SKYLINE CORPORATION
2520 By-Pass Road
P.O. Box 743
Elkhart, Indiana 46515
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 24, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Skyline Corporation ("Skyline") will be held at the Emerald Room, in the
Ramada Inn, 3011 Belvedere Road, Elkhart, Indiana, on Monday, September 24,
2001, at 9:00 a.m., Eastern Standard Time, for the following purposes:
1. To elect a Board of Directors for the ensuing year, or until their
successors are elected and qualify.
2. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The Board of Directors has fixed the close of business on July 19,
2001, as the record date for the determination of shareholders
entitled to notice of, and to vote at, said meeting.
By Order of the Board of Directors
RONALD F. KLOSKA
Vice-Chairman and
Chief Executive Officer
August 3, 2001
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
SKYLINE CORPORATION
2520 By-Pass Road, P.O. Box 743
Elkhart, Indiana 46515
August 3, 2001
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Skyline
Corporation ("Skyline") for use at the Annual Meeting of Shareholders to be
held September 24, 2001. The shares represented by properly executed proxies
received prior to the meeting will be voted. If the shareholder directs in the
proxy how the shares are to be voted, they will be voted accordingly. When no
direction has been given by the shareholder, it is the intention of the proxies
named in the proxy to vote the same in accordance with their best judgment. Any
proxy given may be revoked by the shareholder at any time prior to the voting
of the proxy. The approximate date on which this proxy statement and the form
of proxy are first sent or given to security holders is August 3, 2001.
VOTING SECURITIES
Only shareholders of record as of the close of business on July 19, 2001, or
their proxies are entitled to vote at the meeting. As of that date, Skyline
had outstanding 8,391,244 shares of Common Stock having one vote per share.
ELECTION OF DIRECTORS
Each share of Common Stock is entitled to one vote, which means that the
holders of more than 50% of the shares voting for the election of Directors can
elect all of the Directors and approve any other matter as may properly come
before the meeting if they choose to do so.
It is proposed that nine Directors be elected at the meeting, each to serve
until the next Annual Meeting of Shareholders and until his successor is
elected and qualifies.
It is intended that the votes authorized by the enclosed proxy will be cast for
the election of the nine nominees for Directors whose names are set forth
below. In the event that one or more of the nominees shall unexpectedly become
unavailable for election, the votes will be cast, pursuant to authority granted
by the enclosed proxy, for such person or persons as may be designated by the
present Board of Directors or the Board may be reduced accordingly. All of the
nominees for whom the proxies intend to vote have agreed to serve as Directors
if elected.
Information about the nominees for election as Directors and the beneficial
ownership of Skyline Common Stock by directors as a group is as follows:
Shares of Skyline
Common Stock Bene-
Skyline ficially Owned at Percent
Name, Title, Address Director July 1, 2001 of
and Principal Occupation Age Since Directly or Indirectly Class(3)
ARTHUR J. DECIO 70 1959 1,477,784(1) 17.6 %
Chairman of the Board
Skyline Corporation, 2520
By-Pass Road, Elkhart, IN
46514. Mr. Decio is also a
Director of NiSource Inc.,
Merrillville, Indiana.
(Mr. Decio was Chief
Executive Officer of Skyline
until December 16, 1998.)
TERRENCE M. DECIO 49 1989 30,080(2)
Senior Executive Vice
President,Skyline Corporation,
2520 By-Pass Road, Elkhart,
Indiana 46514. Mr. Decio is
also a Director of KeyBank of
Northern Indiana, South Bend,
Indiana.
JERRY HAMMES 69 1986 13,000
2015 West Western Avenue,
South Bend, Indiana 46629.
President of Romy Hammes, Inc.,
a bank holding company and real
estate investment company,
South Bend, Indiana, and
Chairman of Peoples Bank of
Kankakee County, a bank,
Bourbonnais, Illinois. Mr Hammes
is also a Director of St.Joseph
Capital Corporation, Mishawaka,
Indiana.
RONALD F. KLOSKA 67 1965 28,600
Vice-Chairman and Chief
Executive Officer, Skyline
Corporation, 2520 By-Pass
Road, Elkhart, Indiana 46514.
(Mr. Kloska was Deputy Chief
Executive Officer of Skyline
until December 16, 1998.)
WILLIAM H. LAWSON 64 1975 3,000
400 East Spring Street,
Bluffton, Indiana 46714.
Chairman of the Board, Chief
Executive Officer, and a
Director of Franklin Electric
Company, Inc., a manufacturer
of electric motors, Bluffton,
Indiana. Mr. Lawson is also a
Director of JSJ Corporation
and Sentry Insurance, a
Mutual Company.
DAVID T. LINK 64 1994 600
Dean Emeritus, Notre Dame Law
School, University of Notre
Dame, Notre Dame, Indiana
46556. President Emeritus,
University of Notre Dame
Australia, Fremantle, W.A.,
Australia. Associate Vice
President, University of St.
Thomas, St. Paul, Minnesota,
Provost, St Augustine College
of South Africa.
ANDREW J. McKENNA 71 1971 12,300
8338 North Austin Avenue,
Morton Grove, Illinois 60053.
Chairman and CEO of Schwarz,
a national printer, converter
and distributor of packaging
and promotional materials,
Morton Grove, Illinois. Mr.
McKenna is also a director of
Tribune Company, Aon
Corporation and McDonalds
Corporation.
WILLIAM H. MURSCHEL 56 1992 4,000
President and Chief Operations
Officer, Skyline Corporation,
2520 By-Pass Road, Elkhart,
Indiana 46514.
DALE SWIKERT 71 1963 8,791
5 Queen Victoria Ct., Nampa,
Idaho 83687. Private Investor.
ALL NOMINEES AND
OFFICERS AS A GROUP 1,580,655 18.8%
(l) Includes 83,500 shares in The Arthur J. Decio Foundation, a charitable
foundation, of which Mr. Decio is a trustee. Mr. Decio disclaims any
beneficial interest with respect to these shares.
(2) Terrence M. Decio is the son of Arthur J. Decio.
(3) Less than one percent unless otherwise indicated.
Information about Board and Committee meetings is as follows:
The Audit Committee consisted of Messrs. Hammes, McKenna, Lawson, Link and
Swikert. It met three times during the fiscal year ended May 31, 2001. The
Committee meets with the accounting firm which conducts the annual audit of
Skyline's books, reviews auditors' recommendations, reviews the independence of
Skyline's auditors and considers the range of audit and non-audit fees. It also
meets with the internal audit staff and Chief Financial Officer, reviews the
scope and adequacy of Skyline's internal auditing program and reports its
findings to the Board with any recommendations it considers appropriate.
Skyline's Board of Directors has adopted a written charter for the audit
committee. The members of Skyline's Audit Committee are all "independent" as
defined in the New York Stock Exchange Listing Standards.
The Governance and Compensation Committee consisted of Messrs. McKenna,
Hammes, Lawson and Link. It met one time during the last fiscal year. The
Committee establishes compensation for the Chairman of the Board and consults
with the Chairman of the Board concerning compensation for other elected
officers of the Company. The Committee also recommends to the Board the
selection of nominees for election as directors, and considers the performance
of incumbent directors in determining whether to nominate them for re-election.
Nominees recommended by shareholders will be considered upon their submission
in writing by the shareholders to Skyline prior to the end of the fiscal year
immediately preceding the next regular annual shareholders' meeting.
The Executive Committee of the Board of Directors consisted of Messrs.
Arthur J. Decio, McKenna, Hammes, Lawson and Link, and met five times during
the last fiscal year. This Committee exercises the powers of the Board of
Directors in the management of the business affairs of Skyline, subject to the
approval of the full Board of Directors at the next regular or special meeting.
The Board of Directors met or took action six times during the last fiscal
year. Every Board member was present at all Board meetings and meetings of all
committees of which he was a member, except that one Board member missed one
committee meeting.
Report of the Audit Committee
The audit committee of Skyline's Board of Directors has reviewed and
discussed Skyline's audited financial statements with management; has discussed
with Skyline's independent auditors PricewaterhouseCoopers LLP the matters
required to be discussed by Codification of Statements on Auditing Standards,
AV 380, Statement on Auditing Standards No. 61; has received from the auditors
disclosures regarding the auditors' independence as required by Independence
Standards Board Standard No. 1
and has discussed with the auditors the auditors' independence; and has, based
on the review and discussions noted above, recommended to Skyline's Board of
Directors that the audited financial statements be included in Skyline's Annual
Report on Form 10-K for the fiscal year ended May 31, 2001 for filing with the
Securities and Exchange Commission.
Jerry Hammes
William H. Lawson
Andrew J. McKenna
David T. Link
Dale Swikert
Audit Fees
The aggregate fees billed for professional services rendered for the audit of
Skyline's annual financial statements for the fiscal year ended May 31, 2001
and the reviews of the financial statements included in Skyline's Forms 10-Q
for that fiscal year were $117,000.
Financial Information Systems Design and Implementation Fees
The aggregate fees billed for professional services described in Paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X (17 CFR 210.2-01(c)(4)(ii)) (i.e.:
directly or indirectly operating or supervising the operation of Skyline's
information system or managing Skyline's local area network, or designing or
implementing a hardware or software system that aggregates source data
underlying Skyline's financial statements or generates information that is
significant to Skyline's financial statements taken as a whole) were $0.00.
All Other Fees
The aggregate fees billed Skyline for services by PricewaterhouseCoopers LLP,
other than for services addressed under the captions "Audit Fees" and
"Financial Information Systems Design and Implementation Fees" for the fiscal
year ended May 31, 2001, were $25,000.
The Audit Committee has considered whether the provision of services
addressed under the captions "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" is compatible with maintaining
PricewaterhouseCoopers LLP's independence.
CERTAIN OTHER BENEFICIAL OWNERS
The following person, entities or "group" as indicated are known to Skyline
to own beneficially at least five percent (5%) of Skyline's common stock or are
members of management identified in the summary compensation table but who are
not on Skyline's Board. The beneficial ownership of Skyline common stock by the
members of its Board and its nominees for directors is shown in the table under
"Election of Directors" above.
Shares of Skyline Common
Name and Address Stock Beneficially Owned Percent of
of Beneficial Owner at July 1, 2001 Class (1)
Christopher R. Leader 1,000
Vice President, Operations
2520 By-Pass Road
Elkhart, Indiana 46514
Dimensional Fund Advisors 568,700 6.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Private Capital Management, 1,464,416 17.5%
Inc.3003 Tamiami Trail North,
3rd Floor Naples, Florida 34103
(2) T. Rowe Price Associates, 661,100 7.9%
Inc. 100 East Pratt Street
Baltimore, Maryland 21202
(1) Less than one percent (1%) if not specified.
(2) T. Rowe Price Associates, Inc. (Price Associates) has informed Skyline that
these securities are owned by various individual and institutional
investors which Price Associates serves as investment advisor with power to
direct investment and/or sole power to vote the securities and that for
purposes of the reporting requirements of the Securities Exchange Act of
1934, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of forms provided to Skyline and on certain written
representations, Skyline is unaware of any failure to file on a timely basis
reports required by Section 16(a) of the Exchange Act by any director, officer
or beneficial owner of more than ten percent of Skyline's common stock.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid during the fiscal
year ended May 31, 2001 for each of the five highest paid executive officers of
Skyline, including the Chief Executive Officer. The table also shows for each
such officer, the amounts set aside during the last fiscal year under Skyline's
Profit Sharing Plan.
All
Other
Annual Compensation Compensation
(Vested
Name and Principal Profit
Position Year Salary ($) Bonus ($) Sharing)
Arthur J. Decio 2001 295,000 112,100 9,000
Chairman of the Board 2000 365,000 233,600 9,000
(Chief Executive 1999 365,000 481,800 9,000
Officer of Skyline
until December 16,
1998)
Ronald F. Kloska 2001 365,000 138,700 9,000
Vice-Chairman and 2000 365,000 233,600 9,000
Chief Executive 1999 365,000 481,800 9,000
Officer (Deputy Chief
Executive Officer of
Skyline until December
16, 1998)
William H. Murschel 2001 330,000 125,400 9,000
President and Chief 2000 330,000 211,200 9,000
Operations Officer 1999 330,000 435,600 9,000
Terrence M. Decio 2001 275,000 104,500 9,000
Senior Executive 2000 275,000 176,000 9,000
Vice-President 1999 275,000 363,000 9,000
Christopher R. Leader 2001 190,000 54,150 9,000
Vice-President, 2000 190,000 91,200 9,000
Operations (Hired 1999 190,000 99,750 9,000
January 13, 1997.
Vice President-
Operations of Trek
Bicycle from October
1994 to 1996)
Compensation of Directors
Directors who are not full-time employees of Skyline receive an annual fee of
$16,000 payable in quarterly installments and receive $500 for each Board or
Committee meeting attended. Chairmen of Board Committees who are not full-time
employees of Skyline receive an additional $2,000 annually and Committee
members who are not full-time employees of Skyline receive an additional $1,500
annually payable in quarterly installments.
Termination of Employment Arrangements
The Skyline Corporation and Affiliates Employees' Profit Sharing Plan
provides benefits on death, disability or retirement for officers and
executives, sales, administrative and supervisory employees. Employees become
eligible as of the June 1 or December 1 immediately following completion of
six months of employment. The amount of contribution under the Plan is at the
discretion of Skyline each year. However, the maximum contribution for any
participant shall not exceed 12% of a participant's basic compensation. Upon
retirement, death or permanent total disability, a participant is entitled to
all of the funds credited to his account. In case of termination of employment
by resignation or discharge, the participant is entitled to a percentage of the
amount credited to his account, ranging from 0% after one year of employment to
100% after seven years. Forfeitures resulting from any employee's termination
of employment prior to full vesting will be used to reduce employer
contributions. Net investment earnings or net losses for each fiscal year are
allocated to the account of each participant in the same ratio as the
participant's account balance bears to the total account balances of all
participants. Skyline reserves the right to modify, amend or terminate the
Plan. In the event of termination of the Plan, the entire amount theretofore
contributed under the Plan must be paid to participants or their beneficiaries
and under no circumstances reverts to Skyline.
Under an insurance plan, payments would be made to the below named executive
officers, and executive officers as a group, for a period of 10 years upon
retirement from Skyline at age 60, 62, or later, in the following annual
amounts: Arthur J. Decio, $100,000; Ronald F. Kloska, $100,000; William H.
Murschel, $75,000; Terrence M. Decio, $75,000 and Christopher R. Leader,
$60,000; and all executive officers as a group, consisting of 8 individuals,
$550,000. Under the same insurance plan, in the event of the death of any of
such executive officers while employed by Skyline, payments would be made for
a period of 10 years in the annual amounts hereinafter specified to the
beneficiaries of the following individuals and group: Ronald F. Kloska,
$100,000; William H. Murschel, $75,000; Terrence M. Decio, $75,000, and
Christopher R. Leader, $40,000; and 3 other executive officers, totaling 7
individuals, $390,000. Skyline is the owner and beneficiary of policies
insuring the lives of all such executive officers in the total amount of
$3,111,659.
In addition, in the event of the death of Arthur J. Decio, whether before or
after his retirement from Skyline, Skyline has agreed to pay his survivor(s)
the sum of $2,700,000, which at the present income tax rates, would result in
after tax cost to Skyline of approximately $1,620,000. Skyline is the owner and
beneficiary of policies insuring Arthur J. Decio's life in the amount of
$1,650,000.
The appreciation in cash surrender value of all of the above-described
insurance policies is such that there is no current cost to Skyline for their
maintenance.
Compensation Committee Interlocks and Insider Participation
The following persons served as members of the Governance and Compensation
Committee (the "Compensation Committee") of Skyline's Board of Directors during
the fiscal year ended May 31, 2001: Andrew J. McKenna, Jerry Hammes, William H.
Lawson and David T. Link. Arthur J. Decio is the Chairman of the Board of
Skyline, and is a member of the Board of Directors of Schwarz. Andrew J.
McKenna is an executive officer of Schwarz.
Report of the Governance and Compensation
Committee (the "Compensation Committee")
on Executive Compensation
The compensation of Skyline's executive officers is determined by the
Compensation Committee of the Board of Directors. Each member of the
Compensation Committee is a director who is not an employee of Skyline or any
of its affiliates. The following report with respect to compensation paid to
Skyline's executive officers for the fiscal year ended May 31, 2001 is
furnished by the Compensation Committee.
General Policies. Skyline's compensation programs are intended to enable
Skyline to attract, motivate, reward and retain the executive management talent
required to achieve corporate objectives. It is Skyline's policy to reward
exceptional performance and contributions to the development of Skyline's
business. To attain these objectives, Skyline's executive compensation program
includes a competitive base salary coupled with the opportunity to participate
in a bonus pool which is created based on the performance of Skyline's
business. The Compensation Committee establishes the base salaries and
discretionary bonuses which will be paid to Skyline's executive officers for
each fiscal year. In setting salaries and bonuses, the Compensation Committee
takes into account several factors, including compensation paid by competitors
and other industries' compensation data as well as qualitative factors bearing
on an individual's experience, responsibilities, management and job
performance. The Compensation Committee evaluates the contributions to
Skyline's overall performance during the last fiscal year, leadership,
effectiveness and commitment of all executive officers, including the Chief
Executive Officer. For the fiscal year ended May 31, 2001, each of the
executive officers received a bonus, in the amounts set forth above in the
executive compensation table.
Salaries. Salary levels for executive officer positions are set so as to
reflect the duties and level of responsibilities inherent in the position and
current economic conditions relating to Skyline's business. Comparative
salaries paid by other companies in the industries in which Skyline does
business are considered in establishing the salary level for a given position.
The Compensation Committee does not, however, target a specific percentile
range within the comparative group in setting salaries of Skyline's executive
officers. The particular qualifications and level of experience of the
individual holding the position are also considered in establishing a salary
level when the individual is first appointed to a given position.
Bonus. Skyline provides executive officers the opportunity to earn an annual
incentive
bonus based on an evaluation of the executive's individual performance and
Skyline's performance. No executive officer is automatically entitled to a
bonus or a bonus in any particular amount. In considering bonuses for
executives other than Arthur J. Decio, the Compensation Committee consults with
the Chairman of the Board.
Other. In addition, the executive officers participate in a profit sharing
program and insurance and other plans described above providing payments on
death or retirement.
Compensation of Chief Executive Officer ("CEO"). In setting the base salary
and bonus for Skyline's CEO, for the fiscal year ended May 31, 2001, the
Compensation Committee considered the same factors as with other executive
officers of Skyline. The Compensation Committee believes the CEO's compensation
was fully supported by those standards.
Andrew J. McKenna, Chairman
Jerry Hammes
William H. Lawson
David T. Link
Being all the members of Skyline's
Governance and Compensation Committee
(the "Compensation Committee")
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN *
AMONG SKYLINE CORPORATION, S & P 500 INDEX AND PEER GROUP **
1996 1997 1998 1999 2000 2001
SKYLINE 100.00 97.51 117.83 128.94 87.78 107.06
S&P 500 100.00 129.41 169.12 204.68 226.13 202.26
PEER GROUP 100.00 92.36 138.18 105.01 52.80 60.20
* Notes:
Assumes initial investment of $100 on May 31, 1996 and compares the return on
that investment through May 31, 2001.
For comparison purposes, Total Return assumes reinvestment of dividends,
although Skyline has no dividend reinvestment plan.
Total Return is based on market capitalization.
** This self constructed peer group
consists of the following companies:
Champion Enterprises, Inc.
Coachmen Industries, Inc.
Fleetwood Enterprises, Inc.
Liberty Homes, Inc.
Thor Industries, Inc.
The returns for each member of this peer group have been weighted according to
that company's respective stock market capitalization.
INDEPENDENT PUBLIC ACCOUNTANTS
Skyline's independent public accounting firm is PricewaterhouseCoopers LLP.
It is expected that representatives of PricewaterhouseCoopers LLP will be
present at the meeting of shareholders, will have the opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Any proposal submitted for inclusion in Skyline's Proxy Statement and form of
proxy for the 2002 Annual Meeting of Shareholders must be received at the
address shown above on or before April 3, 2002.
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business which will be presented for consideration at the annual meeting.
However, if other proper matters are presented at the meeting, it is the
intention of the proxies named in the enclosed proxy to take such action as
shall be in accordance with their best judgment.
The expense of this solicitation, including the cost of preparing and mailing
this Proxy Statement and accompanying material, will be paid by Skyline.
Skyline expects to pay approximately $6,500 to Georgeson Shareholder
Communications, Inc. as compensation for the solicitation of proxies, and may
reimburse brokers and others for their expense for sending proxy material to
principals for the purpose of obtaining signed proxies. In addition,
solicitation may be by mail, telephone, telefax and personal interview by
regularly engaged officers of Skyline who will not be additionally compensated
therefor.
Shareholders are respectfully requested to date, sign and return promptly the
enclosed proxy in the enclosed envelope. No postage is required if mailed in
the United States.
By Order of the
Board of Directors
RONALD F. KLOSKA
Vice-Chairman and
Chief Executive Officer