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 August 31, 1994
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:
Title of Class Shares Outstanding
Common stock 11,157,244
SKYLINE CORPORATION
Form 10-Q Quarterly Report
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as
of August 31, 1994 and May 31, 1994 2 - 3
Consolidated Statements of Earnings and 4
Retained Earnings for the three-month
periods ended August 31, 1994 and 1993
Consolidated Statements of Cash 5
Flows for the three-month
periods ended August 31, 1994
and 1993
Notes to the Consolidated Financial 6
Statements
Report of Independent Accountants 7
Item 2. Management's Discussion and Analysis 8 - 9
of Financial Condition and Results
of Operations
Part II. Other Information
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets
(Dollars in thousands)
August 31, 1994 May 31, 1994
(Unaudited)
ASSETS
Current Assets:
Cash and temporary cash investments $ 3,843 $ 9,232
Treasury Bills, at cost plus accrued
interest, which approximates market 12,724 7,896
Accounts receivable, trade, less allowance
for doubtful accounts of $40 43,668 44,514
Inventories
Raw materials 10,223 8,399
Work in process 5,027 4,775
Finished goods 3,748 2,357
Total Inventories 18,998 15,531
Other current assets 6,988 6,405
TOTAL CURRENT ASSETS 86,221 83,578
Investment in U.S. Treasury Notes 89,914 89,912
Property, Plant and Equipment, at Cost:
Land 5,193 4,525
Buildings and improvements 49,133 47,982
Machinery and equipment 22,280 19,769
76,606 72,276
Less accumulated depreciation 39,838 39,946
Total Property, Plant and Equipment 36,768 32,330
Other Assets 2,701 2,711
$ 215,604 $ 208,531
The accompanying notes are a part of the consolidated financial
statements.
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets
(Dollars in thousands except per share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
August 31, 1994 May 31, 1994
(Unaudited)
Current Liabilities:
Accounts payable, trade $ 16,137 $ 14,468
Accrued salaries and wages 4,928 5,123
Accrued profit sharing 551 2,156
Accrued marketing programs 11,468 7,248
Other accrued liabilities 4,625 4,852
Income taxes 2,449 1,972
TOTAL CURRENT LIABILITIES 40,158 35,819
Other Deferred Liabilities 2,376 2,329
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 168,883 166,196
Treasury stock, at cost, 59,900 shares (1,053) (1,053)
TOTAL SHAREHOLDERS' EQUITY 173,070 170,383
$ 215,604 $ 208,531
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-month periods ended August 31, 1994 and 1993
(Unaudited)
(Dollars in thousands except per share data)
1994 1993
Sales $ 155,328 $ 136,167
Cost of sales 130,866 116,049
Gross profit 24,462 20,118
Selling and administrative expenses 19,234 16,658
Operating earnings 5,228 3,460
Interest income 1,488 1,441
Earnings before income taxes 6,716 4,901
Provision for income taxes:
Federal 2,180 1,570
State 510 330
2,690 1,900
Net earnings 4,026 3,001
Retained earnings, beginning of period 166,196 156,589
170,222 159,590
Less, cash dividends paid 1,339 1,346
Retained earnings, end of period $ 168,883 $ 158,244
Net earnings per share $ .36 $.27
Cash dividends per share $ .12 $.12
Weighted average common shares outstanding 11,157,244 11,217,144
The accompanying notes are a part of the consolidated financial
statements.
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the three-month periods ended August 31, 1994 and 1993
Increase (decrease) in Cash
(Unaudited)
(Dollars in thousands)
1994 1993
Cash Flows From Operating Activities:
Net earnings $ 4,026 $ 3,001
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Interest income earned on U.S. Treasury
Bills and Notes (1,431) (1,363)
Depreciation 784 657
Amortization of discount or premium on
U.S. Treasury Notes (2) 5
Working Capital Items:
Accounts receivable 846 1,613
Inventories (3,467) (2,330)
Other current assets (583) (681)
Accounts payable, trade 1,669 4,702
Accrued liabilities 2,193 1,784
Income taxes payable 477 872
Other assets 10 328
Other deferred liabilities 47 251
Total Adjustments 543 5,838
Net cash provided by operating activities 4,569 8,839
Cash Flows From Investing Activities:
Proceeds from sale or maturity of
U.S. Treasury Bills 10,879 -
Purchase of U.S. Treasury Bills (15,556) (4,784)
Interest received from U.S. Treasury Notes 1,280 1,289
Proceeds from sale of property, plant
and equipment 4 -
Purchase of property, plant and equipment (5,226) (1,689)
Net cash used in investing activities (8,619) (5,184)
Cash Flows From Financing Activities:
Cash dividends paid (1,339) (1,346)
Net cash used in financing activities (1,339) (1,346)
Net increase (decrease) in cash (5,389) 2,309
Cash at beginning of year 9,232 8,787
Cash at end of quarter $ 3,843 $ 11,096
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-month periods ended August 31, 1994 and 1993
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
August 31, 1994 and the consolidated results of operations and changes in
cash for the three-month periods ended August 31, 1994 and 1993.
The unaudited interim consolidated financial statements included herein
have been prepared pursuant to the rules and regulations for reporting on
Form 10-Q. Accordingly, certain information and footnote disclosures
normally accompanying the annual consolidated financial statements have
been omitted. The interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Corporation's latest annual report on Form 10-K.
The financial data included herein has been subjected to a limited review
by Price Waterhouse LLP, the registrant's independent accountants, whose
report is included on page 7 of this filing.
Inventories are stated at cost, determined under the first-in, first-out
method, which is not in excess of market. Physical inventory counts are
taken at the end of each reporting quarter.
The Corporation and its subsidiaries were contingently liable at August
31, 1994 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.
Report of Independent Accountants
September 16, 1994
To The Board of Directors and
Shareholders of Skyline Corporation
We have reviewed the accompanying consolidated balance sheet as of August
31, 1994 and the related consolidated statements of earnings and retained
earnings for the three-month periods ended August 31, 1994 and 1993 and
the consolidated statements of cash flows for the three-month periods
ended August 31, 1994 and 1993 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, 1994, 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, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet information as of
May 31, 1994, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE LLP
Chicago, Illinois
Skyline Corporation and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
At August 31, 1994 cash and investments in U.S. Treasury Bills totaled
$16,567,000 a decrease of $561,000 from $17,128,000 at May 31, 1994.
Working capital at August 31, 1994 amounted to $46,063,000 compared to
$47,759,000 at May 31, 1994. Capital expenditures amounted to $5,226,000
in 1994 compared to $1,689,000 in the first quarter of the prior year.
Capital expenditures were made primarily to increase manufacturing
capacity, adopt new manufacturing processes, increase manufacturing
efficiencies and replace the Company's eighteen year-old aircraft. The
cash provided by operating activities in fiscal 1995 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 August 31, 1994
Sales in the quarter ended August 31, 1994 amounted to $155,328,000 a 14.1
percent increase from $136,167,000 in the comparable quarter of the prior
year. Manufactured housing sales increased 16.1 percent to $123,295,000
in 1994 compared to $106,235,000 in 1993. Recreational vehicle sales
increased 7.0 percent to $32,033,000 in the first quarter of 1994 compared
to $29,932,000 in 1993. Sales for the quarter reflected an improvement in
overall economic conditions which contributed to an increase in industry
wide demand for manufactured housing and recreational vehicles.
Cost of sales decreased in 1994 to 84.3 percent of sales compared with
85.2 percent in 1993. This decrease is due to increased sales volume and
continued cost containment efforts. Selling and administrative expenses
in 1994 increased slightly as a percentage of sales to 12.4 percent from
12.2 percent in 1993 due primarily to the costs of increased marketing
efforts.
Interest income amounted to $1,488,000 in 1994 compared to $1,441,000 in
1993. 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.
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.
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, 1994, 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 - no report on Form 8-K has been filed during the
quarter ended August 31, 1994.
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: October 11, 1994 /S/ Joseph B. Fanchi
Joseph B. Fanchi
V.P. Finance & Treasurer,
Chief Financial Officer
DATE: October 11, 1994 /S/ James R. Weigand
James R. Weigand
Corporate Controller