Skyline Champion (SKY) 10-Q 12 Apr 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Mar. 04, 2018	Apr. 12, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 4, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Trading Symbol	SKY
Entity Registrant Name	SKYLINE CORP
Entity Central Index Key	90,896
Current Fiscal Year End Date	--05-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		8,391,244

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 04, 2018	May 31, 2017
Current Assets:
Cash	$ 14,090	$ 11,384
Accounts receivable	14,345	12,751
Inventories	13,046	12,233
Workers' compensation security deposit	800	371
Other current assets	820	563
Total Current Assets	43,101	37,302
Property, Plant and Equipment, at Cost:
Land	2,016	2,965
Buildings and improvements	36,092	35,368
Machinery and equipment	16,715	16,364
Property, Plant and Equipment gross	54,823	54,697
Less accumulated depreciation	44,191	43,721
Net Property, Plant and Equipment	10,632	10,976
Other Assets	4,705	7,366
Total Assets	58,438	55,644
Current Liabilities:
Accounts payable, trade	5,240	3,861
Accrued salaries and wages	3,350	3,530
Accrued volume rebates	3,306	1,986
Accrued warranty	3,811	4,757
Customer deposits	1,480	1,880
Other accrued liabilities	2,342	2,371
Total Current Liabilities	19,529	18,385
Long-Term Liabilities:
Deferred compensation expense	4,801	4,848
Accrued warranty	2,800	2,800
Life insurance loans		4,312
Total Long-Term Liabilities	7,601	11,960
Commitments and Contingencies - See Note 7
Shareholders' Equity:
Common stock, $.0277 par value, 15,000,000 shares authorized; issued 11,217,144 shares	312	312
Additional paid-in capital	5,391	5,171
Retained earnings	91,349	85,560
Treasury stock, at cost, 2,825,900 shares	(65,744)	(65,744)
Total Shareholders' Equity	31,308	25,299
Total Liabilities and Shareholders' Equity	$ 58,438	$ 55,644

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 04, 2018	May 31, 2017
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0277	$ 0.0277
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	11,217,144	11,217,144
Treasury stock, shares	2,825,900	2,825,900

Consolidated Income Statements

Consolidated Income Statements - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017	Mar. 04, 2018	Feb. 28, 2017
OPERATIONS
Net sales	$ 57,978	$ 51,640	$ 174,205	$ 177,042
Cost of sales	49,832	48,421	149,762	162,013
Gross profit	8,146	3,219	24,443	15,029
Selling and administrative expenses	6,913	5,581	19,157	17,070
Net gain on sale of property, plant and equipment			702
Operating income (loss)	1,233	(2,362)	5,988	(2,041)
Interest expense	(15)	(85)	(199)	(257)
Income tax expense	0	0	0	0
Net income (loss)	$ 1,218	$ (2,447)	$ 5,789	$ (2,298)
Basic income (loss) per share	$ 0.15	$ (0.29)	$ 0.69	$ (0.27)
Diluted income (loss) per share	$ 0.14	$ (0.29)	$ 0.68	$ (0.27)
Weighted average number of common shares outstanding:
Basic	8,391,244	8,391,244	8,391,244	8,391,244
Diluted	8,627,332	8,391,244	8,574,146	8,391,244

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 5,789	$ (2,298)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation	558	779
Amortization of debt financing costs	99	77
Share-based compensation	220	107
Cancellation of life insurance policies	2,546
Net gain on sale of property, plant and equipment	(702)
Change in assets and liabilities:
Accounts receivable	(1,594)	296
Inventories	(813)	(2,238)
Workers' compensation security deposit	(429)	604
Other current assets	(257)	(445)
Accounts payable, trade	1,379	(145)
Accrued liabilities	(235)	1,803
Other, net	20	170
Net cash from operating activities	6,581	(1,290)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment	1,651
Purchase of property, plant and equipment	(1,170)	(1,094)
Other, net	(44)	(43)
Net cash from investing activities	437	(1,137)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of life insurance loans	(4,312)
Net cash from financing activities	(4,312)
Net increase (decrease) in cash	2,706	(2,427)
Cash at beginning of period	11,384	7,659
Cash at end of period	$ 14,090	$ 5,232

Basis of Presentation

Basis of Presentation	9 Months Ended
	Mar. 04, 2018
Accounting Policies [Abstract]
Basis of Presentation	NOTE 1 Basis of Presentation 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 March 4, 2018, in addition to the consolidated results of operations and cash flows for the three-month and nine-month periods ended March 4, 2018 and February 28, 2017. Due to the seasonal nature of the Corporation’s business, interim results are not necessarily indicative of results for the entire year. Effective June 1, 2017, the Corporation adopted a 52-53 The unaudited interim consolidated financial statements included herein have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. 10-K. Recently issued accounting pronouncements — No. 2014-09, Revenue from Contracts with Customers (Topic 606) No. 2014-09, No. 2015-14, 2014-09 The core principal of ASU 2014-09 • Identify the contract(s) with a customer; • Identify each performance obligation in the contract; • Determine the transaction price; • Allocate the transaction price to each performance obligation; and • Recognize revenue when or as each performance obligation is satisfied. The Corporation’s revenue comes substantially from the sale of manufactured housing, modular housing and park models, along with freight billed to customers, parts sold and aftermarket services. Recently issued accounting pronouncements — (continued) 2014-09 The Corporation, however, does expect to greatly increase the amount of required disclosures, including but not limited to: • Disaggregation of revenue in to categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors; • The opening and closing balances of receivables, contract assets, and contract liabilities from contracts with customers, if not otherwise separately presented or disclosed; • Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period; • Information about performance obligations in contracts with customers; and • Judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers, including the timing of satisfaction of performance obligation, and the transaction price and the amounts allocation to performance obligations.

Inventories

Inventories	9 Months Ended
	Mar. 04, 2018
Inventory Disclosure [Abstract]
Inventories	NOTE 2 Inventories Total inventories consist of the following: March 4, 2018 May 31, 2017 (Unaudited) (Dollars in thousands) Raw materials $ 8,876 $ 7,734 Work in process 3,762 4,030 Finished goods 408 469 $ 13,046 $ 12,233

Other Assets

Other Assets	9 Months Ended
	Mar. 04, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other Assets	NOTE 3 Other Assets Other assets consist primarily of the cash surrender value of life insurance policies which totaled $4,598,000 and $7,093,000 at March 4, 2018 and May 31, 2017, respectively. In the third quarter of fiscal 2018, life insurance policies with cash surrender value of approximately $2,546,000 were cancelled. Proceeds from the cash surrender value were used to repay outstanding life insurance loans.

Warranty

Warranty	9 Months Ended
	Mar. 04, 2018
Guarantees and Product Warranties [Abstract]
Warranty	NOTE 4 Warranty A reconciliation of accrued warranty is as follows: Nine-Months Ended March 4, 2018 February 28, 2017 (Unaudited) (Dollars in thousands) Balance at the beginning of the period $ 7,557 $ 7,317 Accruals for warranties 4,690 6,078 Settlements made during the period (5,636 ) (5,209 ) Balance at the end of the period 6,611 8,186 Non-current 2,800 2,500 Accrued warranty $ 3,811 $ 5,686

Life Insurance Loans

Life Insurance Loans	9 Months Ended
	Mar. 04, 2018
Investments, All Other Investments [Abstract]
Life Insurance Loans	NOTE 5 Life Insurance Loans Life insurance loans have no fixed repayment schedule, and have interest rates ranging from 4.2 percent to 4.8 percent. The weighted average interest rate is 4.5 percent. In the second and third quarters of fiscal 2018, all loan balances totaling $4,312,000 were repaid.

Income Taxes

Income Taxes	9 Months Ended
	Mar. 04, 2018
Income Tax Disclosure [Abstract]
Income Taxes	NOTE 6 Income Taxes At March 4, 2018, the Corporation’s deferred tax assets of approximately $32.0 million consist of approximately $20.1 million in federal net operating loss and tax credit carryforwards, $7.2 million in state net operating loss carryforwards and $4.7 million resulting from temporary differences between financial and tax reporting. The federal net operating loss and tax credit carryforwards have a useful life ranging from ten to twenty years. The state net operating loss carryforwards have a useful life, depending on the state where a loss was incurred, ranging from one to twenty years. The Corporation has revalued the deferred tax account balances in accordance with the Tax Cuts and Jobs Act (TCJA) enacted December 22, 2017. The revaluation resulted in a $14.6 million decrease in both the net deferred tax assets and the valuation allowance account balances. The Corporation has recorded a full valuation allowance against this asset. If the Corporation, after considering future negative and positive evidence regarding the realization of deferred tax assets, determines that a lesser valuation allowance is warranted, it would record a reduction to income tax expense and the valuation allowance in the period of determination. The Corporation had no federal and state income tax benefit or expense for the quarters ended March 4, 2018 and February 28, 2017. For the first nine months of fiscal 2018, the Corporation reported the utilization of previously fully-reserved federal net operating loss carryforwards of $1,775,000 and state operating loss carryforwards of $412,000 and released corresponding amounts of the valuation allowance to offset federal and state income tax expense.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Mar. 04, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 7 Commitments and Contingencies The Corporation was contingently liable at March 4, 2018 and May 31, 2017, under repurchase agreements with certain financial institutions providing inventory financing for dealers of its products. Under these arrangements, which are customary in the manufactured housing and park model industries, the Corporation agrees to repurchase units in the event of default by the dealer at declining prices over the term of the agreement. The period to potentially repurchase units is between 12 to 24 months. The maximum repurchase liability is the total amount that would be paid upon the default of the Corporation’s independent dealers. The maximum potential repurchase liability, without reduction for the resale value of the repurchased units, was approximately $29 million at March 4, 2018 and $30 million at May 31, 2017. As a result of the Corporation’s favorable experience regarding repurchased units, which is largely due to the strength of dealers selling the Corporation’s products, the Corporation maintained at March 4, 2018 and May 31, 2017, a $100,000 loss reserve that is a component of other accrued liabilities. The risk of loss under these agreements is spread over many dealers and financial institutions. The loss, if any, under these agreements is the difference between the repurchase cost and the resale value of the units. The Corporation estimates the fair value of this commitment considering both the contingent losses and the value of the guarantee. This amount has historically been insignificant. The Corporation believes that any potential loss under the agreements in effect at March 4, 2018 will not be material to its financial position or results of operations. There were no obligations or incurred net losses from repurchased units for the nine-month periods ended March 4, 2018 and February 28, 2017. 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. The Corporation utilizes a combination of insurance coverage and self-insurance for certain items, including workers’ compensation and group health benefits. Liabilities for workers’ compensation are recognized for estimated future medical costs and indemnity costs. Liabilities for group health benefits are recognized for claims incurred but not paid. Insurance reserves are estimated based upon a combination of historical data and actuarial information. Actual results could differ from these estimates.

Secured Revolving Credit Facili

Secured Revolving Credit Facility	9 Months Ended
	Mar. 04, 2018
Debt Disclosure [Abstract]
Secured Revolving Credit Facility	NOTE 8 Secured Revolving Credit Facility On March 20, 2015, the Corporation (“Borrower(s)”) entered into a Loan and Security Agreement (the “Loan Agreement”) with First Business Capital Corp. (“First Business Capital”). Under the Loan Agreement, First Business Capital provided a secured revolving credit facility to the Borrowers for a term of three years, renewable on an annual basis thereafter with each renewal for a successive one-year The Corporation was able to obtain loan advances up to a maximum of $10,000,000 subject to certain collateral-obligation ratios. On July 21, 2017, the Corporation terminated the Loan Agreement in connection with its entry into a new Credit Agreement with JPMorgan Chase Bank, N.A. (“Chase”) having terms more favorable to the Corporation. As of the date of termination, the Corporation did not have any borrowings outstanding under the Loan Agreement. In addition, the Corporation did not incur any early termination penalties in connection with the termination of the Loan Agreement. As previously referenced, the Corporation (the “Loan Parties,” and Skyline Corporation and Skyline Homes, Inc., the “Borrowers” and each a “Borrower”) entered into a Credit Agreement (the “Agreement”) with Chase and other ancillary agreements and documents, including a Security Agreement and Patent and Trademark Security Agreement (collectively referred to along with the Agreement as the “Loan Documents”). Under the Agreement, Chase will provide a three-year revolving credit facility with loan advances to the Borrowers of up to a maximum of $10,000,000, subject to a borrowing base set forth in the Agreement (the “New Facility”). Loan advances bear interest at either 50 basis points above Chase’s floating prime rate (“CBFR”) or 150 basis points in excess of the LIBOR rate for the applicable period (the “Adjusted LIBO Rate”). Loans are secured by the Loan Parties’ assets, now owned or hereafter acquired, except for real property and any life insurance policies owned by any Borrower on the effective date of the Agreement. Interest is payable in arrears on a monthly basis in the case of the CBFR or at the end of the applicable interest rate in the case of the Adjusted LIBO Rate, and all principal and accrued but unpaid interest is due and payable at the maturity of the New Facility. Borrowers may at any time prepay in whole or in part any loan amounts, subject to minimum amounts and breakage costs. Also, under the Agreement, Chase agreed to issue letters of credit for the account of the Borrowers not to exceed $500,000. No advances have yet been made in connection with such letters of credit. As part of the closing of the financing, the Company paid Chase a closing fee of $25,000 plus legal and due diligence costs. The Loan Parties also agreed to pay the following fees to Chase during the term of the New Facility: (i) a commitment fee payable in arrears at a rate of .25% per annum on the average daily amount of the available revolving commitment under the New Facility during the prior calendar month; and (ii) monthly letter of credit fees payable in arrears at the applicable Adjusted LIBO Rate on the outstanding amount of letters of credit issued and outstanding during the prior month. The Loan Documents contain covenants that limit the ability of the Loan Parties to, among other things: (i) incur other indebtedness; (ii) create or incur liens on their assets; (iii) consummate asset sales, acquisitions, or mergers; (iv) pay dividends; (v) make certain investments; (vi) enter into certain transactions with affiliates; and (vii) amend a Loan Party’s articles of incorporation or bylaws. The Agreement also requires compliance with a financial covenant involving a fixed charge coverage ratio as set forth in the Agreement, which becomes effective when borrowing on the revolving credit facility is outstanding. If the Borrowers default in their obligations under the Agreement, then the unpaid balances will bear interest at 2.0% per annum in excess of the rate that would apply in the absence of a default. Other remedies available to Chase upon an event of default include the right to accelerate the maturity of all obligations, the right to foreclose on and otherwise repossess the collateral securing the obligations, and all other rights set forth in the Loan Documents. The events of default under the Agreement include, but are not limited to, the following: (i) certain events of bankruptcy and insolvency; (ii) failure to make required payments; (iii) misrepresentations to Chase; (iv) failure to comply with certain covenants and agreements; (v) changes in control; and (vi) a material adverse change occurs. The Corporation was in compliance as of March 4, 2018 with covenants associated with the Agreement.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Mar. 04, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	NOTE 9 Stock-Based Compensation In fiscal 2016, the Corporation’s Board of Directors and shareholders approved the 2015 Stock Incentive Plan (“Plan”), which allows the granting of stock options and other equity awards to directors, officers, employees, and eligible independent contractors of the Corporation and is intended to retain and reward key employees’ performance and efforts as they relate to the Corporation’s long-term objectives and strategic plan. A total of 700,000 shares of Common Stock have been reserved for issuance under the Plan. Stock option awards are granted with an exercise price equal to, or greater than, the market price of the Corporation’s stock at the date of grant and vest over a period of time as determined by the Corporation at the date of grant up to the contractual ten-year Stock Options – The following unaudited tables summarize option activity for the nine-months ended March 4, 2018. Number Shares Weighted Weighted Aggregate (in Options outstanding at May 31, 2017 274,000 $ 4.79 8.40 $ 128 Granted 57,000 6.15 Options outstanding at March 4, 2018 331,000 $ 5.03 7.94 $ 5,466 Vested and exercisable options at March 4, 2018 99,800 $ 4.11 7.08 $ 1,739 Number Weighted Grant-Date Non-vested 229,000 $ 3.34 Granted 57,000 3.86 Vested (54,800 ) 2.35 Non-vested 231,200 $ 3.51 Stock-based compensation expense for the third quarter of fiscal 2018 and 2017 was approximately $53,000 and $39,000, respectively. Stock-based compensation for the first nine months of fiscal 2018 and 2017 was approximately $158,000 and $101,000, respectively. Total unrecognized compensation expense related to stock options outstanding at March 4, 2018 was approximately $698,000 and is to be recorded over a weighted-average life of 2.90 years. The Corporation records all stock-based payments, including grants of stock options, in the consolidated statements of operations based on their fair values at the date of grant. The Corporation currently uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by stock price as well as assumptions that include expected stock price volatility over the term of the awards, expected life of the awards, risk-free interest rate, and expected dividends. The fair value of the options granted during the first nine months of fiscal 2018 and 2017 were estimated at the date of grant using the following weighted average assumptions: 2018 2017 Volatility 65.9 % 64.3 % Risk-free interest rate 2.13 % 2.14 % Expected option life in years 7.50 7.50 Dividend yield 0 % 0 % Volatility is estimated based on historical volatility measured monthly for a time period equal to the expected life of the option ending on the date of grant. The risk-free interest rate is determined based on observed U.S. Treasury yields in effect at the time of the grant for maturities equivalent to the expected life of the options. The expected option life (estimated average period of time the options will be outstanding) is estimated based on the expected exercise date of the options. The expected dividend yield of zero is estimated based on the dividend yield at the time of grant as adjusted for any expected changes during the life of the options. Restricted Stock – In the first quarter of fiscal 2018 and third quarter of fiscal 2017, the Corporation issued 36,000 shares and 15,000 shares of restricted stock valued at approximately $221,000 and $216,000, respectively. No restricted stock was vested at March 4, 2018, and the non-vested

Earnings Per Share

Earnings Per Share	9 Months Ended
	Mar. 04, 2018
Earnings Per Share [Abstract]
Earnings Per Share	NOTE 10 Earnings Per Share Basic earnings per common share is computed based on the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed based on the combination of dilutive common share equivalents, comprised of shares issuable under the Corporation’s Stock Incentive Plan and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): Three-Months Ended Nine-Months Ended March 4, February 28, March 4, February 28, 2018 2017 2018 2017 (Unaudited) Net income (loss) $ 1,218 $ (2,447 ) $ 5,789 $ (2,298 ) Weighted average share outstanding: Basic 8,391,244 8,391,244 8,391,244 8,391,244 Common stock equivalents - treasury stock method 236,088 — 182,902 — Diluted 8,627,332 8,391,244 8,574,146 8,391,244 Net income (loss) per share: Basic $ .15 $ (.29 ) $ .69 $ (.27 ) Diluted $ .14 $ (.29 ) $ .68 $ (.27 ) There were 4,234 and 175,484 anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three-months ended March 4, 2018 and February 28, 2017, respectively. There were 21,413 and 161,368 anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the nine-months ended March 4, 2018 and February 28, 2017.

Net Gain on Sale of Property, P

Net Gain on Sale of Property, Plant and Equipment	9 Months Ended
	Mar. 04, 2018
Property, Plant and Equipment [Abstract]
Net Gain on Sale of Property, Plant and Equipment	NOTE 11 Net Gain on Sale of Property, Plant and Equipment In the first quarter of fiscal 2018, the Corporation sold a non-income non-income

Share Contribution and Exchange

Share Contribution and Exchange Agreement	9 Months Ended
	Mar. 04, 2018
Text Block [Abstract]
Share Contribution and Exchange Agreement	NOTE 12 Share Contribution and Exchange Agreement The Exchange On January 5, 2018, the Corporation (“ Skyline Company Champion Holdings Exchange Agreement Under the Exchange Agreement, (i) Champion Holdings will contribute to Skyline all of the issued and outstanding shares of common stock of Champion Holdings’ wholly-owned operating subsidiaries through the contribution of all of the issued and outstanding equity interests of each of Champion Home Builders, Inc., a Delaware corporation (“ CHB CIBV Contributed Shares Shares Issuance Exchange Immediately prior to the closing of the Exchange, Skyline will amend and restate its articles of incorporation to provide for, among other things, (i) the change in the name of the Company as described above; (ii) an increase in the number of authorized shares of common stock of the Company from 15,000,000 to 115,000,000 shares; (iii) a provision stating that the number of directors shall be as specified in the Company’s bylaws; and (iv) certain other ministerial revisions to update and modernize the articles of incorporation and remove various extraneous provisions (collectively, the “ Company Charter Amendment The Exchange is expected to close as soon as practicable after the satisfaction or waiver of all the conditions to the closing in the Exchange Agreement, which is currently expected to be in the first half of 2018. Representations and Warranties; Covenants Each of Skyline and Champion Holdings makes customary representations and warranties in the Exchange Agreement. Skyline also has agreed to various covenants in the Exchange Agreement, including, without limitation, to cause a special meeting of Skyline’s shareholders to be held as promptly as practicable to consider and approve the Company Charter Amendment and the Shares Issuance (the “ Company Shareholder Approval Matters SEC The Exchange Agreement contains customary covenants governing the conduct of Skyline’s and Champion Holdings’ respective businesses, access to information pertaining to the parties’ businesses, and notification of certain events, among other things, between the date of the Exchange Agreement and the closing. Pursuant to the Exchange Agreement, Skyline is subject to customary “no-shop” restrictions The Exchange Agreement provides that, prior to the closing of the Exchange, Skyline may declare and pay a special cash dividend to its shareholders in the aggregate amount of Skyline’s “net cash” (generally defined in the Exchange Agreement as Skyline’s aggregate cash and cash equivalents, less the aggregate amount of Skyline’s indebtedness and debt-like items, and less Skyline’s aggregate transaction expenses incurred in connection with the Exchange, each as determined as of the close of business on the last business day immediately prior to the date Skyline gives notice of the special dividend to the NYSE American), if any. If declared, Skyline must pay the special dividend at least one business day prior to the closing date. Closing Conditions Consummation of the Exchange is subject to various conditions, including, without limitation, (i) approval by Skyline’s shareholders of the Company Shareholder Approval Matters; (ii) the receipt of all required regulatory approvals (without the imposition of any burdensome divestiture condition on the parties, as described in the Exchange Agreement); (iii) the absence of any law, order, or legal injunction which prohibits the consummation of the Exchange and the absence of certain other litigation matters; (iv) the NYSE American listing application for the Company’s shares to be issued in the Shares Issuance shall have been conditionally approved; (v) the accuracy of the parties’ respective representations and warranties and the performance of their respective obligations; (vi) the absence of the occurrence of a material adverse effect with respect to each of Skyline and Champion Holdings, and their subsidiaries, each taken as a whole, between the date of the Exchange Agreement and closing; and (vii) certain other customary conditions. Termination and Termination Fees The Exchange Agreement contains certain termination rights in favor of Skyline and Champion Holdings, as set forth therein. Upon the termination of the Exchange Agreement under specified circumstances, and upon Skyline entering into or closing another acquisition transaction within 12 months after termination of the Exchange Agreement, Skyline may be required to pay Champion Holdings a termination fee of $10 million. Any termination fee triggered under the Exchange Agreement will accrue upon Skyline entering into or closing another acquisition transaction within 12 months after termination, but the fee is not payable by Skyline to Champion Holdings until two business days after the date that the other acquisition closes or is terminated unless the board of directors of Skyline adversely changes its favorable recommendation of the Exchange to its shareholders and Champion Holdings terminates the Exchange Agreement as a result of such change in recommendation, in which case, a termination fee of $3 million in cash is immediately due and payable by Skyline to Champion Holdings upon such termination, and if Skyline subsequently enters into or closes another acquisition transaction within 12 months after termination, an additional $7 million cash termination fee would accrue and would become payable two business days after the date that the other acquisition closes or is terminated. In addition to the termination fee, if the Exchange Agreement is terminated by either Skyline or Champion Holdings because of Skyline’s shareholders do not approve the Company Shareholder Approval Matters, then Skyline must pay Champion Holdings $2 million as reimbursement for fees and expenses incurred by Champion Holdings in connection with the Exchange Agreement. Any expense reimbursement paid by Skyline will be credited against, and thereby reduce, any termination fee that may become due and payable. The foregoing descriptions of the Exchange Agreement, the Exchange, and the Shares Issuance are summaries, do not purport to be complete, and are qualified in their entirety by reference to the full text of the Exchange Agreement, and the exhibits attached thereto, copies of which are attached as Exhibits 2.1 to the Current Report on Form 8-K filed

Basis of Presentation (Policies

Basis of Presentation (Policies)	9 Months Ended
	Mar. 04, 2018
Accounting Policies [Abstract]
Recently Issued Accounting Pronouncements	Recently issued accounting pronouncements — No. 2014-09, Revenue from Contracts with Customers (Topic 606) No. 2014-09, No. 2015-14, 2014-09 The core principal of ASU 2014-09 • Identify the contract(s) with a customer; • Identify each performance obligation in the contract; • Determine the transaction price; • Allocate the transaction price to each performance obligation; and • Recognize revenue when or as each performance obligation is satisfied. The Corporation’s revenue comes substantially from the sale of manufactured housing, modular housing and park models, along with freight billed to customers, parts sold and aftermarket services. Recently issued accounting pronouncements — (continued) 2014-09 The Corporation, however, does expect to greatly increase the amount of required disclosures, including but not limited to: • Disaggregation of revenue in to categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors; • The opening and closing balances of receivables, contract assets, and contract liabilities from contracts with customers, if not otherwise separately presented or disclosed; • Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period; • Information about performance obligations in contracts with customers; and • Judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers, including the timing of satisfaction of performance obligation, and the transaction price and the amounts allocation to performance obligations.

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Mar. 04, 2018
Inventory Disclosure [Abstract]
Schedule of Inventories	Total inventories consist of the following: March 4, 2018 May 31, 2017 (Unaudited) (Dollars in thousands) Raw materials $ 8,876 $ 7,734 Work in process 3,762 4,030 Finished goods 408 469 $ 13,046 $ 12,233

Warranty (Tables)

Warranty (Tables)	9 Months Ended
	Mar. 04, 2018
Guarantees and Product Warranties [Abstract]
Reconciliation of Accrued Warranty	A reconciliation of accrued warranty is as follows: Nine-Months Ended March 4, 2018 February 28, 2017 (Unaudited) (Dollars in thousands) Balance at the beginning of the period $ 7,557 $ 7,317 Accruals for warranties 4,690 6,078 Settlements made during the period (5,636 ) (5,209 ) Balance at the end of the period 6,611 8,186 Non-current 2,800 2,500 Accrued warranty $ 3,811 $ 5,686

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Mar. 04, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Option Activity	The following unaudited tables summarize option activity for the nine-months ended March 4, 2018. Number Shares Weighted Weighted Aggregate (in Options outstanding at May 31, 2017 274,000 $ 4.79 8.40 $ 128 Granted 57,000 6.15 Options outstanding at March 4, 2018 331,000 $ 5.03 7.94 $ 5,466 Vested and exercisable options at March 4, 2018 99,800 $ 4.11 7.08 $ 1,739
Summary of Non-vested Options Activity	Number Weighted Grant-Date Non-vested 229,000 $ 3.34 Granted 57,000 3.86 Vested (54,800 ) 2.35 Non-vested 231,200 $ 3.51
Fair Value of Options Granted Estimated at Date of Grant Using Weighted Average Assumptions	The fair value of the options granted during the first nine months of fiscal 2018 and 2017 were estimated at the date of grant using the following weighted average assumptions: 2018 2017 Volatility 65.9 % 64.3 % Risk-free interest rate 2.13 % 2.14 % Expected option life in years 7.50 7.50 Dividend yield 0 % 0 %

Earnings Per Share (Tables)

Earnings Per Share (Tables)	9 Months Ended
	Mar. 04, 2018
Earnings Per Share [Abstract]
Computation of Basic and Diluted Earnings Per Share	The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): Three-Months Ended Nine-Months Ended March 4, February 28, March 4, February 28, 2018 2017 2018 2017 (Unaudited) Net income (loss) $ 1,218 $ (2,447 ) $ 5,789 $ (2,298 ) Weighted average share outstanding: Basic 8,391,244 8,391,244 8,391,244 8,391,244 Common stock equivalents - treasury stock method 236,088 — 182,902 — Diluted 8,627,332 8,391,244 8,574,146 8,391,244 Net income (loss) per share: Basic $ .15 $ (.29 ) $ .69 $ (.27 ) Diluted $ .14 $ (.29 ) $ .68 $ (.27 )

Inventories - Schedule of Inven

Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	Mar. 04, 2018	May 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 8,876	$ 7,734
Work in process	3,762	4,030
Finished goods	408	469
Total inventories	$ 13,046	$ 12,233

Other Assets - Additional Infor

Other Assets - Additional Information (Detail) - USD ($)	Mar. 04, 2018	May 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Cash surrender value of life insurance	$ 4,598,000	$ 7,093,000
Surrender value of cancelled life insurance policies	$ 2,546,000

Warranty - Reconciliation of Ac

Warranty - Reconciliation of Accrued Warranty (Detail) - USD ($) $ in Thousands	9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017	Mar. 04, 2018	May 31, 2017	Feb. 28, 2017
Guarantees [Abstract]
Balance at the beginning of the period	$ 7,557	$ 7,317
Accruals for warranties	4,690	6,078
Settlements made during the period	(5,636)	(5,209)
Balance at the end of the period	6,611	8,186
Accrued warranty	$ 6,611	$ 8,186	$ 6,611	$ 7,557	$ 8,186
Non-current balance			2,800	2,800	2,500
Accrued warranty			$ 3,811	$ 4,757	$ 5,686

Life Insurance Loans - Addition

Life Insurance Loans - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 04, 2018	Dec. 03, 2017	Mar. 04, 2018
Schedule Of Life Insurance Liabilities [Line Items]
Repayment of life insurance loans	$ 4,312	$ 4,312	$ 4,312
Life Insurance Loans [Member]
Schedule Of Life Insurance Liabilities [Line Items]
Weighted Average Interest Rate	4.50%		4.50%
Life Insurance Loans [Member] | Minimum [Member]
Schedule Of Life Insurance Liabilities [Line Items]
Interest Rate			4.20%
Life Insurance Loans [Member] | Maximum [Member]
Schedule Of Life Insurance Liabilities [Line Items]
Interest Rate			4.80%

Income Taxes - Additional Infor

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017	Mar. 04, 2018	Feb. 28, 2017
Income Tax Contingency [Line Items]
Deferred tax assets	$ 32,000,000		$ 32,000,000
Federal net operating loss and tax credit carryforwards	20,100,000		20,100,000
State net operating loss carryforwards	7,200,000		7,200,000
Differences between financial and tax reporting	4,700,000		4,700,000
Decrease in deferred income tax account balances			(14,600,000)
Income tax expense (benefit)	0	$ 0	0	$ 0
Federal [Member]
Income Tax Contingency [Line Items]
Federal net operating loss and tax credit carryforwards	1,775,000		1,775,000
Income tax expense (benefit)	0	0
State [Member]
Income Tax Contingency [Line Items]
State net operating loss carryforwards	412,000		$ 412,000
Income tax expense (benefit)	$ 0	$ 0
Minimum [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Net operating loss and tax credit carryforwards useful life			10 years
Minimum [Member] | State [Member]
Income Tax Contingency [Line Items]
Net operating loss and tax credit carryforwards useful life			1 year
Maximum [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Net operating loss and tax credit carryforwards useful life			20 years
Maximum [Member] | State [Member]
Income Tax Contingency [Line Items]
Net operating loss and tax credit carryforwards useful life			20 years

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail) - USD ($)	Mar. 04, 2018	May 31, 2017	Mar. 04, 2018	Feb. 28, 2017
Loss Contingencies [Line Items]
Maximum potential repurchase liability	$ 29,000,000	$ 30,000,000	$ 29,000,000
Other accrued liabilities	$ 100,000	$ 100,000	100,000
Obligations from units repurchased			$ 0	$ 0
Minimum [Member]
Loss Contingencies [Line Items]
Period to potentially repurchase units	12 months	12 months
Maximum [Member]
Loss Contingencies [Line Items]
Period to potentially repurchase units	24 months	24 months

Secured Revolving Credit Faci29

Secured Revolving Credit Facility - Additional Information (Detail) - USD ($)	Jul. 21, 2017	Mar. 20, 2015	Mar. 04, 2018
Secured Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 10,000,000
Secured revolving credit facility term		3 years
Secured revolving credit facility renewal term		1 year
The Agreement [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 10,000,000
Secured revolving credit facility term	3 years
Credit facility, interest rate description			Loan advances bear interest at either 50 basis points above Chase’s floating prime rate (“CBFR”) or 150 basis points in excess of the LIBOR rate for the applicable period (the “Adjusted LIBO Rate”).
Credit facility, closing fee paid	$ 25,000
Credit facility, commitment fee percentage	0.25%
Credit facility, commitment fee description			(i) a commitment fee payable in arrears at a rate of .25% per annum on the average daily amount of the available revolving commitment under the New Facility during the prior calendar month; and (ii) monthly letter of credit fees payable in arrears at the applicable Adjusted LIBO Rate on the outstanding amount of letters of credit issued and outstanding during the prior month.
Credit facility, default status additional rate	2.00%
The Agreement [Member] | Letter of Credit [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 500,000
Credit facility, outstanding	$ 0
The Agreement [Member] | Prime Rate [Member]
Line of Credit Facility [Line Items]
Credit facility, interest range	0.50%
The Agreement [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Credit facility, interest range	1.50%

Stock-Based Compensation - Addi

Stock-Based Compensation - Additional Information (Detail) - USD ($)	3 Months Ended			9 Months Ended		12 Months Ended
	Mar. 04, 2018	Sep. 03, 2017	Feb. 28, 2017	Mar. 04, 2018	Feb. 28, 2017	May 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 53,000		$ 39,000	$ 158,000	$ 101,000
Unrecognized compensation expense related to stock options outstanding	698,000			$ 698,000
Unrecognized compensation expense, period for recognition				2 years 10 months 25 days
Expected dividend yield				0.00%	0.00%
Restricted stock shares issued		36,000	15,000
Restricted stock shares issued, value		$ 221,000	$ 216,000
Stock-based compensation expense				$ 220,000	$ 107,000
2015 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock available under the 2015 plan						700,000
Share based compensation,awards vesting period						10 years
2015 Stock Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of restricted stock awards based on market price						100.00%
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation,awards vesting period				5 years
Unrecognized compensation expense related to stock options outstanding	$ 358,000			$ 358,000
Restricted stock shares vested				0
Weighted average grant date fair value of non-vested shares	$ 8.58			$ 8.58
Stock-based compensation expense	$ 22,000		$ 6,000	$ 62,000	$ 6,000

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Mar. 04, 2018	May 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Shares, Options outstanding, Beginning balance	274,000
Number of Shares, Granted	57,000
Number of Shares, Options outstanding, Ending balance	331,000	274,000
Number of Shares, Vested and exercisable options	99,800
Weighted Average Exercise Price, Options outstanding, Beginning balance	$ 4.79
Weighted Average Exercise Price, Granted	6.15
Weighted Average Exercise Price, Options outstanding, Ending balance	5.03	$ 4.79
Weighted Average Exercise Price, Vested and exercisable options	$ 4.11
Weighted Average Remaining Contractual Term, Options outstanding	7 years 11 months 8 days	8 years 4 months 24 days
Weighted Average Remaining Contractual Term, Vested and exercisable options	7 years 29 days
Aggregate Intrinsic Value, Options outstanding, Ending balance	$ 5,466	$ 128
Aggregate Intrinsic Value, Vested and exercisable options	$ 1,739

Stock-Based Compensation - Su32

Stock-Based Compensation - Summary of Non-vested Options Activity (Detail)	9 Months Ended
	Mar. 04, 2018$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Shares, Non-vested options, Beginning balance | shares	229,000
Number of Shares, Granted | shares	57,000
Number of Shares, Vested | shares	(54,800)
Number of Shares, Non-vested options, Ending balance | shares	231,200
Weighted Average Grant-Date Fair Value, Non-vested options, Beginning balance | $ / shares	$ 3.34
Weighted Average Grant-Date Fair Value, Granted | $ / shares	3.86
Weighted Average Grant-Date Fair Value, Vested | $ / shares	2.35
Weighted Average Grant-Date Fair Value, Non-vested options, Ending balance | $ / shares	$ 3.51

Stock-Based Compensation - Fair

Stock-Based Compensation - Fair Value of Options Granted Estimated at Date of Grant Using Weighted Average Assumptions (Detail)	9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Volatility	65.90%	64.30%
Risk-free interest rate	2.13%	2.14%
Expected option life in years	7 years 6 months	7 years 6 months
Dividend yield	0.00%	0.00%

Earnings Per Share - Computatio

Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017	Mar. 04, 2018	Feb. 28, 2017
Earnings Per Share [Abstract]
Net income (loss)	$ 1,218	$ (2,447)	$ 5,789	$ (2,298)
Weighted average share outstanding:
Basic	8,391,244	8,391,244	8,391,244	8,391,244
Common stock equivalents - treasury stock method	236,088		182,902
Diluted	8,627,332	8,391,244	8,574,146	8,391,244
Basic	$ 0.15	$ (0.29)	$ 0.69	$ (0.27)
Diluted	$ 0.14	$ (0.29)	$ 0.68	$ (0.27)

Earnings Per Share - Additional

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Mar. 04, 2018	Feb. 28, 2017	Mar. 04, 2018	Feb. 28, 2017
Earnings Per Share [Abstract]
Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share	4,234	175,484	21,413	161,368

Net Gain on Sale of Property,36

Net Gain on Sale of Property, Plant and Equipment - Additional Information (Detail) - USD ($)	3 Months Ended
	Dec. 03, 2017	Sep. 03, 2017
Property Plant and Equipment Useful Life and Values [Abstract]
Proceeds from sale of facility	$ 1,231,000	$ 420,000
Gain (loss) on disposal of asset	$ 762,000	$ (60,000)

Share Contribution and Exchan37

Share Contribution and Exchange Agreement - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	Jan. 05, 2018	Jun. 30, 2018	Mar. 04, 2018	May 31, 2017
Schedule of Capitalization, Equity [Line Items]
Common stock, par value	$ 0.0277		$ 0.0277	$ 0.0277
Ownership percentage	15.50%
Common stock, shares authorized			15,000,000	15,000,000
Termination fee payable under specified circumstances	$ 10
Termination fee payable upon entering into or closing acquisition transaction	3
Additional termination fee payable	7
Reimbursement fees and expenses payable	$ 2
Scenario Forecast [Member]
Schedule of Capitalization, Equity [Line Items]
Common stock, shares authorized		115,000,000
Champion Enterprises Holdings, LLC [Member]
Schedule of Capitalization, Equity [Line Items]
Ownership percentage	84.50%