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, 1998 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, 1998 which Registered
Common Stock 9,433,144 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 (7,856,279 shares) based on the closing price on the New
York Stock Exchange on July 17, 1998 was $270,550,608.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE:
Title Form 10-K
Proxy Statement dated August 7, 1998 Part III, Items 10 - 12
for Annual Meeting of Shareholders to
be held September 28, 1998.
<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
1998 Annual Meeting of Shareholders to be held on September 28, 1998 (its
"1998 Proxy Statement"). The following cross-reference index shows the
page locations in the 1998 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 1998 Proxy Statement are not required in this Form 10-K and
should not be considered a part hereof.
1998
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..................... 19
Report of Independent Accountants 20
Consolidated Balance Sheets...... 21
Consolidated Statements of
Earnings and Retained Earnings. 23
Consolidated Statements of
Cash Flows .................... 24
Notes to Consolidated Financial
Statements..................... 26
Financial Summary by Quarter..... 31
<PAGE>
FORM 10-K
CROSS-REFERENCE INDEX
(Continued)
1998
Form Proxy
10-K Statement
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure............... 31
PART III
Item 10. Directors and Executive
Officers of the Registrant......... 31 3-4
Item 11. Executive Compensation............
Item 12. Security Ownership of Certain
Beneficial Owners and
Management......................... 3-5
Item 13. Certain Relationships and Related
Transactions....................... 32
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on
Form 8-K:
(a) 1. Financial Statements...... 33
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......... 33
(b)Reports on Form 8K............. 33
SIGNATURES..................................... 34
<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 "Corporation")
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 Corporation, which is one of the largest producers of
manufactured homes in the United States, produced 17,293
manufactured homes in fiscal year 1998.
The Corporation'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 Corporation'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 1998 manufactured homes represented 82% of total
sales, while recreational vehicles accounted for the remaining
18%. In the prior year the sales dollars were 81% manufactured
homes and 19% recreational vehicles. Additional financial data
relating to these industry segments is included in Note 5,
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 Corporation's manufac tured homes are distributed by
approximately 770 de alers at 1,390 locations throughout the
United States and recreational vehicles are distributed by
approximately 350 dealers at 400 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 Corporation 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 Corporation'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 Corporation are made
either directly by the dealer or by financial institutions which
have agreed to finance dealer purchases of the Corporation's
products. In accordance with industry practice, certain
financial institutions which finance dealer purchases require the
Corporation to execute repurchase agreements which provide that
in the event a dealer defaults on its repayment of the financing,
the Corporation will repurchase its products from the financing
institution in accordance with a declining repurchase price
schedule established by the Corporation. 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 Corporation is basically an assembler of components purchased
from outside sources. The major components used by the
Corporation 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 Corporation is
obtaining sufficient materials to fulfill its needs.
Patents, Trademarks, Licenses, Franchises and Concessions
The Corporation 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 Corporation 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 Corporation's northern plants. Recreational vehicle sales
are generally higher in the spring and summer months than in the
fall and winter months.
Inventory
The Corporation 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 Corporation does not rely upon any single dealer for a
significant percentage of its business in any industry segment.
Backlog
The Corporation does not consider as significant in its business
the existence and extent of backlog at any given date. Because
the Corporation'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 Corporation's business.
Government Contracts
The Corporation has had no significant contracts during the past
three years.
Competitive Conditions
The manufactured housing and recreational vehicle industries are
highly competitive, with particular emphasis on price and
features offered. The Corporation'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 353,400 homes in calendar year 1997. In
the same period, the Corporation produced 17,033 units for a 4.8%
market share. In calendar year 1996, approximately 363,400 homes
were manufactured by the industry. In that period the
Corporation produced 18,791 homes for a 5.2% market share.
<PAGE>
The recreational vehicle industry produced 438,800 units in
calendar year 1997 compared to 466,800 units in calendar year
1996. The following table shows the Corporation's competitive
position in the recreational vehicle product lines it sells.
Units Produced Units Produced
Calendar Year 1997 Calendar Year 1996
Industry Skyline Industry Skyline
Travel Trailers 78,800 5,772 75,400 5,369
Fifth Wheels 52,800 2,321 48,500 2,660
Park Models 7,500 644 6,800 675
Truck Campers 10,300 299 11,000 402
Both the manufactured housing and recreational vehicle segments
of the Corporation'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
Corporation's business in the past and may do so in the future.
The Corporation 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 occur, such public concerns
will affect sales of the Corporation'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 Corporation 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 Corporation has voluntarily
subjected itself to third party inspection of all of its products
nationwide in order to further assure the Corporation, its
dealers, and customers of compliance with established standards.
The Corporation'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 Corporation'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 Corporation'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 Corporation 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
Corporation 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 Corporation employs approximately 3,500 people at the present
time.
Item 2. Properties
The Corporation owns its corporate offices and design facility,
which are located in Elkhart, Indiana.
The Corporation'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 Corporation because of the ever-changing
product mix.
The Corporation believes that its plant facilities and
machinery and equipment are well maintained and are in
good operating condition.
Item 3. Legal Proceedings
Neither the Corporation 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,
1998.
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 in fiscal 1998 and in 1997. At May 31, 1998,
there were approximately 1,700 holders of record of Skyline
Corporation common stock. A quarterly summary of the market
price is listed for the fiscal years ended May 31, 1998 and
1997.
1998 1997
Quarter High Low High Low
First $30 $24-1/4 $26-3/4 $23-5/8
Second $30-1/2 $26-3/8 $28-5/8 $25
Third $31-15/16 $25-5/16 $27-1/8 $23-1/8
Fourth $32-9/16 $28-5/8 $24-7/8 $21
<PAGE>
Item 6. Selected Financial Data
Dollars in thousands except per share data
1998 1997 1996 1995 1994
FOR THE YEAR
Sales $623,395 $613,191 $645,956 $642,118 $580,144
Net earnings $ 19,946 $ 20,831 $ 19,683 $ 15,342 $ 14,991
Cash dividends
paid $ 5,729 $ 6,098 $ 5,477 $ 5,351 $ 5,384
Capital
expenditures $ 3,069 $ 3,285 $ 2,971 $ 16,385 $ 8,090
Depreciation $ 3,775 $ 3,745 $ 3,479 $ 3,404 $ 2,879
AT YEAR END
Working
capital $142,185 $133,942 $ 80,761 $ 74,090 $ 47,759
Current ratio 4.1:1 4.5:1 2.9:1 3.2:1 2.3:1
U.S. Treasury
Notes $ - $ 29,949 $ 59,907 $ 59,917 $ 89,912
Property,
plant and
equipment,
net $ 40,951 $ 41,952 $ 43,400 $ 45,256 $ 32,330
Total assets $233,004 $217,867 $230,336 $215,464 $208,531
Shareholders'
equity $183,523 $176,221 $184,267 $179,732 $170,383
PER SHARE
Basic earnings $ 2.10 $ 2.07 $ 1.84 $ 1.38 $ 1.34
Cash dividends $ .60 $ .60 $ .51 $ .48 $ .48
Shareholders'
equity $ 19.46 $ 18.23 $ 17.43 $ 16.16 $ 15.27
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited)
Results of Operations - Fiscal 1998 Compared to Fiscal 1997
Sales in 1998 were $623,395,000, an increase of $10,204,000
from $613,191,000 in 1997. Manufactured housing sales totaled
$510,465,000 for 1998 compared to $494,691,000 in 1997.
Manufactured housing unit sales decreased to 17,293 units
compared to 17,512 units. Sales in this business segment
increased due to a reversal in the second half of 1998 of an
overall industry slowdown that began in November 1996. Sales
also rose due to strengthening demand for multi-section homes,
which have a higher selling price compared to a single section
home. Recreational vehicle sales decreased to $112,930,000 in
1998 compared to $118,500,000 in 1997. Recreational vehicle
unit sales decreased to 8,979 in 1998 compared to 9,103 in
1997. The decline in this segment's sales is primarily due to
a continued reduction in fifth wheel and truck camper sales.
Cost of sales in 1998 was 82.4% of sales compared to 82.7% in
1997. Manufactured housing cost of sales in 1998 decreased to
81.6% of sales compared to 81.8% in 1997. Recreational vehicle
cost of sales in 1998 decreased to 86.3% of sales compared to
86.4% in 1997. The decreases are primarily due to a reduction
in raw material cost.
Selling and administrative expenses in 1998 increased as a
percentage of sales to 13.2% from 12.9% in 1997. The increase
is due primarily to a rise in the costs of marketing programs
driven by higher manufactured housing sales.
Manufactured housing operating earnings as a percentage of
sales were 5.5% in 1998 and 1997. Recreational vehicle
operating earnings as a percentage of sales decreased to 3.6%
of sales in 1998 from 3.8% of sales in 1997.
Interest income amounted to $6,233,000 in 1998 compared to
$6,047,000 in 1997. 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 slightly higher investment levels during the period
and marginally higher yields.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited), continued
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 partial reversal of 1996'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.
Liquidity and Capital Resources
At May 31, 1998 cash and short-term investments in U.S.
Treasury Bills totaled $128,783,000, an increase of $18,286,000
from $110,497,000 at May 31, 1997. Current assets exclusive of
cash and investments in U.S. Treasury Bills totaled $59,699,000
at the end of fiscal 1998, a decrease of $2,332,000 from the
balance at May 31, 1997 of $62,031,000. Decreases in other
current assets ($1,729,000) and inventories ($838,000) were the
main causes of this change. Current liabilities increased
$7,711,000 from May 31, 1997 to $46,297,000 at May 31, 1998.
This change can mainly be attributed to increased income taxes
payable ($1,811,000), accounts payable ($3,130,000), accrued
salaries and wages ($385,000), accrued warranty expense
($848,000), and accrued marketing programs ($1,203,000).
Working capital at May 31, 1998 amounted to $142,185,000
compared to $133,942,000 at May 31, 1997.
Capital expenditures totaled $3,069,000 in fiscal 1998 compared
to $3,285,000 in the prior year. Capital expenditures during
the current fiscal year were made primarily to replace or
refurbish machinery and equipment and increase manufacturing
efficiencies. Cash was also used to purchase $6,915,000 of the
Corporation's stock in fiscal 1998, compared to $22,779,000 in
fiscal 1997. The cash provided by operating activities in
fiscal 1999, 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.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited), continued
Year 2000
The Year 2000 issue pertains to computer programs using two
digits rather than four to define the applicable year. Many of
the Corporation's computer programs were written using the
common practice of defining a year with two digits. As the
year 2000 approaches, programs with date-related logic will be
unable to distinguish between the years 1900 and 2000.
Potential problems arising include software and hardware
failing, errors occurring in calculations, or information being
presented in an unusable format. In February 1997 the
Corporation responded to the Year 2000 issue by starting a
project designed to update its computer systems. This project
entails changing computer code of programs developed internally
and upgrading software originally purchased from third party
vendors. The project is progressing as scheduled and is
expected to be completed by December 31, 1998. Management does
not anticipate any significant impact on the Corporation's
operations resulting from the use of its computer systems
beyond 1999. The Corporation is also communicating with large
customers and significant suppliers of goods and services to
determine these entities' readiness to resolve their own Year
2000 issues. There is no assurance that any customer or
supplier will be Year 2000 compliant, however any potential
lack of compliance is not expected to have an adverse impact to
the Corporation. The estimated cost of this project, which is
being expensed as incurred, is not expected to have a material
effect on the Corporation's results of operations, liquidity or
capital resources. The above information is based on
management's best estimates, and no guarantee can be made that
these estimates will be achieved.
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 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Unaudited), continued
Forward Looking Information
Certain statements in this report are considered forward
looking as indicated by the Private Securities Litigation
Reform Act of 1995. These statements involve uncertainties
that may cause actual results to materially differ from
expectations as of the report date. These uncertainties
include but are not limited to general economic conditions,
interest rate levels, consumer confidence, market demographics,
competitive pressures, and the success of implementing
administrative strategies.
<PAGE>
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Financial Statements:
Report of Independent Accountants........... 20
Consolidated Balance Sheets................. 21
Consolidated Statements of Earnings
and Retained Earnings....................... 23
Consolidated Statements of Cash Flows....... 24
Notes to Consolidated Financial Statements.. 26
Financial Summary by Quarter................ 31
<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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in
the period ended May 31, 1998, 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 15, 1998
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets
May 31, 1998 and 1997
Dollars in thousands
ASSETS
1998 1997
Current Assets
Cash $ 10,667 $ 9,489
Treasury Bills, at cost plus
accrued interest 118,116 71,059
Investment in U.S. Treasury Notes - 29,949
Accounts receivable, trade,
less allowance for doubtful
accounts of $40 42,898 43,360
Inventories
Raw materials 4,248 5,237
Work in process 4,907 4,756
Total Inventories 9,155 9,993
Deferred income tax benefits 6,104 5,407
Other current assets 1,542 3,271
Total Current Assets 188,482 172,528
Property, Plant and Equipment,
At Cost
Land 5,136 5,336
Buildings and improvements 57,388 55,711
Machinery and equipment 24,010 22,996
86,534 84,043
Less accumulated depreciation 45,583 42,091
Total Property, Plant and
Equipment 40,951 41,952
Other Assets 3,571 3,387
$233,004 $217,867
The accompanying notes are a part of the consolidated financial
statements.
<PAGE>
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets
May 31, 1998 and 1997
Dollars in thousands except per share data
LIABILITIES AND SHAREHOLDERS' EQUITY
1998 1997
Current Liabilities
Accounts payable, trade $ 12,872 $ 9,742
Accrued salaries and wages 5,579 5,194
Accrued profit sharing 2,760 2,659
Accrued marketing programs 9,271 8,068
Accrued warranty expense 8,216 7,368
Other accrued liabilities 5,139 4,906
Income taxes 2,460 649
Total Current Liabilities 46,297 38,586
Other Deferred Liabilities 3,184 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 219,343 205,126
Treasury stock, at cost, 1,784,000
shares in 1998 and 1,551,000
shares in 1997 (41,060) (34,145)
Total Shareholders' Equity 183,523 176,221
$233,004 $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 Years Ended May 31, 1998, 1997, and 1996
Dollars in thousands except per share data
1998 1997 1996
EARNINGS
Sales $623,395 $613,191 $645,956
Cost of sales 513,643 507,045 533,723
Gross profit 109,752 106,146 112,233
Selling and administrative
expenses 82,482 79,023 84,680
Operating earnings 27,270 27,123 27,553
Interest income 6,233 6,047 6,192
(Loss) gain on sale of property,
plant and equipment (164) 1,532 (793)
Earnings before income taxes 33,339 34,702 32,952
Provision for income taxes
Federal 11,107 11,381 10,800
State 2,286 2,490 2,469
13,393 13,871 13,269
Net earnings $ 19,946 $ 20,831 $ 19,683
Basic earnings per share $ 2.10 $ 2.07 $ 1.84
Weighted average common shares
outstanding 9,511,023 10,070,383 10,710,511
RETAINED EARNINGS
Balance at beginning of year $205,126 $190,393 $176,187
Add net earnings 19,946 20,831 19,683
Less cash dividends paid ($.60
per share in 1998 and 1997
and $.51 per share in
1996) 5,729 6,098 5,477
Balance at end of year $219,343 $205,126 $190,393
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, 1998, 1997, and 1996
Increase (Decrease) in Cash
Dollars in Thousands
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 19,946 $ 20,831 $ 19,683
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Interest income earned on
U.S. Treasury Bills and Notes (6,233) (6,047) (6,192)
Depreciation 3,775 3,745 3,479
Amortization of discount or premium
on U.S. Treasury Notes (51) (41) 10
Loss (gain) on sale of property,
plant and equipment 164 (1,532) 793
Working capital items:
Accounts receivable 462 5,367 (3,353)
Inventories 838 629 4,183
Other current assets 1,032 747 (2,179)
Accounts payable, trade 3,130 (507) 287
Accrued liabilities 2,770 (1,634) 7,425
Income taxes payable 1,811 (2,379) 2,148
Other assets (184) (225) (207)
Other deferred liabilities 124 97 477
Total Adjustments 7,638 (1,780) 6,871
Net cash provided by operating
activities 27,584 19,051 26,554
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, 1998, 1997, and 1996
Increase (Decrease) in Cash
Dollars in Thousands
1998 1997 1996
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale or maturity
of U.S. Treasury Bills 452,570 499,845 252,486
Proceeds from maturity of
U.S. Treasury Notes 30,000 30,000 -
Purchase of U.S. Treasury Bills (494,538) (522,677) (265,162)
Interest received from
U.S. Treasury Notes 1,144 2,200 3,644
Proceeds from sale of property,
plant and equipment 131 2,520 555
Purchase of property, plant
and equipment (3,069) (3,285) (2,971)
Net cash (used in) provided by
investing activities (13,762) 8,603 (11,448)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (5,729) (6,098) (5,477)
Purchase of treasury stock (6,915) (22,779) (9,671)
Net cash used in financing
activities (12,644) (28,877) (15,148)
Net increase (decrease) in cash 1,178 (1,223) (42)
Cash at beginning of year 9,489 10,712 10,754
Cash at end of year $ 10,667 $ 9,489 $ 10,712
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 $12.3 million, $16.1
million and $13.0 million in 1998, 1997 and 1996, 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.
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.
<PAGE>
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies, continued
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):
Gross Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
May 31, 1998
U.S. Treasury Bills 118,116 - - 118,116
U.S. Treasury Notes - - - -
Total 118,116 - - 118,116
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
At May 31, 1998, the U.S. Treasury Bills mature within one year. 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.
Earnings Per Share -- SFAS No. 128, "Earnings per Share," was
adopted in the third fiscal quarter of 1998. The Statement establishes
standards for computing earnings per share (EPS) by replacing the
Corporation's presentation of primary EPS with the presentation of basic
EPS. Basic EPS is calculated by dividing net income by the weighted
average number of common shares outstanding. All current and prior year
EPS amounts reflect the adoption of this new accounting standard.
Comprehensive Income -- SFAS No. 130, "Reporting Comprehensive Income,"
was issued in the first quarter of fiscal 1998, establishing standards
for reporting comprehensive income. Comprehensive income consists of
net income and other comprehensive income, defined as revenues,
expenses, gains, and losses recorded directly to equity. This statement
is not applicable to the Corporation because it does not have components
that are currently considered other comprehensive income, such as
foreign currency items, pension liability adjustments, or certain
investments in debt and equity securities.
<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies, continued
Segment Information -- SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," was issued in June 1997.
This statement, which the Corporation will adopt in fiscal 1999,
establishes standards for the way public enterprises report segment
information in both interim and annual financial statements. The
Corporation anticipates that segment information reported upon the
adoption of this statement will be similar to that which is currently
reported.
The Corporation has determined that the effects on the financial
statements from any other recently issued accounting standards will not
be material.
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, 1998 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.
NOTE 3 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 1998 the Corporation
acquired 233,000 shares of its common stock for $6,915,000, in fiscal
1997 it acquired 906,400 shares for $22,779,000, and in fiscal 1996 it
acquired 548,100 shares for $9,671,000. The effect of the aggregate
repurchases on basic earnings per share was $.32 per share in 1998, $.21
per share in 1997 and $.08 per share in 1996. At May 31, 1998, the
Corporation had authorization to repurchase an additional 433,144 shares
of its common stock.
NOTE 4 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, 1998, 1997 and 1996, contributions to the Plans were
$2,661,000, $2,575,000 and $2,594,000, respectively.
<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 4 Employee Benefits, continued
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 1998
and 1997 and 7.5% in 1996. The amount charged to operations under these
arrangements was $285,000 in fiscal 1998, 1997 and 1996.
<PAGE>
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 5 Industry Segment Information
Dollars in thousands
1998 1997 1996
SALES
Manufactured housing $510,465 $494,691 $542,519
Recreational vehicles 112,930 118,500 103,437
Total sales $623,395 $613,191 $645,956
EARNINGS BEFORE INCOME TAXES
OPERATING EARNINGS
Manufactured housing $ 27,849 $ 27,167 $ 32,297
Recreational vehicles 4,050 4,550 (79)
General corporate expenses (4,629) (4,594) (4,665)
Total operating earnings 27,270 27,123 27,553
Interest income 6,233 6,047 6,192
(Loss) gain on sale of
property, plant and equipment (164) 1,532 (793)
Earnings before income taxes $ 33,339 $ 34,702 $ 32,952
IDENTIFIABLE ASSETS
OPERATING ASSETS
Manufactured housing $ 95,859 $ 96,100 $105,704
Recreational vehicles 19,029 20,759 20,344
Total operating assets 114,888 116,859 126,048
U.S. TREASURY BILLS 118,116 71,059 44,381
U.S. TREASURY NOTES - 29,949 59,907
Total assets $233,004 $217,867 $230,336
DEPRECIATION
Manufactured housing $ 3,255 $ 3,171 $ 2,995
Recreational vehicles 520 574 484
Total depreciation $ 3,775 $ 3,745 $ 3,479
CAPITAL EXPENDITURES
Manufactured housing $ 2,713 $ 3,003 $ 2,804
Recreational vehicles 356 282 167
Total capital expenditures $ 3,069 $ 3,285 $ 2,971
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
Financial Summary By Quarter
Unaudited
Dollars in thousands except per share data
1998 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Sales $161,632 $160,279 $131,390 $170,094 $623,395
Gross profit 28,541 28,136 20,898 32,177 109,752
Net earnings 5,474 5,355 2,137 6,980 19,946
Basic earnings per
share .57 .56 .23 .74 2.10
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
Basic earnings per
share .62 .62 .18 .65 2.07
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 67 Chairman of the Board and
Chief Executive Officer
Ronald F. Kloska 64 Vice Chairman, Deputy Chief
Executive Officer and Chief
Administration Officer
William H. Murschel 53 President - Chief
Operations Officer
Terrence M. Decio 46 Senior Executive Vice
President
Charles W. Chambliss 48 Vice President - Product
Development and Engineering
Christopher R. Leader 39 Vice President - Operations
James R. Weigand 43 Vice President - Finance &
Treasurer and Chief
Financial Officer
Jon S. Pilarski 35 Controller
<PAGE>
Arthur J. Decio, Chairman of the Board and Chief Executive
Officer, has been the Corporations's Chairman and Chief
Executive Officer since its incorporation in 1959.
Ronald F. Kloska, Vice Chairman, Deputy Chief Executive Officer
and Chief Administration Officer, joined the Corporation 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 Corporation 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
Corporation in 1973. He was elected Vice President in 1985, Senior Vice
President in 1991, and Senior Executive Vice President in 1993.
Charles W. Chambliss, Vice President - Product Development and
Engineering, joined the Corporation in 1973 and was elected
Vice President in 1996.
Christopher R. Leader, Vice President - Operations, joined the
Corporation and was elected Vice President in 1997. He was
previously Vice President - Operations of Trek Bicycle Corporation from
October 1994 to 1996. From 1993 to September 1994 he was employed at the
Ford Motor Corporation as a Vehicle Evaluation Manager and Production
Manager. Trek Bicycle Corporation and the Ford Motor Company are not
affiliated with the Corporation.
James R. Weigand, Vice President - Finance & Treasurer and Chief Financial
Officer, joined the Corporation in 1991 as Controller. He was elected an
officer in 1994 and Vice President-Finance & Treasurer and Chief Financial
Officer in 1997.
Jon S. Pilarski, Controller, joined the Corporation in 1994 as General
Accounting Manager and was elected Controller in 1997.
He was previously employed as a cost accountant at Zenith Data Systems.
Zenith Data Systems is not affiliated with the Corporation.
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) (i) Articles of Incorporation
(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, 1998.<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, 1998 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, 1998 BY:
Arthur J. Decio, Chairman of
the Board and Chief Executive
Officer
DATE: July 17, 1998 BY:
William H. Murschel, President
and Chief Operations Officer
and Director
DATE: July 17, 1998 BY:
Terrence M. Decio, Senior
Executive Vice President and
Director
DATE: July 17, 1998 BY:
James R. Weigand, Vice
President - Finance &
Treasurer and Chief Financial
Officer
DATE: July 17, 1998 BY:
Jon S. Pilarski, Controller
DATE: July 17, 1998 BY:
Jerry Hammes, Director
DATE: July 17, 1998 BY:
William H. Lawson, Director
DATE: July 17, 1998 BY:
David Link, Director
DATE: July 17, 1998 BY:
Andrew J. McKenna, Director
DATE: July 17, 1998 BY:
V. Dale Swikert, Director
<PAGE>
EXHIBIT (3) (i)
Articles of Incorporation
No changes were made to the Articles of Incorporation during the fiscal
year ended May 31, 1998. The Articles of Incorporation were filed with
and are incorporated by reference from the Corporation's Form 10-K for
the fiscal year ended May 31, 1996.<PAGE>
EXHIBIT (3) (ii)
By-Laws
No changes were made to the By-Laws during the fiscal year ended
May 31, 1998. The By-Laws were filed with and are incorporated by
reference from the Corporation's Form 10K for the fiscal year ended May
31, 1997.<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 Corporation'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>
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<NAME> SKYLINE CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> MAY-31-1998
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<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 183211
<TOTAL-LIABILITY-AND-EQUITY> 233004
<SALES> 623395
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