SKYLINE CORP
10-Q, 1997-01-14
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                   SECURITIES AND EXCHANGE COMMISSION

                      WASHINGTON,  D.C.      20549

                                FORM 10-Q

               Quarterly Report Under Section 13 or 15 (d)
                 of the Securities Exchange Act of 1934

                 For the Quarter Ended November 30, 1996

                       Commission File No. 1-4714



                           SKYLINE CORPORATION
                                                                     
         (Exact name of registrant as specified in its charter)


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


      P. O. Box 743,     2520 By-Pass Road    Elkhart, IN    46515    
                                                                       
           (Address of principal executive offices)          (Zip)    



                      294-6521                   (219)
                                                         
             (Registrant's telephone number)   (Area Code)


     Indicate by check mark whether the registrant (1) has filed
     all reports required to be filed by Section 13 or 15 (d) of
     the Securities Exchange Act of 1934 during the preceding 12
     months (or for such shorter period that the registrant was
     required to file such reports), and (2) has been subject to
     such filing requirements for the past 90 days.


                                                  Yes   X   No     


     Securities registered pursuant to Section 12 (b) of the Act:
                                          
                                          Shares Outstanding

                Title of Class             January 14, 1997  
                 Common stock                 9,995,844<PAGE>
                 
                 
                  

                            SKYLINE CORPORATION

                         Form 10-Q Quarterly Report

                                    INDEX

                                                              Page No.

Part I.    Financial Information


           Item 1.  Financial Statements:
                    Consolidated Balance Sheets as
                       of November 30, 1996 and May 31, 1996      2 - 3

                    Consolidated Statements of Earnings and       4
                       Retained Earnings for the three and
                       six-month periods ended November 30,
                       1996 and 1995

                    Consolidated Statements of Cash               5
                       Flows for the six-month periods
                       ended November 30, 1996 and 1995

                    Notes to the Consolidated Financial           6 
                       Statements

                    Report of Independent Accountants             7

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


Part II.   Other Information

           Item 1.  Legal Proceedings                             10

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

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


(Dollars in thousands)
                                        November 30, 1996    May 31, 1996 
                                           (Unaudited)
ASSETS

Current Assets:

Cash                                           $   7,763       $  10,712

Treasury Bills, at cost plus accrued 
interest, which approximates market               85,547          44,381

Accounts receivable, trade, less allowance
for doubtful accounts of $40                      37,858          48,727

Inventories                                                      
  Raw materials                                    5,830           5,813  
  Work in process                                  5,000           4,809
  Finished goods                                      79               -
                                                                          
Total Inventories                                 10,909          10,622
                                                                        
Other current assets                               9,108           9,425
                                                                        
TOTAL CURRENT ASSETS                             151,185         123,867
                                                                        
Investment in U.S. Treasury Notes                 29,915          59,907  
                                                                          
Property, Plant and Equipment, at Cost:
  Land                                             5,409           5,217
  Buildings and improvements                      56,069          56,684 
  Machinery and equipment                         22,440          22,222  

                                                  83,918          84,123

Less accumulated depreciation                     41,046          40,723  
                                                                        
  Total Property, Plant and Equipment             42,872          43,400 
                                                                          
Other Assets                                       3,187           3,162
                                                                        
                                               $ 227,159       $ 230,336 
                                                                          
            
The accompanying notes are a part of the consolidated financial 
statements.<PAGE>



Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets


(Dollars in thousands except per share data)

LIABILITIES AND SHAREHOLDERS' EQUITY

                                        November 30, 1996    May 31, 1996 
                                           (Unaudited)
Current Liabilities:
 
Accounts payable, trade                    $     9,642        $   10,249

Accrued salaries and wages                       4,130             5,614 

Accrued profit sharing                           1,620             2,644 

Accrued marketing programs                      15,590             8,737 

Accrued warranty expense                         7,001             6,540

Other accrued liabilities                        6,263             6,294

Income taxes                                       214             3,028
                                                                        
   TOTAL CURRENT LIABILITIES                    44,460            43,106  
                                                                        
Other Deferred Liabilities                       2,993             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                             200,075           190,393
                                              
 Treasury stock, at cost, 1,192,500 shares
  at November 30, 1996 and 644,600 shares
  at May 31, 1996                              (25,609)          (11,366)

TOTAL SHAREHOLDERS' EQUITY                     179,706           184,267 
       
                                           $   227,159        $  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 three and six-month periods ended November 30, 1996 and 1995
(Unaudited)

(Dollars in thousands except per share data)


                            Three-months Ended      Six-months Ended
                               November 30,           November 30,       
                             1996       1995        1996       1995

Sales                      $ 164,378  $ 172,469    $ 335,914  $ 336,324

Cost of sales                135,171    141,853      275,043    276,699    
                                                                       
Gross profit                  29,207     30,616       60,871     59,625

Selling and administrative
 expenses                     20,208     22,612       42,721     45,409
                                                                       
Operating earnings             8,999      8,004       18,150     14,216
Interest income                1,560      1,576        3,186      3,126
                                                                       
Earnings before income taxes  10,559      9,580       21,336     17,342
                                                                       
Provision for income taxes:
      Federal                  3,430      3,135        6,930      5,685
      State                      790        719        1,600      1,299
                                                                       
                               4,220      3,854        8,530      6,984
                                                                       
Net earnings                   6,339      5,726       12,806     10,358
Retained earnings,
 beginning of period         195,274    179,485      190,393    176,187
                                                                       
                             201,613    185,211      203,199    186,545 

Less, cash dividends paid      1,538      1,280        3,124      2,614
                                                                       
Retained earnings,
 end of period             $ 200,075  $ 183,931    $ 200,075  $ 183,931
                                                                          
Net earnings per share         $ .62      $ .54        $1.24      $ .96    
                                                                       
Cash dividends per share       $ .15      $ .12        $ .30      $ .24
                                                                       
Weighted average common
 shares outstanding       10,162,287 10,655,689   10,310,560 10,828,196    
                                                                           
                                                                          
The accompanying notes are a part of the consolidated financial 
statements.<PAGE>



Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the six-month periods ended November 30, 1996 and 1995
Increase (Decrease) in Cash
(Unaudited)

(Dollars in thousands)

                                                   1996          1995
Cash Flows From Operating Activities:
  Net earnings                                  $  12,806    $  10,358 
                                                                      

  Adjustments to reconcile net earnings to
  net cash provided by operating activities:
    Interest income earned on U.S. Treasury 
     Bills and Notes                               (3,177)      (3,006)
    Gain of sale of property, plant & equipment      (962)           -
    Depreciation                                    1,796        1,636
    Amortization of discount or premium on 
     U.S. Treasury Notes                               (8)           5 
    Working capital items:
      Accounts receivable                          10,519        4,213 
      Inventories                                    (287)       3,246 
      Other current assets                            317       (1,502)
      Accounts payable, trade                        (607)       3,306     
      Accrued liabilities                           4,775        9,827 
      Income taxes payable                         (2,814)        (571)    
   Other assets                                       (25)         (12) 
    Other deferred liabilities                         30           69
                                                                       
    Total adjustments                               9,557       17,211 
                                                                      
    Net cash provided by operating activities      22,363       27,569 
                                                                      
Cash Flows From Investing Activities:
  Proceeds from sale or maturity of 
   U.S. Treasury Bills                            234,932       84,492
  Purchase of U.S. Treasury Bills                (274,390)    (106,336)
  Proceeds from maturity of U.S. Treasury Notes    30,000            - 
  Interest received from U.S. Treasury Notes        1,819        1,799
  Proceeds from sale of property, plant
   and equipment                                    1,442          555
  Purchase of property, plant and equipment        (1,748)      (1,517)
                                                                      
    Net cash used in investing activities          (7,945)     (21,007)   
                                                                      
Cash Flows From Financing Activities:
  Cash dividends paid                              (3,124)      (2,614)
  Purchase of treasury stock                      (14,243)      (8,207)    
                                                                      
Net cash used in financing activities             (17,367)     (10,821)
                                                                      
Net decrease in cash                               (2,949)      (4,259)
Cash at beginning of year                          10,712       10,754
                                                                      
Cash at end of quarter                          $   7,763     $  6,495
                                                                           
                                                                           
The accompanying notes are a part of the consolidated financial 
statements.<PAGE>



Skyline Corporation and Subsidiary Companies
Notes to the Consolidated Financial Statements 
For the three and six-month periods ended November 30, 1996 and 1995
                                                                      
The accompanying unaudited interim consolidated financial statements
contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the consolidated financial
position as of November 30, 1996, the consolidated results of
operations for the three and six-month periods ended November 30, 1996
and 1995, and the consolidated cash flows for the six month periods
ended November 30, 1996 and 1995.

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

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

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

The Corporation and its subsidiaries were contingently liable at 
November 30, 1996 under agreements to purchase repossessed units on
floor plan financing made by financial institutions to its customers. 
Losses, if any, would be the difference between repossession cost and
the resale value of the units.  There have been no material losses in
past years under these agreements, and none are anticipated in the
future.

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

                   
                                                                        
                   Report of Independent Accountants


December 16, 1996

To The Board of Directors and
Shareholders of Skyline Corporation

We have reviewed the accompanying consolidated balance sheet as of
November 30, 1996 and the related consolidated statements of earnings 
and retained earnings for the three-month and six-month periods ended 
November 30, 1996 and 1995 and the consolidated statements of cash
flows for the six-month periods ended November 30, 1996 and 1995 of
Skyline Corporation and Subsidiary Companies.  This financial
information is the responsibility of the company's management.

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

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

We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of May 31, 1996, 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 18, 1996 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, 1996, is
fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.


PRICE WATERHOUSE LLP
Chicago, Illinois<PAGE>
                                                       
        


Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results 
of Operations
                                                                       
Liquidity and Capital Resources

At November 30, 1996 cash and investments in U.S. Treasury Bills totaled
$93,310,000, an increase of $38,217,000 from $55,093,000 at May 31,
1996. The majority of this increase was due to the reinvestment of the
proceeds from the maturity of $30,000,000 in U.S. Treasury Notes into
U.S. Treasury Bills.  Current assets exclusive of cash and investments
in U.S. Treasury Bills totaled $57,875,000 at November 30, 1996, a
decrease of $10,899,000 from the balance at May 31, 1996 of $68,774,000.
A reduction in trade accounts receivable ($10,869,000) contributed to
this decrease.   Current liabilities increased $1,354,000 from May 31,
1996 to $44,460,000 at November 30, 1996.  This increase can mainly be
attributed to a seasonal increase in marketing program accruals
($6,853,000) and decreased income taxes ($2,814,000).  Working capital
at November 30, 1996 amounted to $106,725,000 compared to $80,761,000 at
May 31, 1996.  Capital expenditures totaled $1,748,000 in the first half
of fiscal 1997 compared to $1,517,000 in the first half of the prior
year.  Capital expenditures during the current fiscal year were made
primarily to adopt new manufacturing processes and increase
manufacturing efficiencies.  An unused production facility was sold in
the second quarter, resulting in a net gain of $577,000.  Cash was also
used to purchase $14,243,000 of Company stock in fiscal 1997, compared
to $8,207,000 in fiscal 1996.  The cash provided by operating activities
in fiscal 1997 is expected to be adequate to fund any capital
expenditures and treasury stock purchases during the year. 
Historically, the Corporation's financing needs have been met through
funds generated internally.

Results of Operations for the Quarter and Six-months Ended November 30,
1996

Sales in the quarter ended November 30, 1996 amounted to $164,378,000, a 
4.7 percent decrease from $172,469,000 in the comparable quarter of the
prior year.  Manufactured housing sales decreased 8.9 percent to 
$136,657,000 in 1996 compared to $150,079,000 in 1995.<PAGE>
  



Manufactured housing unit sales decreased to 4,796 compared to 5,657 in
1995.  Recreational vehicle sales increased 23.8 percent to $27,721,000
in the second quarter of fiscal 1997 compared to $22,390,000 in fiscal
1996.  Recreational vehicle unit sales increased to 2,055 compared to
1,776 in fiscal 1996.  

Sales during the first half of fiscal 1997 amounted to $335,914,000 a
0.1 percent decrease from $336,324,000 in the comparable period of the
prior year.  Manufactured housing sales decreased 3.8 percent to
$280,381,000 in 1996 compared to $291,377,000 in 1995.  Manufactured
housing unit sales decreased to 9,871 compared to 11,027 in 1995.
Recreational vehicle sales increased 23.6 percent to $55,533,000 in the
first half of fiscal 1997 compared to $44,947,000 in fiscal 1996. 
Recreational vehicle unit sales increased to 4,289 compared to 3,637 in
1995.  Sales for the first half of fiscal 1997 reflect a softening in
demand for manufactured housing and a reversal of last year's overall
industry slowdown in the RV marketplace.  In addition, second quarter
results were negatively affected by the unusually early November onset
of winter weather conditions, particularly in the Midwest. 

Cost of sales in the second quarter remained unchanged at 82.2 percent
of sales, while the cost of sales for the first half of the year
decreased slightly (81.9 percent in fiscal 1997 vs 82.3 percent in
fiscal 1996).  The decrease in costs is due to continued cost
containment efforts.

Selling and administrative expenses for the second quarter of fiscal
1997 decreased as a percentage of sales to 12.3 percent from 13.1
percent last year.  Selling and administrative expenses for the first
half of the fiscal year also decreased as a percentage of sales to 12.7
percent from 13.5 percent.  Both decreases were due primarily to the
reduction in the cost of marketing programs.

Interest income amounted to $1,560,000 in the second quarter of fiscal
1997 compared to $1,576,000 one year earlier.  Interest income is
directly related to the amount available for investment and the
prevailing yields of U.S. Government securities.<PAGE>
  



Income Taxes

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.  

                                 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, 1996,
heretofore filed by the registrant with the Commission.

Item 6.  Exhibits and Reports on Form 8-K
No reports on Form 8K were filed during the second quarter of fiscal
1996.

The Exhibit filed as part of this report is listed below.

     Exhibit No.     Description            
        27           Financial Data Schedule

                                                    
                                SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                SKYLINE CORPORATION    





DATE:      January 14, 1997                                            
                                                 Joseph B. Fanchi
                                            V.P. Finance & Treasurer, 
                                             Chief Financial Officer




DATE:      January 14, 1997                                            
                                                 James R. Weigand 
                                               Corporate Controller<PAGE>


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