SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended November 30, 1993
Commission File No. 1-4714
SKYLINE CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1038277
(State of Incorporation) (IRS Employer Identification No.)
P. O. Box 743, 2520 By-Pass Road Elkhart, IN 46515
(Address of principal executive offices) (Zip)
294-6521 (219)
(Registrant's telephone number) (Area Code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Securities registered pursuant to Section 12(b) of the Act:
Shares Outstanding
Title of Class January 14, 1994
Common stock 11,217,144
SKYLINE CORPORATION
Form 10-Q Quarterly Report
INDEX
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of
November 30, 1993 and May 31, 1993
Consolidated Statements of Earnings and
Retained Earnings for the three and
six month periods ended November 30,
1993 and 1992
Consolidated Statements of Cash Flows
for the six month periods ended
November 30, 1993 and 1992
Notes to the Consolidated Financial
Statements
Report of Independent Accountants
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
Skyline Corporation and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Dollars in thousands)
ASSETS November 30, 1993 May 31, 1993
(Unaudited)
Current Assets:
Cash and temporary cash investments $ 11,070 $ 8,787
Treasury Bills, at cost plus accrued
interest 13,774 4,885
Accounts receivable, net 37,055 40,736
Inventories 17,119 10,724
Other current assets and prepaid
income taxes 4,260 3,017
Total current assets 83,278 68,149
Investments in U.S. Treasury Note 90,186 90,197
Property, Plant and Equipment, at Cost:
Land 3,840 3,651
Buildings and improvements 44,185 42,158
Machinery and equipment 19,445 18,641
67,470 64,450
Less accumulated depreciation 38,648 37,318
28,822 27,132
Other Assets 2,746 3,033
$ 205,032 $ 188,511
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 15,831 $ 9,672
Accrued liabilities 19,717 14,175
Income taxes 806 890
Total current liabilities 36,354 24,737
Other Deferred Liabilities 2,267 1,945
Commitments and Contingencies - -
Shareholders' Equity:
Common stock 312 312
Additional paid-in capital 4,928 4,928
Retained earnings 161,171 156,589
Total shareholders' equity 166,411 161,829
$ 205,032 $ 188,511
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Earnings and Retained Earnings
For the Three and Six Month Periods Ended November 30, 1993 and 1992
(Unaudited)
(Dollars in thousands except per share data)
Three Months Ended Six Months Ended
November 30 November 30
1993 1992 1993 1992
Manufactured housing sales $ 115,038 $ 97,151 $ 221,273 $ 182,944
Recreational vehicle sales 30,273 30,460 60,205 60,376
Total sales 145,311 127,611 281,478 243,320
Cost of sales 121,716 108,525 237,765 207,985
Gross profit 23,595 19,086 43,713 35,335
Selling & administrative
expenses 18,002 15,925 34,660 29,811
Operating earnings 5,593 3,161 9,053 5,524
Interest income 1,475 1,515 2,916 2,978
Gain (loss) on sale of prop-
erty, plant and equipment 10 (7) 10 746
Earnings before income
taxes 7,078 4,669 11,979 9,248
Provision for income taxes:
Federal 2,330 1,500 3,900 2,975
State 475 300 805 590
2,805 1,800 4,705 3,565
Earnings before cumulative
effect of accounting change 4,273 2,869 7,274 5,683
Cumulative effect of accoun-
ting change - - - (370)
Net earnings 4,273 2,869 7,274 5,313
Retained earnings, begin-
ning of period 158,244 153,130 156,589 152,032
162,517 155,999 163,863 157,345
Less cash dividends paid 1,346 1,346 2,692 2,692
Retained earnings,
end of period $ 161,171 $ 154,653 $ 161,171 $ 154,653
Earnings per share before
cumulative effect of accoun-
ting change $.38 $.26 $.65 $.51
Cumulative effect per share of
accounting change - - - (.03)
Net earnings per share $.38 $.26 $.65 $.48
Cash dividends per share $.12 $.12 $.24 $.24
Per share data based on 11,217,144 common shares outstanding.
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the six month periods ended November 30, 1993 and 1992
Increase (decrease) in Cash
(Unaudited)
(Dollars in Thousands)
1993 1992
Cash Flows From Operating Activities:
Net earnings $ 7,274 $ 5,313
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Interest income earned on U.S. Treasury Bills
and Notes (2,767) (2,811)
Cumulative effect of accounting change - 370
Depreciation 1,330 1,280
Amortization of discount or premium on
U.S. Treasury Notes 11 11
Gain on sale of property, plant and
equipment (10) (746)
Working Capital Items:
Accounts receivable 3,681 1,196
Inventories (6,395) (9,734)
Other current assets and income taxes (1,243) (1,323)
Accounts payable, trade 6,159 4,394
Accrued liabilities 5,542 3,894
Income taxes payable (84) (696)
Other assets 287 (11)
Other deferred liabilities 322 143
Total Adjustments 6,833 (4,033)
Net cash provided by operating activities $14,107 $ 1,280
Cash Flows From Investing Activities:
Proceeds from sale of U.S. Treasury Bills - 12,943
Purchase of U.S. Treasury Bills (8,699) (9,443)
Interest received from U.S. Treasury Notes 2,577 2,578
Proceeds from sale of property, plant
and equipment 10 1,154
Purchase of property, plant and equipment (3,020) (1,907)
Net cash (used in) provided by investing
activities (9,132) 5,325
Cash Flows From Financing Activities:
Cash dividends paid (2,692) (2,692)
Net cash used in financing activities (2,692) (2,692)
Net increase in cash 2,283 3,913
Cash at beginning of year 8,787 4,385
Cash at end of quarter $ 11,070 $ 8,298
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Notes To The Consolidated Financial Statements For
The Three and Six Month Periods Ended November 30, 1993 and 1992
The accompanying unaudited interim consolidated financial statements contain
all adjustments (consisting of only normal recurring adjustments) necessary
to present fairly the consolidated financial position as of November 30,
1993 and the consolidated changes in cash for the six month periods ended
November 30, 1993 and 1992, and the consolidated results of operations for
the three and six month periods ended November 30, 1993 and 1992.
The unaudited interim consolidated financial statements included herein have
been prepared pursuant to the rules and regulations for reporting on Form
10-Q. Accordingly, certain information and footnote disclosures normally
accompanying the annual consolidated financial statements have been
omitted. The interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Corporation's latest annual report on Form 10-K.
The financial data included herein has been subjected to a limited review by
Price Waterhouse, the registrant's independent accountants, whose report is
included in this filing.
Inventories are stated at cost, determined under the first-in, first-out
method, which is not in excess of market. Physical inventory counts are
taken at the end of each reporting quarter. Inventories at November 30,
1993 and May 31, 1993 are as follows:
Finished Work In
Goods Process Materials Total
May 31, 1993 $ 1,192,000 $ 3,885,000 $ 5,647,000 $10,724,000
November 30, 1993 $ 4,462,000 $ 4,534,000 $ 8,123,000 $17,119,000
The Corporation and its subsidiaries were contingently liable at November
30, 1993, 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. It is impossible to evaluate the potential
liability, if any, at this time. However, management believes that it is
probable that the Corporation's insurance would offset any material losses
and that any uninsured losses resulting from such proceedings would not have
a material adverse effect on the Corporation's result of operations or
financial position.
The Corporation's board of directors authorized the repurchase of up to 1.2
million shares of common stock, or approximately ten percent of the shares
outstanding, effective December 16, 1993. The purchases will be made in the
open market, or in negotiated transactions, at such times and at such prices
as management may decide.
Report of Independent Accountants
January 13, 1994
To The Board of Directors and
Shareholders of Skyline Corporation
We have reviewed the accompanying condensed consolidated balance sheet as of
November 30, 1993 and the related consolidated statements of earnings and
retained earnings for the three-month and six-month periods ended November
30, 1993 and 1992 and the consolidated statements of cash flows for the six-
month periods ended November 30, 1993 and 1992 of Skyline Corporation and
Subsidiary Companies. This financial information is the responsibility of
the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquires of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of May 31, 1993, and the
related consolidated statements of earnings and retained earnings and of
cash flows for the year then ended (not presented herein), and in our report
dated June 15, 1993, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of May 31,
1993, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE
Chicago, Illinois
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At November 30, 1993 cash and investments in U.S. Treasury Bills totaled
$24,844,000 an increase of $11,172,000 from $13,672,000 at May 31, 1993.
Working capital at November 30, 1993 amounted to $46,924,000 compared to
$43,412,000 at May 31, 1993. The increase in cash and investments in U.S.
Treasury Bills was due primarily to net earnings, a reduction of accounts
receivable, and an increase in accrued marketing programs. Capital
expenditures amounted to $ 3,020,000 in 1993 compared to $1,907,000 in the
first six months of the prior year. Capital expenditures were made
primarily to increase manufacturing capacity, adopt new manufacturing
technology and increase manufacturing efficiencies. The cash provided by
operating activities in fiscal 1994 is expected to be adequate to fund any
capital expenditures which may become necessary during the year.
Results of Operations for the Three Months Ended November 30, 1993
Sales in the quarter ended November 30, 1993 amounted to $145,311,000 an
increase of $17,700,000 from $127,611,000 for the same quarter of the prior
year. Manufactured housing sales increased 18.4 percent to
$115,038,000 in 1993 compared to $97,151,000 in 1992. Manufactured housing
unit sales increased to 5,150 compared to 4,975 in 1992. Sales of
recreational vehicles decreased 0.6 percent to $30,273,000 during the second
quarter of fiscal 1994 compared to the $30,460,000 reported for the second
quarter of fiscal 1993. Recreational vehicle unit sales decreased to 2,536
compared to 2,702 in 1992.
Skyline's performance for the second quarter and the first half of fiscal
1994 reflects the continuation of a positive sales trend that first became
evident during the third quarter of fiscal 1993. Fueling the trend is an
increased demand for manufactured housing that seems to indicate an easing
of recessionary conditions in most parts of the country.
Cost of sales in 1993 decreased slightly to 83.8 percent of sales compared
to 85.0 percent in 1992. Selling and administrative expenses in 1993
decreased as a percent of sales to 12.4 percent compared to 12.5 percent in
1992.
Interest income amounted to $1,475,000 in 1993 compared to $1,515,000 in
1992. The decrease in interest income was due to lower interest rates.
Income Taxes
The provision for federal income tax approximates the statutory rate and for
state income taxes reflects current state rates effective for the period
based upon activities within the taxing entities.
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting For Income Taxes," effective June 1, 1992. The cumulative
effect of this change in accounting for income taxes on prior years was
$370,000 or $.03 per share.
PART II
Item 1. Legal Proceedings
Information with respect to this item for the period covered by this Form
10-Q has been previously reported in Item 3, entitled "Legal Proceedings" of
the Form 10-K for the fiscal year ended May 31, 1993, heretofore filed by
the registrant with the Commission.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K
1) A report was filed on September 21, 1993, reporting the election
of directors at the Annual Meeting of Shareholders on
September 20, 1993, and the election of officers at the Annual
Meeting of the Board of Directors held on the same date.
2) A report was filed on December 21, 1993, reporting the Company's
intent to repurchase up to 1.2 million shares of its common
stock, or approximately ten percent of its outstanding shares.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SKYLINE CORPORATION
DATE: January 14, 1994 /S/ Joseph B. Fanchi
Joseph B. Fanchi
V.P. Finance & Treasurer,
Chief Financial Officer
DATE: January 14, 1994 /S/ James R. Weigand
James R. Weigand
Corporate Controller