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, 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:
Shares Outstanding
Title of Class January 13, 1995
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 November 30, 1994 and May 31, 1994 2 - 3
Consolidated Statements of Earnings and 4
Retained Earnings for the three and
six-month periods ended November 30,
1994 and 1993
Consolidated Statements of Cash 5
Flows for the six-month periods
ended November 30, 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)
November 30, 1994 May 31, 1994
(Unaudited)
ASSETS
Current Assets:
Cash and temporary cash investments $ 6,272 $ 9,232
Treasury Bills, at cost plus accrued
interest, which approximates market 7,836 7,896
Accounts receivable, trade, less allowance
for doubtful accounts of $40 40,281 44,514
Inventories
Raw materials 10,064 8,399
Work in process 5,615 4,775
Finished goods 7,762 2,357
Total Inventories 23,441 15,531
Other current assets 7,733 6,405
TOTAL CURRENT ASSETS 85,563 83,578
Investment in U.S. Treasury Notes 89,917 89,912
Property, Plant and Equipment, at Cost:
Land 5,262 4,525
Buildings and improvements 52,081 47,982
Machinery and equipment 22,726 19,769
80,069 72,276
Less accumulated depreciation 40,279 39,946
Total Property, Plant and Equipment 39,790 32,330
Other Assets 2,724 2,711
$ 217,994 $ 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
November 30, 1994 May 31, 1994
(Unaudited)
Current Liabilities:
Accounts payable, trade $ 14,437 $ 14,468
Accrued salaries and wages 4,871 5,123
Accrued profit sharing 1,116 2,156
Accrued marketing programs 13,948 7,248
Other accrued liabilities 5,379 4,852
Income taxes 49 1,972
TOTAL CURRENT LIABILITIES 39,800 35,819
Other Deferred Liabilities 2,416 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 171,591 166,196
Treasury stock, at cost, 59,900 shares (1,053) (1,053)
TOTAL SHAREHOLDERS' EQUITY 175,778 170,383
$ 217,994 $ 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 and six-month periods ended November 30, 1994 and 1993
(Unaudited)
(Dollars in thousands except per share data)
Three-months Ended Six-months Ended
November 30, November 30,
1994 1993 1994 1993
Sales $ 164,475 $ 145,311 $ 319,803 $ 281,478
Cost of sales 138,798 121,716 269,664 237,765
Gross profit 25,677 23,595 50,139 43,713
Selling and administrative
expenses 20,453 17,992 39,687 34,650
Operating earnings 5,224 5,603 10,452 9,063
Interest income 1,523 1,475 3,011 2,916
Earnings before income taxes 6,747 7,078 13,463 11,979
Provision for income taxes:
Federal 2,190 2,330 4,370 3,900
State 510 475 1,020 805
2,700 2,805 5,390 4,705
Net earnings 4,047 4,273 8,073 7,274
Retained earnings,
beginning of period 168,883 158,244 166,196 156,589
172,930 162,517 174,269 163,863
Less, cash dividends paid 1,339 1,346 2,678 2,692
Retained earnings,
end of period $ 171,591 $ 161,171 $ 171,591 $ 161,171
Net earnings per share $ .36 $ .38 $ .72 $ .65
Cash dividends per share $ .12 $ .12 $ .24 $ .24
Weighted average common
shares outstanding 11,157,244 11,217,144 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 six-month periods ended November 30, 1994 and 1993
Increase (decrease) in Cash
(Unaudited)
(Dollars in thousands)
1994 1993
Cash Flows From Operating Activities:
Net earnings $ 8,073 $ 7,274
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Interest income earned on U.S. Treasury
Bills and Notes (2,867) (2,767)
Depreciation 1,569 1,330
Amortization of discount or premium on
U.S. Treasury Notes (5) 11
Working Capital Items:
Accounts receivable 4,233 3,681
Inventories (7,910) (6,395)
Other current assets (1,328) (1,243)
Accounts payable, trade (31) 6,159
Accrued liabilities 5,935 5,542
Income taxes payable (1,923) (84)
Other assets (13) 287
Other deferred liabilities 87 322
Total Adjustments (2,253) 6,843
Net cash provided by operating activities 5,820 14,117
Cash Flows From Investing Activities:
Proceeds from sale or maturity of
U.S. Treasury Bills 18,879 -
Purchase of U.S. Treasury Bills (18,556) (8,699)
Interest received from U.S. Treasury Notes 2,604 2,577
Proceeds from sale of property, plant
and equipment 38 -
Purchase of property, plant and equipment (9,067) (3,020)
Net cash used in investing activities (6,102) (9,142)
Cash Flows From Financing Activities:
Cash dividends paid (2,678) (2,692)
Net cash used in financing activities (2,678) (2,692)
Net increase (decrease) in cash (2,960) 2,283
Cash at beginning of year 9,232 8,787
Cash at end of quarter $ 6,272 $ 11,070
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, 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
November 30, 1994 and the consolidated results of operations and changes
in cash for the three and six-month periods ended November 30, 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 November
30, 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
December 15, 1994
To The Board of Directors and
Shareholders of Skyline Corporation
We have reviewed the accompanying consolidated balance sheet as of
November 30, 1994 and the related consolidated statements of earnings and
retained earnings for the three-month and six-month periods ended November
30, 1994 and 1993 and the consolidated statements of cash flows for the
six-month periods ended November 30, 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 November 30, 1994 cash and investments in U.S. Treasury Bills totaled
$14,108,000 a decrease of $3,020,000 from $17,128,000 at May 31, 1994.
This decrease was due primarily to an increase in inventories and capital
additions. Working capital at August 31, 1994 amounted to $45,763,000
compared to $47,759,000 at May 31, 1994. Capital expenditures amounted to
$9,067,000 in 1994 compared to $3,020,000 in the first half 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 are expected to be
adequate to fund any capital expenditures which may become necessary
during the year.
Results of Operations for the Quarter and Six-months Ended
November 30, 1994
Sales in the quarter ended November 30, 1994 amounted to $164,475,000 a
13.2 percent increase from $145,311,000 in the comparable quarter of the
prior year. Manufactured housing sales increased 14.8 percent to
$132,113,000 in 1994 compared to $115,038,000 in 1993. Manufactured
housing unit sales increased to 5,323 compared to 5,150 in 1993.
Recreational vehicle sales increased 6.9 percent to $32,362,000 in the
second quarter of fiscal 1995 compared to $30,273,000 in fiscal 1994.
Recreational vehicle unit sales increased to 2,544 compared to 2,536 in
fiscal 1994.
Sales during the first half of fiscal 1995 amounted to $319,803,000 a 13.6
percent increase from $281,478,000 in the comparable period of the prior
year. Manufactured housing sales increased 15.4 percent to $255,408,000
in 1994 compared to $221,273,000 in 1993. Manufactured housing unit sales
increased to 10,398 compared to 10,005 in 1993. Recreational vehicle sales
increased 7.0 percent to $64,395,000 in the first half of fiscal 1995
compared to $60,205,000 in fiscal 1994. Recreational vehicle unit sales
increased to 5,307 compared to 5,304 in 1993.
Sales for the quarter and the first half of fiscal 1995 reflected an
improvement in overall economic conditions which contributed to an
increase in industry wide demand for manufactured housing and non-
motorized recreational vehicles in most parts of the country.
Cost of sales in the second quarter increased slightly to 84.4 percent of
sales compared with 83.8 percent in 1993, while the cost of sales for the
first half of the year was very comparable to the prior year (84.3 percent
in fiscal 1995 vs 84.5 percent in fiscal 1994). The increase in costs for
the quarter was caused by additional costs associated with increasing
production at recently expanded facilities and a few plants not currently
achieving the results expected.
Selling and administrative expenses for the second quarter were 12.4
percent of sales for both years. Selling and administrative expenses in
the first half of fiscal 1995 increased slightly as a percentage of sales
to 12.4 percent from 12.3 percent in fiscal 1994 due primarily to the
costs of increased marketing efforts.
Interest income amounted to $1,523,000 in the second quarter of fiscal
1995 compared to $1,475,000 one year earlier. 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 and yields 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 report on Form 8K was filed on September 20, 1994, reporting the
election of directors and officers at the Annual Meeting of Shareholders
on September 19, 1994.
The Exhibit filed as part of this report is listed below.
Exhibit No. Description
27 Financial Data Schedule
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 13, 1995 /S/ Joseph B. Fanchi
Joseph B. Fanchi
V.P. Finance & Treasurer,
Chief Financial Officer
DATE: January 13, 1995 /S/ James R. Weigand
James R. Weigand
Corporate Controller