holders................ 12
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder
Matters............................ 12
Item 6. Selected Financial Data............ 13
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations.......... 14
Item 8. Financial Statements and
Supplementary Data:
Index to Consolidated Financial
Statements..................... 18
Report of Independent Accountants 19
Consolidated Balance Sheets...... 20
Consolidated Statements of
Earnings and Retained Earnings. 22
Consolidated Statements of
Cash Flows .................... 23
Notes to Consolidated Financial
Statements..................... 25
Financial Summary by Quarter..... 29
<PAGE>
FORM 10-K
CROSS-REFERENCE INDEX
(Continued)
1997
Form Proxy
10-K Statement
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure............... 29
PART III
Item 10. Directors and Executive
Officers of the Registrant......... 29 3-4
Item 11. Executive Compensation............ 6
Item 12. Security Ownership of Certain
Beneficial Owners and
Management......................... 3-5
Item 13. Certain Relationships and Related
Transactions....................... 30
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on
Form 8-K:
(a) 1. Financial Statements...... 31
All other schedules are
omitted because they are
not applicable or the
required information is
shown in the financial
statements or notes
thereto.
2. Index to Exhibits......... 31
(b)Reports on Form 8K............. 31
SIGNATURES..................................... 32
<PAGE>
PART I
Item 1. Business
General Development of Business
Skyline Corporation was originally incorporated in Indiana in
1959, as successor to a business founded in 1951. Skyline
Corporation and its consolidated subsidiaries (the "Company")
design, produce and distribute manufactured housing (mobile homes
and multi-sectional homes) and recreational vehicles (travel
trailers, including park models and fifth wheels, and truck
campers).
The Company, which is one of the largest producers of
manufactured homes in the United States, produced 17,512
manufactured homes in fiscal year 1997.
The Company's manufactured homes are marketed under a number of
trademarks. They are available in lengths ranging from 36' to
80' and in single wide widths from 12' to 18', double wide widths
from 20' to 32', and triple wide widths from 36' to 42'.
The Company's recreational vehicles are sold under the "Nomad,"
"Layton," "Aljo" and "Mountain View" trademarks for travel
trailers and fifth wheels and the "WeekEnder" trademark for truck
campers.
In fiscal year 1997 manufactured homes represented 81% of total
sales, while recreational vehicles accounted for the remaining
19%. In the prior year the sales dollars were 84% manufactured
homes and 16% recreational vehicles. Additional financial data
relating to these industry segments is included in Note 3,
Industry Segment Information, in the Notes to Consolidated
Financial Statements included in this document under Item 8.
Narrative Description of Business
Principal Markets
The principal markets for manufactured homes are the suburban and
rural areas of the continental United States. The principal
buyers continue to be young married couples and senior citizens,
but the market tends to broaden when conventional housing becomes
more difficult to purchase and finance.
The recreational vehicle market is made up of primarily
vacationing middle income families, retired couples traveling
around the country and sportsmen pursuing four-season hobbies.
<PAGE>
Method of Distribution
The Company's manufactured homes are distributed by approximately
850 dealers at 1,460 locations throughout the United States
and recreational vehicles are distributed by approximately 400
dealers at 460 locations throughout the United States. These
are generally not exclusive dealerships and it is believed that
most dealers also sell products of other manufacturers.
The Company provides the retail purchaser of its products with a
full one-year warranty against defects in materials and
workmanship. The warranties are backed by a corporate service
department and an extensive field service system.
The Company's products are sold to dealers either through floor
plan financing with various financial institutions or on a cash
on delivery basis. Payments to the Company are made either
directly by the dealer or by financial institutions which have
agreed to finance dealer purchases of the Company's products. In
accordance with industry practice, certain financial institutions
which finance dealer purchases require the Company to execute
repurchase agreements which provide that in the event a dealer
defaults on its repayment of the financing, the Company will
repurchase its products from the financing institution in
accordance with a declining repurchase price schedule established
by the Company. Any loss under these agreements is the
difference between the repurchase cost and the resale value of
the units repurchased. Further, the risk of loss is spread over
numerous dealers. There have been no material losses related to
repurchases in past years.
Raw Materials and Supplies
The Company is basically an assembler of components purchased
from outside sources. The major components used by the Company
are lumber, plywood, shingles, vinyl and wood siding, steel,
aluminum, insulation, home appliances, furnaces, plumbing
fixtures, hardware, floor coverings and furniture. The suppliers
are many and range in size from large national companies to very
small local companies. At the present time, the Company is
obtaining sufficient materials to fulfill its needs.
Patents, Trademarks, Licenses, Franchises and Concessions
The Company does not rely upon any terminable or nonrenewable
rights such as patents or licenses or franchises under the
trademarks or patents of others, in the conduct of any segment of
its business.
<PAGE>
Seasonal Fluctuations
While the Company maintains production of manufactured homes and
recreational vehicles throughout the year, seasonal fluctuations
in sales do occur. Sales and production of manufactured homes
are affected by winter weather conditions at the Company's
northern plants. Recreational vehicle sales are generally higher
in the spring and summer months than in the fall and winter
months.
Inventory
The Company does not build significant inventories of either
finished goods or raw materials at any time. It does not deliver
on consignment.
Dependence Upon Individual Customers
The Company does not rely upon any single dealer for a
significant percentage of its business in any industry segment.
Backlog
The Company does not consider as significant in its business the
existence and extent of backlog at any given date. Because the
Company's production is based on dealers' orders, which
continuously fluctuate, and a relatively short manufacturing
cycle, the existence of a backlog does not provide a reliable
indication of the status of the Company's business.
Government Contracts
Two divisions of the Company had government contracts that
provided a small subsidy for making its electrically heated homes
more energy efficient. These contracts expired July 26, 1995.
Competitive Conditions
The manufactured housing and recreational vehicle industries are
highly competitive, with particular emphasis on price and
features offered. The Company's competitors are numerous,
ranging from multi-billion dollar corporations to relatively
small and specialized manufacturers.
The Manufactured Housing Institute reported that the industry
produced approximately 363,400 homes in calendar year 1996. In
the same period, the Company produced 18,791 units for a 5.2%
market share. In calendar year 1995, approximately 339,600 homes
were manufactured by the industry. In that period the Company
produced 20,709 homes for a 6.1% market share.
<PAGE>
The recreational vehicle industry produced 466,800 units in
calendar year 1996 compared to 475,200 units in calendar year
1995. The following table shows the Company's competitive
position in the recreational vehicle product lines it sells.
Units Produced Units Produced
Calendar Year 1996 Calendar Year 1995
Industry Skyline Industry Skyline
Travel Trailers 75,400 5,369 76,700 5,778
Fifth Wheels 48,500 2,660 47,000 2,498
Park Models 6,800 675 6,900 692
Truck Campers 11,000 402 12,100 426
Both the manufactured housing and recreational vehicle segments
of the Company's business are dependent upon the availability of
financing to dealers and retail financing. Consequently,
increases in interest rates and/or tightening of credit through
governmental action or otherwise have adversely affected the
Company's business in the past and may do so in the future.
The Company considers it impossible to predict the future
occurrence, duration or severity of cost or availability
problems in financing either manufactured homes or recreational
vehicles. To the extent that they recur, such public concerns
will affect sales of the Company's products.
Regulation
The manufacture, distribution and sale of manufactured homes and
recreational vehicles are subject to government regulations in
both the United States and Canada, at federal, state or
provincial and local levels.
Environmental Quality
The Company believes that compliance with federal, state and
local requirements respecting environmental quality will not
require any material capital expenditures for plant or equipment
modifications which would adversely affect earnings.
<PAGE>
Other Regulations
The U.S. Department of Housing and Urban Development (HUD) has
set national manufactured home construction and safety standards
and implemented recall and other regulations since 1976. The
National Mobile Home Construction and Safety Standards Act of
1974, as amended, under which such standards and regulations are
promulgated, prohibits states from establishing or continuing in
effect any manufactured home standard that is not identical to
the federal standards as to any covered aspect of performance.
Implementation of these standards and regulations involves
inspection agency approval of manufactured home designs, plant
and home inspection by states or other HUD-approved third
parties, manufacturer certification that the standards are met,
and possible recalls if they are not or if homes contain safety
hazards.
Some components of manufactured homes may also be subject to
Consumer Product Safety Commission standards and recall
requirements. In addition, the Company has voluntarily subjected
itself to third party inspection of all of its products
nationwide in order to further assure the Company, its dealers,
and customers of compliance with established standards.
The Company's travel trailers continue to be subject to safety
standards and recall and other regulations promulgated by the
U.S. Department of Transportation under the National Traffic and
Motor Vehicle Safety Act of 1966, as well as state laws and
regulations.
The Company's operations are subject to the Federal Occupational
Safety and Health Act, and are routinely inspected thereunder.
The transportation and placement (in the case of manufactured
homes) of the Company's products are subject to state highway use
regulations and local ordinances which control the size of units
that may be transported, the roads to be used, speed limits,
hours of travel, and allowable locations for manufactured homes
and parks. The Company is also subject to many state
manufacturer licensing and bonding requirements, and to dealer
day in court requirements in some states.
Manufactured homes and recreational vehicles may be subject to
the Magnuson-Moss Warranty - Federal Trade Commission Improvement
Act, which regulates warranties on consumer products. The
Company believes that its existing warranties meet all
requirements of the Act.
HUD has promulgated rules requiring producers of manufactured
homes to utilize wood products certified by their suppliers to
meet HUD's established limits on formaldehyde emissions, and to
place in each home written notice to prospective purchasers of
possible adverse reaction from airborne formaldehyde in the
homes. These rules are designated as preemptive of state
regulation.
<PAGE>
Number of Employees
The Company employs approximately 3,500 people at the present
time.
Item 2. Properties
The Company owns its corporate offices and design facility,
which are located in Elkhart, Indiana.
The Company's 25 manufacturing plants, all of which are owned,
are as follows:
Location Products
California, Hemet Manufactured Housing/Park Models
California, Hemet Recreational Vehicles
California, Hemet Recreational Vehicles
California, Woodland Manufactured Housing
Florida, Ocala Manufactured Housing
Florida, Ocala Manufactured Housing
Florida, Ocala Manufactured Housing/Park Models
Indiana, Bristol Manufactured Housing
Indiana, Elkhart Manufactured Housing
Indiana, Elkhart Recreational Vehicles
Indiana, Goshen Manufactured Housing
Indiana, Howe Manufactured Housing
Kansas, Arkansas City Manufactured Housing
Kansas, Halstead Manufactured Housing
Louisiana, Bossier City Manufactured Housing
North Carolina, Mocksville Manufactured Housing
Ohio, Sugarcreek Manufactured Housing
Oregon, McMinnville Manufactured Housing
Oregon, McMinnville Recreational Vehicles
Pennsylvania, Ephrata Manufactured Housing
Pennsylvania, Leola Manufactured Housing
Pennsylvania, Leola Recreational Vehicles
Texas, Mansfield Recreational Vehicles
Vermont, Fair Haven Manufactured Housing
Wisconsin, Lancaster Manufactured Housing
The above facilities range in size from approximately 50,000
square feet to approximately 160,000 square feet.
<PAGE>
It is extremely difficult to determine the unit productive
capacity of the Company because of the ever-changing
product mix.
The Company believes that its plant facilities and
machinery and equipment are well maintained and are in
good operating condition.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries is a party
to any pending legal proceeding which could have a
material effect on operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year ended May 31,
1997.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
Skyline Corporation (SKY) is traded on the New York Stock
Exchange. A quarterly cash dividend of 15 cents ($0.15) per
share was paid during all quarters in fiscal 1997 and in the
fourth quarter of fiscal 1996, and quarterly dividends of 12
cents ($0.12) per share were paid during all other quarters of
fiscal 1996. At May 31, 1997, there were approximately 1,900
holders of record of Skyline Corporation common stock. A
quarterly summary of the market price is listed for the fiscal
years ended May 31, 1997 and 1996.
1997 1996
Quarter High Low High Low
First $26-3/4 $23-5/8 $18-11/16 $16-1/2
Second $28-5/8 $25 $19 $17-3/8
Third $27-1/8 $23-1/8 $23- 5/8 $18-1/4
Fourth $24-7/8 $21 $26- 5/8 $22-1/2
<PAGE>
Item 6. Selected Financial Data
Dollars in thousands except per share data
1997 1996 1995 1994 1993
FOR THE YEAR
Sales $613,191 $645,956 $642,118 $580,144 $491,716
Earnings before
cumulative effect
of accounting
change $ 20,831 $ 19,683 $ 15,342 $ 14,991 $ 10,311
Net earnings $ 20,831 $ 19,683 $ 15,342 $ 14,991 $ 9,941
Cash dividends
paid $ 6,098 $ 5,477 $ 5,351 $ 5,384 $ 5,384
Capital
expenditures $ 3,285 $ 2,971 $ 16,385 $ 8,090 $ 4,134
Depreciation $ 3,745 $ 3,479 $ 3,404 $ 2,879 $ 2,685
AT YEAR END
Working
capital $133,942 $ 80,761 $ 74,090 $ 47,759 $ 43,412
Current ratio 4.5:1 2.9:1 3.2:1 2.3:1 2.8:1
U.S. Treasury
Notes $ 29,949 $ 59,907 $ 59,917 $ 89,912 $ 90,197
Property,
plant and
equipment, net$ 41,952 $ 43,400 $ 45,256 $ 32,330 $ 27,132
Total assets $217,867 $230,336 $215,464 $208,531 $188,511
Shareholders'
equity $176,221 $184,267 $179,732 $170,383 $161,829
PER SHARE
Earnings before
cumulative effect
of accounting
change $ 2.07 $ 1.84 $ 1.38 $ 1.34 $ .92
Net earnings $ 2.07 $ 1.84 $ 1.38 $ 1.34 $ .89
Cash dividends$ .60 $ .51 $ .48 $ .48 $ .48
Shareholders'
equity $ 18.23 $ 17.43 $ 16.16 $ 15.27 $ 14.43
Note: The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting For Income Taxes," effective
June 1, 1992. The cumulative effect of this change was
$370,000, or $.03 per share.<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited)
Results of Operations - Fiscal 1997 Compared to Fiscal 1996
Sales in 1997 were $613,191,000, a decrease of $32,765,000 from
$645,956,000 in 1996. Manufactured housing sales totaled
$494,691,000 for 1997 compared to $542,519,000 in 1996.
Manufactured housing unit sales decreased to 17,512 units
compared to 20,301 units in 1996. Sales for 1997 were
depressed by severe weather conditions in some parts of the
country during the third quarter and by a decline in
manufactured housing demand during some of the year. November
1996 marked the first month since November 1991 that industry
shipments were below the same month of the prior year, and this
trend continued through March 1997. In addition, many dealers
were reducing inventories because of overstocked conditions
relative to current end consumer demand. Recreational vehicle
sales increased to $118,500,000 in 1997 compared to
$103,437,000 in 1996. Recreational vehicle unit sales
increased to 9,103 in 1997 compared to 8,341 in 1996. The
recreational vehicle sales reflect a reversal of last year's
overall industry slowdown in the RV marketplace, although sales
have not yet recovered to 1995's level of $136,450,000 and
11,315 units.
Cost of sales in 1997 was 82.7% of sales compared to 82.6% in
1996. Manufactured housing cost of sales in 1997 increased to
81.8% of sales compared to 80.6% in 1996. The increase in
costs as a percent of sales is due to the larger proportion of
fixed and semi-fixed costs resulting from the decreased sales
volume. Recreational vehicle cost of sales in 1997 decreased
to 86.4% of sales compared to 87.0% in 1996. This decrease was
due to efficiencies gained by increased sales volumes and
continued cost containment efforts.
Selling and administrative expenses in 1997 decreased as a
percentage of sales to 12.9% from 13.1% in 1996. The decrease
is due primarily to the reduction in the costs of marketing
programs which was partially offset by the impact of the
reduced sales volume on the proportion of fixed and semi-fixed
costs to total selling and administrative expenses.
Manufactured housing operating earnings as a percentage of
sales were 5.5% in 1997 and 6.0% in 1996, the result of
decreased gross margins. Recreational vehicle operating
earnings as a percentage of sales increased to 3.8% of sales in
1997 from a small loss of less than 0.1% of sales in 1996.
Recreational vehicle earnings benefitted from the decreased
cost of sales discussed above and lower costs of marketing
programs during 1997.<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited), continued
Interest income amounted to $6,047,000 in 1997 compared to
$6,192,000 in 1996. Interest income is directly related to the
amount available for investment and the prevailing yields of
U.S. Government securities. The decrease in interest income
was due to slightly lower investment levels during the period
which were partially offset by marginally higher yields.
The gain on sale of property, plant and equipment in 1997
includes $1,483,000 from the sale of two unused production
facilities. These sales had an impact on net earnings for the
year of $888,000, or $.09 per share. The loss on sale of
property, plant and equipment in 1996 includes $492,000 of
costs to raze an unused production facility. These costs had
an impact on net earnings for 1996 of $295,000, or $.03 per
share.
Results of Operations - Fiscal 1996 Compared to Fiscal 1995
Sales in 1996 were $645,956,000, an increase of $3,838,000 from
$642,118,000 in 1995. Manufactured housing sales totaled
$542,519,000 for 1996 compared to $505,668,000 in 1995.
Manufactured housing unit sales increased to 20,301 units
compared to 20,248 units in 1995. The sales increase in 1996
reflects favorable overall economic conditions during much of
the year which contributed to an increase in industry-wide
demand for manufactured housing. These favorable conditions
were partially offset by severe weather conditions which
negatively impacted housing sales in certain markets during the
third and fourth quarters and by consumer uncertainty regarding
interest rates. Recreational vehicle sales decreased to
$103,437,000 in 1996 compared to $136,450,000 in 1995.
Recreational vehicle unit sales decreased to 8,341 in 1996
compared to 11,315 in 1995. Sales of recreational vehicles
were negatively affected by a continued industry slowdown in
the RV marketplace due largely to consumer uncertainty
regarding interest rates.
Cost of sales in 1996 was 82.6% of sales compared to 84.1% in
1995. Manufactured housing cost of sales in 1996 decreased to
80.6% of sales compared to 83.4% in 1995. The decrease in
costs as a percent of sales was due to efficiencies gained by
increased sales volume, higher product selling prices, and
continued cost containment efforts. Recreational vehicle cost
of sales in 1996 increased to 87.0% of sales compared to 85.4%
in 1995. This increase was due mainly to the effects of the
sharp sales decline from 1995.<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited), continued
Selling and administrative expenses in 1996 increased as a
percentage of sales to 13.1% from 12.8% in 1995. The increase
was due primarily to the costs of increased marketing efforts.
Manufactured housing operating earnings as a percentage of
sales were 6.0% in 1996 and 4.7% in 1995, the net result of
increased margins and selling and administrative expenses
discussed above. Recreational vehicle operating earnings as a
percentage of sales decreased to a small loss of less than 0.1%
of sales in 1996 from an earnings of 0.1% of sales in 1995.
Operating earnings in 1996 for recreational vehicles were
depressed largely due to the sales decrease discussed above.
Interest income amounted to $6,192,000 in 1996 compared to
$5,827,000 in 1995. 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 during the period which
were partially offset by slightly lower yields.
The loss on sale of property, plant and equipment in 1996
includes $492,000 of costs to raze an unused production
facility. These costs had an impact on net earnings for the
year of $295,000, or $.03 per share.
Liquidity and Capital Resources
At May 31, 1997 cash and short-term investments in U.S.
Treasury Bills and Notes totaled $110,497,000, an increase of
$55,404,000 from $55,093,000 at May 31, 1996. This increase
was due primarily to the maturity of $30,000,000 in U.S.
Treasury Notes, which were used to purchase U.S. Treasury
Bills, and the reclassification of $29,949,000 of U.S. Treasury
Notes due within one year as current assets. Current assets
exclusive of cash and investments in U.S. Treasury Bills and
Notes totaled $62,031,000 at the end of fiscal 1997, a decrease
of $6,743,000 from the balance at May 31, 1996 of $68,774,000.
Decreases in trade accounts receivable ($5,367,000) and
inventories ($629,000) due to lower fiscal 1997 fourth quarter
sales volumes were the main causes of this change. Current
liabilities decreased $4,520,000 from May 31, 1996 to
$38,586,000 at May 31, 1997. This decrease in current
liabilities can mainly be attributed to decreased income taxes
payable ($2,379,000) and the general decrease in other current
liabilities due to lower fourth quarter fiscal 1997 sales
volumes. Working capital at May 31, 1997 amounted to
$133,942,000 compared to $80,761,000 at May 31, 1996.<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited), continued
Capital expenditures totaled $3,285,000 in fiscal 1997 compared
to $2,971,000 in the prior year. Capital expenditures during
the current fiscal year were made primarily to adopt new
manufacturing processes, increase manufacturing efficiencies,
and replace worn-out equipment. Two unused production
facilities were sold in fiscal 1997, resulting in a net of tax
gain of $888,000. Cash was also used to purchase $22,779,000
of Company stock in fiscal 1997, compared to $9,671,000 in
fiscal 1996. The cash provided by operating activities in
fiscal 1998, along with current cash and short-term
investments, 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 provision for federal income taxes in each year
approximates the statutory rate and for state income taxes
reflects current state rates effective for the period based
upon activities within the taxable entities.
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>
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Financial Statements:
Report of Independent Accountants........... 19
Consolidated Balance Sheets................. 20
Consolidated Statements of Earnings
and Retained Earnings....................... 22
Consolidated Statements of Cash Flows....... 23
Notes to Consolidated Financial Statements.. 25
Financial Summary by Quarter................ 29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Skyline
Corporation
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material
respects, the financial position of Skyline Corporation and its
subsidiaries at May 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in
the period ended May 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are
the responsibility of Skyline Corporation's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
Price Waterhouse LLP
Chicago, Illinois
June 16, 1997
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets
May 31, 1997 and 1996
Dollars in thousands
ASSETS
1997 1996
Current Assets
Cash $ 9,489 $ 10,712
Treasury Bills, at cost plus
accrued interest 71,059 44,381
Investment in U.S. Treasury Notes 29,949 -
Accounts receivable, trade,
less allowance for doubtful
accounts of $40 43,360 48,727
Inventories
Raw materials 5,237 5,813
Work in process 4,756 4,809
Finished goods - -
Total Inventories 9,993 10,622
Deferred income tax benefits 5,407 5,601
Other current assets 3,271 3,824
Total Current Assets 172,528 123,867
Investment in U.S. Treasury Notes - 59,907
Property, Plant and Equipment,
At Cost
Land 5,336 5,217
Buildings and improvements 55,711 56,684
Machinery and equipment 22,996 22,222
84,043 84,123
Less accumulated depreciation 42,091 40,723
Total Property, Plant and
Equipment 41,952 43,400
Other Assets 3,387 3,162
$217,867 $230,336
The accompanying notes are a part of the consolidated financial statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets
May 31, 1997 and 1996
Dollars in thousands except per share data
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
Current Liabilities
Accounts payable, trade $ 9,742 $ 10,249
Accrued salaries and wages 5,194 5,614
Accrued profit sharing 2,659 2,644
Accrued marketing programs 8,068 8,737
Accrued warranty expense 7,368 6,540
Other accrued liabilities 4,906 6,294
Income taxes 649 3,028
Total Current Liabilities 38,586 43,106
Other Deferred Liabilities 3,060 2,963
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 205,126 190,393
Treasury stock, at cost, 1,551,000
shares in 1997 and 644,600 shares
in 1996 (34,145) (11,366)
Total Shareholders' Equity 176,221 184,267
$217,867 $230,336
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 Years Ended May 31, 1997, 1996, and 1995
Dollars in thousands except per share data
1997 1996 1995
EARNINGS
Sales $613,191 $645,956 $642,118
Cost of sales 507,045 533,723 539,993
Gross profit 106,146 112,233 102,125
Selling and administrative
expenses 79,023 84,680 82,240
Operating earnings 27,123 27,553 19,885
Interest income 6,047 6,192 5,827
Gain (loss) on sale of property,
plant and equipment 1,532 (793) (12)
Earnings before income taxes 34,702 32,952 25,700
Provision for income taxes
Federal 11,381 10,800 8,433
State 2,490 2,469 1,925
13,871 13,269 10,358
Net earnings $ 20,831 $ 19,683 $ 15,342
Net earnings per share $ 2.07 $ 1.84 $ 1.38
Weighted average common shares
outstanding 10,070,383 10,710,511 11,146,515
RETAINED EARNINGS
Balance at beginning of year $190,393 $176,187 $166,196
Add net earnings 20,831 19,683 15,342
Less cash dividends paid ($.60
per share in 1997, $.51 per
share in 1996 and $.48 per
share in 1995) 6,098 5,477 5,351
Balance at end of year $205,126 $190,393 $176,187
The accompanying notes are a part of the consolidated financial statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the Years Ended May 31, 1997, 1996, and 1995
Increase (Decrease) in Cash
Dollars in Thousands
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 20,831 $ 19,683 $ 15,342
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Interest income earned on
U.S. Treasury Bills and Notes (6,047) (6,022) (5,474)
Depreciation 3,745 3,479 3,404
Amortization of discount or premium
on U.S. Treasury Notes (41) 10 (5)
(Gain) loss on sale of property,
plant and equipment (1,532) 793 12
Working capital items:
Accounts receivable 5,367 (3,353) (860)
Inventories 629 4,183 726
Other current assets 747 (2,179) (841)
Accounts payable, trade (507) 287 (4,506)
Accrued liabilities (1,634) 7,425 3,025
Income taxes (2,379) 2,148 (1,092)
Other assets (225) (207) (244)
Other deferred liabilities 97 477 157
Total Adjustments (1,780) 7,041 (5,698)
Net cash provided by operating
activities 19,051 26,724 9,644
The accompanying notes are a part of the consolidated financial statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows, continued
For the Years Ended May 31, 1997, 1996, and 1995
Increase (Decrease) in Cash
Dollars in Thousands
1997 1996 1995
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale or maturity
of U.S. Treasury Bills 499,845 252,486 62,357
Proceeds from maturity of
U.S. Treasury Notes 30,000 - 30,000
Purchase of U.S. Treasury Bills (522,677) (265,162) (82,779)
Interest received from
U.S. Treasury Notes 2,200 3,474 4,635
Proceeds from sale of property,
plant and equipment 2,520 555 43
Purchase of property, plant
and equipment (3,285) (2,971) (16,385)
Net cash provided by (used in)
investing activities 8,603 (11,618) (2,129)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (6,098) (5,477) (5,351)
Purchase of treasury stock (22,779) (9,671) (642)
Net cash used in financing
activities (28,877) (15,148) (5,993)
Net (decrease) increase in cash (1,223) (42) 1,522
Cash at beginning of year 10,712 10,754 9,232
Cash at end of year $ 9,489 $ 10,712 $ 10,754
The accompanying notes are a part of the consolidated financial statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies
Nature of operations -- Skyline Corporation designs, manufactures and
sells at wholesale both a broad line of single and multi-sectional
manufactured homes and a large selection of non-motorized recreational
vehicle models. Both product lines are sold through numerous
independent dealers throughout the United States who often utilize
floor plan financing arrangements with lending institutions.
The following is a summary of the accounting policies which have a
significant effect on the consolidated financial statements.
Basis of presentation -- The consolidated financial statements include
the accounts of Skyline Corporation and all of its subsidiaries
(Corporation), each of which is wholly-owned. All significant
intercompany transactions have been eliminated. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Revenue recognition -- Substantially all of the Corporation's products
are made to order and are recorded as revenue upon shipment.
Consolidated statements of cash flows -- For purposes of the
statements of cash flows, investments in treasury bills are included
as investing activities. The Corporation's cash flows from operating
activities were reduced by income taxes paid of $16.1 million, $13.0
million and $12.1 million in 1997, 1996 and 1995, respectively.
Inventory valuation -- Inventories are stated at cost, which includes
the cost of raw materials, labor and overhead, determined under the
first-in, first-out method, which is not in excess of market.
Long-lived assets -- In the fourth quarter of fiscal 1996, the
Corporation adopted Statement of Financial Accounting Standards (SFAS)
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires the
review of long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. The effects
on the financial statements of adopting SFAS No. 121 were not
material.
The Corporation has determined that the effects on the financial
statements from any other recently issued accounting standards will
not be material.
Depreciation -- Depreciation is computed over the estimated useful
lives of the assets using the straight-line method for financial
statement reporting and accelerated methods for income tax purposes.
Investments -- The Corporation invests in United States Government
securities. These securities are typically held until maturity or
reasonable proximity to maturity and are therefore classified as held-
to-maturity and carried at amortized cost. The following is a summary
of the securities (dollars in thousands):<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies, continued
Gross Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
May 31, 1997
U.S. Treasury Bills 71,059 - - 71,059
U.S. Treasury Notes 29,949 - (108) 29,841
Total 101,008 - (108) 100,900
May 31, 1996
U.S. Treasury Bills 44,381 - - 44,381
U.S. Treasury Notes 59,907 - (483) 59,424
Total 104,288 - (483) 103,805
At May 31, 1997, the U.S. Treasury Bills mature within one year and the
U.S. Treasury Notes mature on February 28, 1998. The Corporation does
not have any other financial instruments which have market values
differing from recorded values.
Warranty -- The Corporation provides a warranty on its products.
Estimated warranty costs are accrued at the time of sale.
Income taxes -- The difference between the Corporation's statutory
federal income tax rate and the effective income tax rate is due
primarily to state income taxes.
The Corporation's deferred tax assets consist primarily of temporary
differences in the basis of certain liabilities for financial statement
and tax return purposes and its deferred tax liabilities are due to the
use of accelerated depreciation methods for tax purposes. The amounts
of such deferred tax items are not significant individually or in the
aggregate.
Reclassification -- Certain prior year amounts have been reclassified to
conform with the current year presentation.
NOTE 2 Contingencies
The Corporation was contingently liable at May 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.<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 3 Industry Segment Information
Dollars in thousands
1997 1996 1995
SALES
Manufactured housing $494,691 $542,519 $505,668
Recreational vehicles 118,500 103,437 136,450
Total sales $613,191 $645,956 $642,118
EARNINGS BEFORE INCOME TAXES
OPERATING EARNINGS
Manufactured housing $ 27,167 $ 32,297 $ 23,551
Recreational vehicles 4,550 (79) 123
General corporate expenses (4,594) (4,665) (3,789)
Total operating earnings 27,123 27,553 19,885
Interest income 6,047 6,192 5,827
Gain (loss) on sale of
property, plant and equipment 1,532 (793) (12)
Earnings before income taxes $ 34,702 $ 32,952 $ 25,700
IDENTIFIABLE ASSETS
OPERATING ASSETS
Manufactured housing $ 96,100 $105,704 $101,245
Recreational vehicles 20,759 20,344 25,145
Total operating assets 116,859 126,048 126,390
U.S. TREASURY BILLS 71,059 44,381 29,157
U.S. TREASURY NOTES 29,949 59,907 59,917
Total assets $217,867 $230,336 $215,464
DEPRECIATION
Manufactured housing $ 3,171 $ 2,995 $ 2,773
Recreational vehicles 574 484 631
Total Depreciation $ 3,745 $ 3,479 $ 3,404
CAPITAL EXPENDITURES
Manufactured housing $ 3,003 $ 2,804 $ 15,285
Recreational vehicles 282 167 1,100
Total capital expenditures $ 3,285 $ 2,971 $ 16,385
Operating earnings represent earnings before interest income, gain (loss) on
sale of property, plant and equipment and provision for income taxes with
non-traceable operating expenses being allocated to industry segments based on
percentage of sales.
Identifiable assets, depreciation and capital expenditures, by industry
segment, are those items that are used in the operations in each industry
segment, with jointly used items being allocated based on a percentage of
sales.<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 4 Purchase of Treasury Stock
The Corporation's board of directors from time to time has authorized
the repurchase of shares of the Corporation's common stock, in the open
market or through negotiated transactions, at such times and at such
prices as management may decide. In fiscal 1997 the Corporation
acquired 906,400 shares of its common stock for $22,779,000, in fiscal
1996 it acquired 548,100 shares for $9,671,000, and in fiscal 1995 it
acquired 36,600 shares for $642,000. The effect of the aggregate
repurchases on net earnings per share was $.21 per share in 1997, $.08
per share in 1996 and $.01 per share in 1995. At May 31, 1997, the
Corporation had authorization to repurchase an additional 666,144 shares
of its common stock.
NOTE 5 Employee Benefits
A) PROFIT SHARING PLANS
The Corporation has two deferred profit sharing Plans which together
cover substantially all of its employees. The Plans are defined
contribution plans to which the Corporation has the right to modify,
suspend or discontinue contributions. For the years ended May 31, 1997,
1996 and 1995, contributions to the Plans were $2,575,000, $2,594,000
and $2,425,000, respectively.
B) RETIREMENT AND DEATH BENEFIT PLANS
The Corporation has entered into arrangements with certain employees
which provide for benefits to be paid to the employees' estates in the
event of death during active employment or retirement benefits to be
paid over 10 years beginning at the date of retirement. To fund all
such arrangements, the Corporation purchased life insurance contracts on
the covered employees. The present value of the principal cost of such
arrangements is being accrued over the period from the date of such
arrangements to full eligibility using a discount rate of 8.0% in 1997
and 7.5% in 1996 and 1995. The change in the discount rate did not have
a significant impact on the financial statements. The amount charged to
operations under these arrangements was $285,000 in fiscal 1997, 1996
and 1995, respectively.
<PAGE>
Skyline Corporation and Subsidiary Companies
Financial Summary By Quarter
Unaudited
Dollars in thousands except per share data
1997 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Sales $171,536 $164,378 $117,995 $159,282 $613,191
Gross profit 31,663 29,207 17,672 27,604 106,146
Net earnings 6,467 6,339 1,817 6,208 20,831
Earnings per share .62 .62 .18 .64 2.07
1996 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Sales $163,855 $172,469 $138,562 $171,070 $645,956
Gross profit 29,009 30,616 22,896 29,712 112,233
Net earnings 4,632 5,726 3,134 6,191 19,683
Earnings per share .42 .54 .30 .59 1.84
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
PART III
Item 10. Executive Officers of the Registrant (Officers are
elected annually)
Name Age Position
Arthur J. Decio 66 Chairman of the Board and
Chief Executive Officer
Ronald F. Kloska 63 Vice Chairman, Deputy Chief
Executive Officer and Chief
Administration Officer
William H. Murschel 52 President - Chief
Operations Officer
Terrence M. Decio 45 Senior Executive Vice
President
Joseph B. Fanchi 61 Vice President - Finance &
Treasurer and Chief
Financial Officer
Charles W. Chambliss, Jr 47 Vice President- Product
Development and Engineering
James R. Weigand 42 Corporate Controller
<PAGE>
Arthur J. Decio, Chairman of the Board and Chief Executive
Officer, has been the Company's Chairman since its
incorporation in 1959. Additionally, Mr. Decio was President
and Chief Executive Officer of the Company from its
incorporation until 1972.
Ronald F. Kloska, Vice Chairman, Deputy Chief Executive Officer
and Chief Administration Officer, joined the Company in 1963 as
Treasurer. He was elected Vice President and Treasurer in
1964, Executive Vice President in 1967, President in 1974, Vice
Chairman and Chief Administration Officer in 1991, Secretary in
1994, and Deputy Chief Executive Officer in 1995.
William H. Murschel, President - Chief Operations Officer,
joined the Company in 1969. He was elected Vice President in
1986, and President and Chief Operations Officer in 1991.
Terrence M. Decio, Senior Executive Vice President, joined the
Company in 1973. He was elected Vice President in 1985, Senior
Vice President in 1991, and Senior Executive Vice President in
1993.
Joseph B. Fanchi, Vice President - Finance & Treasurer and
Chief Financial Officer, joined the Company in 1979 and was
elected Vice President - Finance and Chief Financial Officer in
1979. He assumed the additional responsibility of Treasurer in
1984.
Charles W. Chambliss, Jr., Vice President-Product Development
and Engineering, joined the Company in 1973 and was elected
Vice President in 1996.
James R. Weigand, Corporate Controller, joined the Company in
1991 as Controller and was elected an officer in 1994.
Terrence M. Decio is the son of Arthur J. Decio. No other
family relationship exists among any of the executive officers.
Item 13. Certain Relationships and Related Transactions
None.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a)(1) Financial Statements
Financial statements for the Corporation are listed in
the index under Item 8 of this document.
(a)(2) Index to Exhibits
Exhibits (Numbered according to Item 601 of Regulation
S-K, Exhibit Table)
(3)(ii) By-Laws
(21) Subsidiaries of the Registrant
(27) Financial Data Schedules
(b) Reports on Form 8K
No reports on Form 8K were filed during the quarter
ended May 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Registrant
DATE: July 17, 1997 BY:
Ronald F. Kloska, Vice
Chairman, Chief Administration
Officer, Deputy Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
DATE: July 17, 1997 BY:
Arthur J. Decio, Chairman of
the Board and Chief Executive
Officer
DATE: July 17, 1997 BY:
William H. Murschel, President
and Chief Operations Officer
and Director
DATE: July 17, 1997 BY:
Terrence M. Decio, Senior
Executive Vice President and
Director
DATE: July 17, 1997 BY:
Joseph B. Fanchi, Vice Presi-
dent - Finance & Treasurer and
Chief Financial Officer
DATE: July 17, 1997 BY:
Jerry Hammes, Director
DATE: July 17, 1997 BY:
William H. Lawson, Director
DATE: July 17, 1997 BY:
David Link, Director
DATE: July 17, 1997 BY:
Andrew J. McKenna, Director
DATE: July 17, 1997 BY:
V. Dale Swikert, Director
DATE: July 17, 1997 BY:
James R. Weigand, Corporate
Controller
<PAGE>
EXHIBIT (3)(ii)
By-Laws
<PAGE>
BY-LAWS
OF
SKYLINE CORPORATION
(as in existence on July 17, 1997)
ARTICLE 1
IDENTIFICATION
Section 1. Name. The name of the Corporation shall be Skyline
Corporation (hereinafter referred to as the "Corporation").
Section 2. Seal. The Corporation shall have a corporate seal which
shall be as follows: A circular disc, on the outer margin of which shall
appear the corporate name and State of Incorporation, with the words
"Corporate Seal" through the center, so mounted that it may be used to
impress these words in raised letters upon paper. The seal shall be in
charge of the Secretary.
Section 3. Fiscal Year. The fiscal year of the corporation shall begin
at the beginning of the first day of June and end at the close of the last day
of May next succeeding.
ARTICLE II
CAPITAL STOCK
Section 1. Consideration of Shares. The board of directors shall cause
the corporation to issue the capital stock of the corporation for such
consideration as has been fixed by such board in accordance with the
provisions of the Articles of Incorporation.
Section 2. Payment of Shares. Subject to the provisions of the
Articles of Incorporation, the consideration for the issuance of shares of
the capital stock of the corporation may be paid, in whole or in part, in
money, in other property, tangible or intangible, or in labor actually
performed for, or services actually rendered to, the corporation; provided,
however that the part of the surplus of a corporation which is transferred
to capital upon the issuance of shares as a share dividend shall be deemed to
be the consideration for the issuance of such shares. When payment of the
consideration for which a share was authorized to be issued shall have been
received by the corporation, or when surplus shall have been transferred to
capital upon the issuance of a share dividend, such share shall be declared
and taken to be fully paid and not liable to any further call or assessment,
and the holder thereof shall not be liable for any further payments thereon.
In the absence of actual fraud in the transaction, the judgment of the board
of directors as to the value of such property, labor or services received as
consideration, or the value placed by the board of directors upon the
corporate assets in the event of a share dividend shall be conclusive.
Promissory notes or future services shall not be accepted in payment or part
payment of any of the capital stock of the corporation.
Section 3. Certificates for Shares. Each shareholder shall be entitled
to a certificate signed by the vice-chairman of the board of directors or the
president or a vice president and the secretary or any assistant secretary of
the corporation certifying the number of shares owned by him in the
corporation. If such certificate is countersigned by the written signature
of a transfer agent other <PAGE>
than the corporation or its employee or by the written signature of a
registrar other than the corporation or its employee, the signatures of the
officers of the corporation may be facsimiles. If such certificate is
countersigned by the written signature of a registrar other than the
corporation or its employee, the signatures of the transfer agent and the
officers of the corporation may be facsimiles.
Every certificate shall state the name of the registered holder, the
number of shares represented thereby, the par value of each share or a
statement that such shares have no par value, and whether such shares have
been fully paid up and are nonassessable. If such shares are not fully paid
up, the certificate shall be legibly stamped to indicate the per centum which
has been paid up, and as further payments are made thereon the certificate
shall be stamped accordingly.
If the corporation is authorized to issue shares of more than one class,
every certificate shall state the kind and class of shares represented
thereby, and the relative rights, interests, preferences and restrictions of
such class, or a summary thereof; provided that such statement may be omitted
from the certificate if it shall be set forth upon the face or back of the
certificate that such statement, in full, will be furnished by the
corporation to any shareholder upon written request and without charge.
Section 4. Form of Certificates. The stock certificates to represent
the shares of the capital stock of this corporation shall be in such form, not
inconsistent with the laws of the State of Indiana, as may be adopted by the
board of directors.
Section 5. Transfer of Stock. Title to a certificate and to the shares
represented thereby can be transferred only:
(1) By delivery of the certificate endorsed either in blank or to a
specified person by the person appearing by the certificate to be
the owner of the shares represented thereby; or
(2) By delivery of the certificate and a separate document containing a
written assignment of the certificate or a power of attorney to
sell, assign, or transfer the same or the shares represented
thereby, signed by the person appearing by the certificate to be
the owner of the shares represented thereby. Such assignment or
power of attorney may be either in blank or to a specified person.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of shareholders of the
corporation shall be held at such place, within or without the State of
Indiana, as may be specified in the respective notices or waivers of notice
thereof, or proxies to represent shareholders thereat.
Section 2. Annual Meeting. The Annual Meeting of the Shareholders for
the election of Directors, and for the transaction of such other business as
may properly come before the meeting <PAGE>
shall be held at 9:00 a.m. local time, or at such other time as the Board of
Directors may determine, on the fourth Monday in September of each year, if
such day is not a legal holiday, and if a holiday, then on the next day that
is not a holiday.
Section 3. Special Meetings. Special Meetings of the shareholders may
be called by the chairman of the board of directors, the vice chairman of the
board of directors, the president, or by the board of directors.
Section 4. Notice of Meetings. A written or printed notice, stating
the place, day and hour of the meeting, and in case of a special meeting the
purpose or purposes for which the meeting is called, shall be delivered or
mailed by the secretary or by the officers or persons calling the meetings,
to each holder of the capital stock of the corporation at the time entitled
to vote, at such address as appears upon the records of the corporation, at
least ten days before the date of the meeting. Notice of any such meeting
may be waived in writing by any shareholder if the waiver sets forth in
reasonable detail the purpose or purposes for which the meeting is called,
and the time and place thereof. Attendance at any meeting, in person or by
proxy shall constitute a waiver of notice of such meeting.
Section 5. Voting at Meetings. Except as otherwise provided by law or
by the provisions of the Articles of Incorporation, every holder of the
capital stock of the corporation shall have the right at all meetings of the
shareholders of the corporation to one vote for each share of stock standing
in his name on the books of the corporation.
No share shall be voted at any meeting:
1. Upon which an installment is due and unpaid; or
2. Which shall have been transferred on the books of the
corporation within ten days next preceding the date of the
meeting; or
3. Which belongs to the corporation.
Section 6. Proxies. A shareholder may vote, either in person or by
proxy executed in writing, by the shareholder, or a duly authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from the
date of its execution, unless a longer time is expressly provided therein.
Section 7. Quorum. Unless otherwise provided by the Articles of
Incorporation, at any meeting of shareholders, a majority of the shares of
the capital stock outstanding and entitled to vote, represented in person or
by proxy, shall constitute a quorum.
Section 8. Organization. The chairman of the board of directors, and in
his absence, any director designated by the board of directors including the
vice chairman and the president, shall call meetings of the shareholders to
order and shall act as chairman of such meetings, and a secretary or the
assistant secretary of the corporation shall act as secretary of all
meetings of the shareholders. In the absence of the secretary and assistant
secretary, the presiding officer may appoint a shareholder to act as
secretary of the meeting.<PAGE>
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Board of Directors. The board of directors shall consist of
nine (9) members, who shall be elected annually by a majority of the shares
represented at the Annual Meeting of the shareholders. Such directors shall
hold office until the next annual meeting of the shareholders and until their
successors are elected and qualified. Directors need not be Shareholders of
the Corporation. A majority of the Directors at any time shall be citizens of
the United States. A member of the Board of Directors shall be elected by a
vote of the majority of the Directors as Chairman of the Board, and such
Chairman shall preside at all meetings of the Board of Directors.
Section 2. Duties. The corporate power of this corporation shall be
vested in the board of directors, who shall have the management and control
the business of the corporation. They shall employ such agents and servants
as they deem advisable, and fix the rate of compensation of all agents,
employees and officers.
Section 3. Resignation. A director may resign at any time by filing his
written resignation with the secretary.
Section 4. Removal. Any director may be removed for cause at any time
at any regular meeting or at such a special meeting of the shareholders of the
corporation called for such purpose, by the affirmative vote of the holders of
a majority of the shares outstanding.
Section 5. Vacancies. In case of any vacancy in the board of directors
through death, resignation, removal or other cause, the remaining directors by
the affirmative vote of a majority thereof may elect a successor to fill such
vacancy until the next annual meeting and until his successor is elected and
qualified. If the vote of the remaining members of the board shall result in
a tie, the vacancy shall be filled by shareholders at the annual meeting or a
special meeting.
Section 6. Annual Meetings. The board of directors shall meet each year
immediately after the annual meeting of the shareholders, at the place where
such meeting of the shareholders has been held, for the purpose of
organization, election of officers, and consideration of any other business
that may be brought before the meeting. No notice shall be necessary for the
holding of this annual meeting. If such meeting is not held as above
provided, the election of officers may be had at any subsequent meeting of
the board specifically called in the manner provided in Article IV, Section 7
of these by-laws.
Section 7. Other Meetings.
Regular Meetings. Regular meetings of the board of directors may be
held without notice at such time and place, either within or without the
State of Indiana, as shall from time to time be determined by the board.
Special Meetings. Special meetings of the board of directors shall
be held, either within or without the State of Indiana, whenever called by
the chairman of the board of directors, <PAGE>
or the vice-chairman of the board of directors, or the president or by any
three of the directors. Oral, telegraphic or written notice shall be given,
sent or mailed not less than one day before the meeting and shall state the
purposes of the meeting, and the date, place and hour of such meeting.
Waivers of Notice. Notice of a meeting need not be given to any
director who submits a signed waiver of notice whether before or after the
meeting, and attendance at the meeting by any director shall constitute
waiver of notice by such director.
Section 8. Quorum. At any meeting of the board of directors, the
presence of a majority of the members of the board then qualified and acting
shall constitute a quorum for the transaction of any business except the
filling of vacancies in the board of directors.
Section 9. Organization. The Chairman of the Board of Directors and in
his absence, the Vice Chairman of the Board of Directors, and in their
absence the President and in their absence any director chosen by the
Directors present, shall call meetings of the Board of Directors to order, and
shall act as Chairman of such meetings. The Secretary of the Corporation
shall act as Secretary of the Board of Directors, but in the absence of the
Secretary, the presiding officer may appoint any director to act as Secretary
of the meeting.
Section 10. Order of Business. The order of business at all meetings of
the board of directors shall be as follows:
1. Roll call.
2. Reading of the Minutes of the preceding meeting and action thereon.
3. Reports of Officers.
4. Reports of Committees.
5. Unfinished business.
6. Miscellaneous business.
7. New business.
Section 11. Executive Committee of the Board of Directors. The Board
of Directors may, whenever it sees fit, by a majority vote of the number of
Directors elected and qualified from time to time, designate an Executive
Committee of not less than three (3) persons from its members which Committee
shall, except as to matters upon which the Board of Directors has acted, have
and exercise the full power of the Board of Directors in the management of the
business and affairs of the Corporation, including but not limited to the
power to authorize dividend distributions according to a formula, method or
limit, or within a range, prescribed by the Board of Directors; PROVIDED,
always, that all business transacted by such Committee shall be submitted to
and be approved by the Board of Directors at their next regular or special
meeting. The Board of Directors shall have the power at any time to fill
vacancies in, to change the membership of, or to dissolve the Executive
Committee.
Section 12. Governance and Compensation Committee. The Board of
Directors, by resolution of a majority of the whole Board, shall appoint a
Governance and Compensation Committee to consist of not less than three
directors, none of whom shall be an officer or <PAGE>
employee of the Corporation or of any subsidiary or affiliated corporation.
The functions of the Governance and Compensation Committee shall be (a) to
identify and make recommendations to the Board of Directors regarding
candidates for election to the Board, (b) to review and make recommendations
to the Board of Directors regarding the renomination of incumbent directors,
(c) to perform other related tasks, such as studying the size, committee
structure or meeting frequency of the board, making studies or recommendations
regarding management succession, or tasks of similar character as may be
requested from time to time by the Board of Directors or the Chief Executive
Officer, (d) to establish the compensation of the Chief Executive Officer of
the Corporation, (e) to consult with the Chief Executive Officer with respect
to the compensation of officers and executive employees of the corporation and
its subsidiaries, and (f) to undertake such additional similar functions and
activities as may be required by other compensation plans maintained by the
Corporation or as may be requested from time to time by the Board of
Directors.
The Board of Directors, by resolution of a majority of the whole Board,
shall designate one member of the Governance and Compensation Committee to act
as chairman of the Committee. The Committee member so designated shall (a)
chair all meetings of the Committee, (b) chair meetings involving only
non-employee directors, (c) coordinate an annual performance evaluation of the
Corporation, (d) coordinate the evaluation of the performance of the Chief
Executive Officer, and (e) perform such other activities as from time to time
are requested by the other directors.
Section 13. Management Incentive Plan Committee. The Board of Directors
may appoint a Management Incentive Plan Committee, consisting of not less than
three (3) members, or former members of the Board. The Management Incentive
Plan Committee shall administer and interpret the Skyline Corporation
Management Incentive Plan dated January 8, 1968. No member of the Committee
shall be eligible to receive an award pursuant to the Plan, or be eligible for
selection as a person to whom stock may be allocated or stock options granted
pursuant to any other plan of the Corporation or any of its affiliates at any
time while he is serving on the Committee; and no member of the Committee
shall have been so eligible at any time within one year prior to the time that
he becomes a member of the Committee.
Section 14. Audit Committee. The Board of Directors may appoint an
Audit Committee, consisting of not less than three (3) members of the Board.
The Audit Committee shall, from time to time, meet with representatives of the
independent certified public accountants then servicing the corporation,
review the corporation's systems of internal controls and take necessary
action to see that an adequate system of internal auditing is implemented.
The Audit Committee may also nominate independent auditors and select and
establish accounting policies. All business transacted by the Committee shall
be submitted to the Board of Directors at their next regular or special
meeting for their consideration and approval or rejection. The Board of
Directors shall have the power at any time to fill vacancies in, to change the
membership of, or to dissolve the Audit Committee.<PAGE>
ARTICLE V
OFFICERS OF THE CORPORATION
Section 1. Officers. The officers of the corporation shall consist of a
chairman of the board of directors, a vice-chairman of the board of directors,
a president, one or more vice presidents or senior vice-presidents, a
secretary, an assistant secretary and a treasurer. Any two or more offices
may be held by the same person, except that the duties of the president and
secretary shall not be performed by the same person. The board of directors
by resolution may create and define the duties of other offices in the
corporation, and may elect or appoint persons to fill such offices.
Section 2. Vacancies. Whenever any vacancies shall occur in any office
by death, resignation, increase in the number of offices of the corporation,
or otherwise, the same shall be filled by the board of directors, and the
officer so elected shall hold office until his successor is chosen and
qualified.
Section 3. President. The president shall perform such duties as this
code of by-laws provides, or the board of directors may prescribe.
Section 4. Executive Vice-President. The executive vice-president shall
perform all duties incumbent upon the president during the absence or
disability of the president, and perform such other duties as this code of
by-laws may require or the board of directors may prescribe.
Section 5. Secretary. The secretary shall have the custody and care of
the corporate seal, records, minutes and stock books of the corporation. He
shall attend all meetings of the shareholders and of the board of directors,
and shall keep, or cause to be kept in a book provided for the purpose, a
true and complete record of the proceedings of such meetings, and shall
perform a like duty for all standing committees appointed by the board of
directors, when required. He shall attend to the giving and serving of all
notices of the corporation, shall file and take charge of all papers and
documents belonging to the corporation and shall perform such other duties as
this code of by-laws may require or the board of directors may prescribe.
Section 6. Treasurer. The treasurer shall keep correct and complete
records of account, showing accurately at all times the financial condition of
the corporation. He shall be the legal custodian of all moneys, notes,
securities and other valuables which may from time to time come into the
possession of the corporation. He shall immediately deposit all funds of the
corporation coming into his hands in some reliable bank or other depositary to
be designated by the board of directors, and shall keep such bank account in
the name of the corporation. He shall furnish at meetings of the board of
directors, or whenever requested, a statement of the financial condition of
the corporation, and shall perform such other duties as this code of by-laws
may require or the board of directors may prescribe. The treasurer may be
required to furnish bond in such amount as shall be determined by the board
of directors.
Section 7. Delegation of Authority. In case of the absence of any
officer of the corporation, or for any other reason that the board of
directors may deem sufficient, the board of <PAGE>
directors may delegate the powers or duties of such officer to any other
officer or to any director, for the time being, provided a majority of the
entire board of directors concurs therein.
Section 8. Execution of Documents. Unless otherwise provided by the
board of directors, all contracts, leases, commercial paper, bonds, deeds,
mortgages, and all other legal instruments or documents shall be signed by the
vice-chairman of the board of directors or the president and, if required,
shall be attested by the secretary or assistant secretary. All certificates
of stock shall be signed by the vice-chairman of the board of directors or the
president or a vice-president and the secretary or assistant secretary.
Section 9. Loans to Officers. No loan of money or property or any
advance on account of services to be performed in the future shall be made to
any officer or director of the corporation.
Section 10. Chairman of the Board of Directors and Chief Executive
Officer. The chairman of the board of directors shall be the chief executive
officer of the corporation and shall generally supervise the business of the
Corporation, subject to the control of the board of directors. He shall also
perform such other duties as this code of by-laws provide or the board of
directors may prescribe.
Section 11. Vice-Chairman of the Board of Directors. The vice-chairman
of the board of directors shall perform such duties as this code of by-laws
provides, or the board of directors may prescribe.
The vice-chairman of the board of directors shall have full authority to
execute proxies in behalf of the corporation, to vote stock owned by it in any
other corporation, and to execute, with the secretary, powers of attorney
appointing other corporations, partnerships, or individuals the agent of the
corporation, all subject to the provisions of The Indiana Business Corporation
Law, as amended, the Articles of Incorporation and this code of by-laws.
Section 12. Corporate Controller. The Corporate Controller shall cause
to be kept full and accurate books and accounts of all assets, liabilities and
transactions of the corporation. The Corporate Controller shall establish and
administer an adequate plan for the control of operations, including systems
and procedures required to properly maintain internal controls on all
financial transactions of the corporation. The Corporate Controller shall
prepare, or cause to be prepared, statements of the financial condition of the
corporation and proper profit and loss statements covering the operations of
the corporation and such other and additional financial statements, if any, as
the Chairman of the Board of Directors, Vice-Chairman of the Board of
Directors, President or Chief Financial Officer from time to time shall
require. The Corporate Controller also shall perform such other duties as may
be assigned by the Chairman of the Board of Directors, Vice-Chairman of the
Board of Directors, President or Chief Financial Officer, from time to time.<PAGE>
ARTICLE VI
CORPORATE BOOKS
Section 1. Place of Keeping, In General. Except as otherwise provided
by the laws of the State of Indiana, by the Articles of Incorporation of the
corporation or by these by-laws, the books and records of the corporation may
be kept at such place or places, within or without the State of Indiana, as
the board of directors may from time to time by resolution determine.
Section 2. Transfer Agent and Registrar, and Closing of Transfer Books.
The Board of Directors may appoint one or more transfer agents and one or more
registrars of transfers, and the principal transfer agent shall keep a stock
transfer book for the transfer of all shares of the capital stock of the
Corporation.
The Board of Directors may fix the time, not exceeding fifty days
preceding the date of any meeting of stockholders or any dividend payment
date or any date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, during which the
books of the Corporation shall be closed against transfers of stock. In lieu
of providing for the closing of the books against transfers of stock as
aforesaid, the Board of Directors from time to time may fix in advance a date,
not exceeding fifty days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend, or the date for any allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, as a record date for the determination of the
stockholders entitled to notice of and to vote at such meeting and any
adjournment thereof, or entitled to receive such dividends or allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, as the case may be; and only stockholders of
record on such date shall be entitled to notice of or to vote at such meeting
or to receive such dividends or allotment of rights, or to exercise such
rights in respect of any such change, conversion or exchange of capital stock,
as the case may be.<PAGE>
ARTICLE VII
AMENDMENTS
Section 1. Amendments. By-laws may be adopted, amended or repealed at
any meeting of the Board of Directors by the vote of a majority thereof,
unless the Articles of Incorporation provide for the adoption, amendment or
repeal by the shareholders, in which event, action thereon may be taken at
any meeting of the shareholders by the vote of a majority of the voting shares
outstanding.
<PAGE>
EXHIBIT (21)
Subsidiaries of the Registrant
Parent (Registrant) - Skyline Corporation (an Indiana Corporation)
Subsidiaries - Skyline Homes, Inc. (a California Corporation)
- Homette Corporation (an Indiana Corporation)
- Layton Homes Corp. (an Indiana Corporation)
These wholly-owned subsidiaries are included in the consolidated
financial statements.
EXHIBIT (27)
Financial Data Schedules
A copy of the Company's Financial Data Schedules filed electronically
with the Securities and Exchange Commission with Form 10-K will be
furnished to shareholders without charge upon written request to Ronald
F. Kloska, Vice Chairman, Chief Administration Officer and Deputy Chief
Executive Officer, Skyline Corporation, Post Office Box 743, Elkhart,
Indiana 46515.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000090896
<NAME> SKYLINE CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 9489
<SECURITIES> 101008
<RECEIVABLES> 43400
<ALLOWANCES> 40
<INVENTORY> 9993
<CURRENT-ASSETS> 172528
<PP&E> 84043
<DEPRECIATION> 42091
<TOTAL-ASSETS> 217867
<CURRENT-LIABILITIES> 38586
<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 175909
<TOTAL-LIABILITY-AND-EQUITY> 217867
<SALES> 613191
<TOTAL-REVENUES> 613191
<CGS> 507045
<TOTAL-COSTS> 586068
<OTHER-EXPENSES> (1532)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6047)
<INCOME-PRETAX> 34702
<INCOME-TAX> 13871
<INCOME-CONTINUING> 20831
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20831
<EPS-PRIMARY> 2.07
<EPS-DILUTED> 2.07
</TABLE>
