SKYLINE CORP
10-Q, 1998-01-12
MOBILE HOMES
Previous: SHELDAHL INC, 10-Q, 1998-01-12
Next: SOUTHERN CO, S-8, 1998-01-12


                          
                   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, 1997

                       Commission File No. 1-4714




                           SKYLINE CORPORATION

         (Exact name of registrant as specified in its charter)


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


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




                      294-6521                   (219) 

             (Registrant's telephone number)   (Area Code)


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



                                                  Yes   X   No     


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

                Title of Class             January 12, 1998  
                 Common stock                   9,433,144    

<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, 1997 and May 31, 1997    2 - 3

                    Consolidated Statements of Earnings and       4
                       Retained Earnings for the three and
                       six-month periods ended November 30,
                       1997 and 1996

                    Consolidated Statements of Cash               5
                       Flows for the six-month periods
                       ended November 30, 1997 and 1996

                    Notes to the Consolidated Financial         6 - 7
                       Statements

                    Report of Independent Accountants             8

          Item 2.   Management's Discussion and Analysis        9 - 11
                       of Financial Condition and Results 
                       of Operations


Part II.  Other Information

          Item 1.   Legal Proceedings                            11

          Item 6.   Exhibits and Reports on Form 8-K             11

          Signatures                                             12
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets


(Dollars in thousands)
                                        November 30, 1997    May 31, 1997 
                                           (Unaudited)
ASSETS

Current Assets:

Cash                                           $   7,429       $   9,489

Treasury Bills, at cost plus accrued 
interest, which approximates market               84,038          71,059  

Investment in U.S. Treasury Notes                 29,983          29,949  
                
Accounts receivable, trade, less allowance
for doubtful accounts of $40                      36,545          43,360  

Inventories                                                      
  Raw materials                                    4,628           5,237  
  Work in process                                  4,574           4,756  
  Finished goods                                     216            -     
                                                                          
Total Inventories                                  9,418           9,993
                                    
Other current assets                               8,101           8,678  
                                                                        
TOTAL CURRENT ASSETS                             175,514         172,528  
                                                                        
                                                               
Property, Plant and Equipment, at Cost:
  Land                                             5,115           5,336  
  Buildings and improvements                      56,498          55,711  
  Machinery and equipment                         23,513          22,996  
                                                                        
                                                  85,126          84,043  

Less accumulated depreciation                     43,812          42,091  
                                                                        
  Total Property, Plant and Equipment             41,314          41,952
                                                                       
Other Assets                                       3,416           3,387  
                                                                        
                                               $ 220,244       $ 217,867  
                                                                          
            
                                                                      
The accompanying notes are a part of the consolidated financial 
statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets


(Dollars in thousands except per share data)

LIABILITIES AND SHAREHOLDERS' EQUITY

                                        November 30, 1997    May 31, 1997 
                                           (Unaudited)
Current Liabilities:
 
Accounts payable, trade                    $     7,424        $    9,742

Accrued salaries and wages                       3,427             5,194  
 
Accrued profit sharing                           1,430             2,659  
 
Accrued marketing programs                      14,899             8,068  
 
Accrued warranty expense                         7,810             7,368  

Other accrued liabilities                        4,360             4,906  

Income taxes                                       501               649
                                                         
   TOTAL CURRENT LIABILITIES                    39,851            38,586  
                                                                        
Other Deferred Liabilities                       3,157             3,060 
                                              
Commitments and Contingencies                        -                - 

Shareholders' Equity:
 Common stock, $.0277 par value, 15,000,000   
 shares authorized; issued 11,217,144 shares       312               312  
 Additional paid-in capital                      4,928             4,928  
 Retained earnings                             213,056           205,126
 Treasury stock, at cost, 1,784,000 shares
 at November 30, 1997 and 1,551,000 shares
 at May 31, 1997                               (41,060)          (34,145) 

TOTAL SHAREHOLDERS' EQUITY                     177,236           176,221
       
                                           $   220,244         $ 217,867  
                                                                          
              
                                                                         
 
The accompanying notes are a part of the consolidated financial
statements.<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Earnings and Retained Earnings
For the three and six-month periods ended November 30, 1997 and 1996
(Unaudited)

(Dollars in thousands except per share data)


                            Three-months Ended      Six-months Ended
                               November 30,           November 30,       
                             1997       1996        1997       1996

Sales                      $ 160,279  $ 164,378    $ 321,911  $ 335,914

Cost of sales                132,143    135,171      265,234    275,043    
                                                                      
Gross profit                  28,136     29,207       56,677     60,871

Selling and administrative
 expenses                     20,712     21,170       41,635     43,683
                                                                      
Operating earnings             7,424      8,037       15,042     17,188

Interest income                1,518      1,560        2,992      3,186
                            
(Loss) gain on sale of 
 property, plant and
 equipment                        (7)       962           (5)       962
                                                                        
Earnings before income taxes   8,935     10,559       18,029     21,336
                                                                     
Provision for income taxes:
      Federal                  2,940      3,430        5,920      6,930  
      State                      640        790        1,280      1,600

                               3,580      4,220        7,200      8,530
                                                                       
Net earnings                   5,355      6,339       10,829     12,806

Retained earnings,
 beginning of period         209,150    195,274      205,126    190,393
  
                             214,505    201,613      215,955    203,199 

Less, cash dividends paid      1,449      1,538        2,899      3,124
                                                                       
Retained earnings,
 end of period             $ 213,056  $ 200,075    $ 213,056  $ 200,075
                                                                     
Net earnings per share         $ .56      $ .62        $1.13      $1.24 
      
Cash dividends per share       $ .15      $ .15        $ .30      $ .30
                                                                   
Weighted average common
 shares outstanding        9,509,957 10,162,287    9,588,477 10,310,560    
                                                                          
                                                                         
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, 1997 and 1996
Increase (Decrease) in Cash
(Unaudited)

(Dollars in thousands)

                                                   1997          1996     
Cash Flows From Operating Activities:
  Net earnings                                  $  10,829      $12,806
                                                                     
  Adjustments to reconcile net earnings to
  net cash provided by operating activities:
    Interest income earned on U.S. Treasury 
     Bills and Notes                               (2,992)      (3,186)
    Loss (gain) on sale of property, plant &
     equipment                                          5         (962)    
    Depreciation                                    1,803        1,796
    Amortization of discount or premium on 
     U.S. Treasury Notes                              (34)          (8)
    Working capital items:
      Accounts receivable                           6,815       10,869 
      Inventories                                     575         (287)
      Other current assets                            577          317 
      Accounts payable, trade                      (2,318)        (607)    
      Accrued liabilities                           3,731        4,775 
      Income taxes payable                           (148)      (2,814)    
    Other assets                                      (29)         (25) 
    Other deferred liabilities                         97           30
                                                                       
    Total adjustments                               8,082        9,898 
                                                                      
    Net cash provided by operating activities      18,911       22,704 
                                                                      
Cash Flows From Investing Activities:
  Proceeds from sale or maturity of 
   U.S. Treasury Bills                            254,243      234,932
  Purchase of U.S. Treasury Bills                (264,998)    (274,390)
  Proceeds from maturity of U.S. Treasury Notes      -          30,000 
  Interest received from U.S. Treasury Notes          768        1,478
  Proceeds from sale of property, plant
   and equipment                                      224        1,442 
  Purchase of property, plant and equipment        (1,394)      (1,748)
                                                                      
    Net cash used in investing activities         (11,157)      (8,286)   
                                                                      
Cash Flows From Financing Activities:
  Cash dividends paid                              (2,899)      (3,124)
  Purchase of treasury stock                       (6,915)     (14,243)
 
Net cash used in financing activities              (9,814)     (17,367)    
                                                                      
Net decrease in cash                               (2,060)      (2,949)

Cash at beginning of year                           9,489       10,712     
                                                                      
Cash at end of quarter                          $   7,429      $ 7,763
                                                                           
                                                                           
      
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, 1997 and 1996
                                                                      
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, 1997, the consolidated results of
operations for the three and six-month periods ended November 30, 1997
and 1996, and the consolidated cash flows for the six-month periods
ended November 30, 1997 and 1996.

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

The financial data included herein has been subjected to a limited
review by Price Waterhouse LLP, the registrant's independent
accountants, whose report is included on page 8 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, 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 the Consolidated Financial Statements 
For the three and six-month periods ended November 30, 1997 and 1996
                                                                      

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

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

                    Report of Independent Accountants

December 15, 1997

To The Board of Directors and
Shareholders of Skyline Corporation

We have reviewed the accompanying consolidated balance sheet as of
November 30, 1997 and the related consolidated statements of earnings 
and retained earnings for the three-month and six-month periods ended 
November 30, 1997 and 1996 and the consolidated statements of cash
flows for the six-month periods ended November 30, 1997 and 1996 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, 1997, and the
related consolidated statements of earnings and retained earnings and
of cash flows for the year then ended (not presented herein), and in
our report dated June 16, 1997 we expressed an unqualified opinion on
those consolidated financial statements.  In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of May 31, 1997, is fairly stated in all material
respects in relation to the consolidated balance sheet from which it
has been derived.






PRICE WATERHOUSE LLP
Chicago, Illinois                                                       
        





<PAGE>
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results 
of Operations         
 

Liquidity and Capital Resources

At November 30, 1997 cash and investments in U.S. Treasury Bills and
Notes totaled $121,450,000, an increase of $10,953,000 from $110,497,000
at May 31, 1997.  Current assets exclusive of cash and investments in
U.S. Treasury Bills totaled $54,064,000 at November 30, 1997, a decrease
of $7,967,000 from the balance at May 31, 1997 of $62,031,000.  A
reduction in trade accounts receivable ($6,815,000) and inventories
($575,000) contributed to this decrease.  Current liabilities increased
$1,265,000 from May 31, 1997 to $39,851,000 at November 30, 1997.  This  
increase is mainly attributable to a seasonal increase in marketing
program accruals ($6,831,000) coupled with decreases in trade accounts
payable ($2,318,000), accrued salaries and wages ($1,767,000), accrued
liabilites ($546,000), and accrued profit sharing ($1,229,000).  Working
capital at November 30, 1997 amounted to $135,663,000 compared to
$133,942,000 at May 31, 1997.  Capital expenditures totaled $1,394,000  
in the first half of fiscal 1998 compared to $1,748,000 in the first
half of the prior year.  Capital expenditures during the current fiscal
year were made primarily to replace or refurbish machinery and equipment
and increase manufacturing efficiencies.  An unused production facility
was sold in the second quarter of fiscal 1997, resulting in a net gain
of $577,000.  Cash was also used to purchase $6,915,000 of Company stock
in fiscal 1998, compared to $14,243,000 in fiscal 1997.  The cash
provided by operating activities in fiscal 1998 is expected to be
adequate to fund any capital expenditures and treasury stock purchases
during the year.  Historically, the Corporation's financing needs have
been met through funds generated internally.


Results of Operations for the Quarter and Six-months Ended November 30,
1997

Sales in the quarter ended November 30, 1997 amounted to $160,279,000, a 
2.5 percent decrease from $164,378,000 in the comparable quarter of the
prior year.  Manufactured housing sales decreased 0.6 percent to 
$135,851,000 in fiscal 1998 compared to $136,657,000 in fiscal 1997.  




<PAGE>
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results 
of Operations             
  

Manufactured housing unit sales decreased to 4,620 compared to 4,796 in
fiscal 1997.  Recreational vehicle sales decreased 11.9 percent to
$24,428,000 in the second quarter of fiscal 1998 compared to $27,721,000
in fiscal 1997.  Recreational vehicle unit sales decreased to 1,896
compared to 2,055 in fiscal 1997.  

Sales during the first half of fiscal 1998 amounted to $321,911,000, a
4.2 percent decrease from $335,914,000 in the comparable period of the
prior year.  Manufactured housing sales decreased 4.1 percent to
$269,001,000 in fiscal 1998 compared to $280,381,000 in fiscal 1997. 
Manufactured housing unit sales decreased to 9,181 compared to 9,871 in
1996. Recreational vehicle sales decreased 4.7 percent to $52,910,000 in
the first half of fiscal 1998 compared to $55,533,000 in fiscal 1997. 
Recreational vehicle unit sales decreased to 4,190 compared to 4,289 in
fiscal 1997.  Sales for this business segment declined because of a
reduction in fifth wheel and truck camper sales.  Manufactured housing
sales for the first half of fiscal 1998 reflect a softening in demand
for manufactured housing which began in late calendar 1996. 

Cost of sales in the second quarter increased slightly to 82.4 percent
of sales from 82.2 in the prior year, while the cost of sales for the
first half of the year also increased (82.4 percent in fiscal 1998 vs
81.9 percent in fiscal 1997).  The increase in costs is due to the
larger proportion of fixed and semi-fixed costs resulting from decreased
sales volume.

Selling and administrative expenses for the second quarters of fiscal
1998 and 1997 remained unchanged at 12.9 percent.  Selling and
administrative expenses for the first half of the fiscal year decreased
as a percentage of sales to 12.9 percent from 13.0 percent.

An unused production facility was sold for a $962,000 gain in the second
quarter of fiscal 1997.  This sale had an impact on net earnings for the
period of $577,000 or $.06 per share.



<PAGE>
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results 
of Operations
                                                                       

Interest income amounted to $1,518,000 in the second quarter of fiscal
1998 compared to $1,560,000 one year earlier.  Interest income is
directly related to the amount available for investment and the
prevailing yields of U.S. Government securities.  

Income Taxes

The provision for federal income taxes 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.  

Other Matters

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

                                 PART II        

Item 1.  Legal Proceedings

Information with respect to this Item for the period covered by this
Form 10-Q has been previously reported in Item 3, entitled "Legal
Proceedings" of the Form 10-K for the fiscal year ended May 31, 1997,
heretofore filed by the registrant with the Commission.

Item 6.  Exhibits and Reports on Form 8-K

No reports on Form 8K were filed during the second quarter of fiscal
1998.

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

     Exhibit No.     Description            
        27           Financial Data Schedule
<PAGE>
                                    
                                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 12, 1998                                            
                                                 James R. Weigand
                                            V.P. Finance & Treasurer, 
                                             Chief Financial Officer




DATE:      January 12, 1998                                            
                                                 Jon S. Pilarski 
                                                   Controller 


<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          MAY-31-1998
<PERIOD-START>                             JUN-01-1997
<PERIOD-END>                               NOV-30-1997
<CASH>                                            7429
<SECURITIES>                                    114021
<RECEIVABLES>                                    36585
<ALLOWANCES>                                        40
<INVENTORY>                                       9418
<CURRENT-ASSETS>                                175514
<PP&E>                                           85126
<DEPRECIATION>                                   43812
<TOTAL-ASSETS>                                  220244
<CURRENT-LIABILITIES>                            39851
<BONDS>                                              0
                                0
                                          0
<COMMON>                                           312
<OTHER-SE>                                      176924
<TOTAL-LIABILITY-AND-EQUITY>                    220244
<SALES>                                         321911
<TOTAL-REVENUES>                                321911
<CGS>                                           265234
<TOTAL-COSTS>                                   306869
<OTHER-EXPENSES>                                     5
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              (2992)
<INCOME-PRETAX>                                  18029
<INCOME-TAX>                                      7200
<INCOME-CONTINUING>                              10829
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     10829
<EPS-PRIMARY>                                     1.13
<EPS-DILUTED>                                     1.13
        

</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission