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 February 28, 1995
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 March 29, 1995
Common stock 11,120,644
SKYLINE CORPORATION
Form 10-Q Quarterly Report
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements: 2 - 3
Consolidated Balance Sheets as
of February 28, 1995 and May 31, 1994
Consolidated Statements of Earnings and 4
Retained Earnings for the three and
nine-month periods ended February 28,
1995 and 1994
Consolidated Statements of Cash 5
Flows for the nine-month periods
ended February 28, 1995 and 1994
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)
February 28, 1995 May 31, 1994
(Unaudited)
ASSETS
Current Assets:
Cash and temporary cash investments $ 7,646 $ 9,232
Treasury Bills, at cost plus accrued
interest, which approximates market 32,154 7,896
Accounts receivable, trade, less allowance
for doubtful accounts of $40 44,151 44,514
Inventories
Raw materials 9,402 8,399
Work in process 4,939 4,775
Finished goods 10,319 2,357
Total Inventories 24,660 15,531
Other current assets 5,686 6,405
TOTAL CURRENT ASSETS 114,297 83,578
Investment in U.S. Treasury Notes 59,919 89,912
Property, Plant and Equipment, at Cost:
Land 5,271 4,525
Buildings and improvements 55,170 47,982
Machinery and equipment 23,397 19,769
83,838 72,276
Less accumulated depreciation 41,142 39,946
Total Property, Plant and Equipment 42,696 32,330
Other Assets 2,822 2,711
$ 219,734 $ 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
February 28, 1995 May 31, 1994
(Unaudited)
Current Liabilities:
Accounts payable, trade $ 13,663 $ 14,468
Accrued salaries and wages 5,555 5,123
Accrued profit sharing 1,683 2,156
Accrued marketing programs 14,328 7,248
Other accrued liabilities 5,576 4,852
Income taxes 104 1,972
TOTAL CURRENT LIABILITIES 40,909 35,819
Other Deferred Liabilities 2,447 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 172,833 166,196
Treasury stock, at cost, 96,500 shares
in 1995 and 59,900 shares in 1994 (1,695) (1,053)
TOTAL SHAREHOLDERS' EQUITY 176,378 170,383
$ 219,734 $ 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 nine-month periods ended February 28, 1995 and 1994
(Unaudited)
(Dollars in thousands except per share data)
Three-months Ended Nine-months Ended
February 28, February 28,
1995 1994 1995 1994
Sales $ 150,657 $ 130,732 $ 470,460 $ 412,210
Cost of sales 127,871 111,435 397,536 349,200
Gross profit 22,786 19,297 72,924 63,010
Selling and administrative
expenses 19,838 16,687 59,525 51,337
Operating earnings 2,948 2,610 13,399 11,673
Interest income 1,343 1,438 4,355 4,354
Earnings before income taxes 4,291 4,048 17,754 16,027
Provision for income taxes:
Federal 1,390 1,335 5,760 5,235
State 320 273 1,340 1,078
1,710 1,608 7,100 6,313
Net earnings 2,581 2,440 10,654 9,714
Retained earnings,
beginning of period 171,591 161,171 166,196 156,589
174,172 163,611 176,850 166,303
Less, cash dividends paid 1,339 1,346 4,017 4,038
Retained earnings,
end of period $ 172,833 $ 162,265 $ 172,833 $ 162,265
Net earnings per share $ .23 $ .22 $ .96 $ .87
Cash dividends per share $ .12 $ .12 $ .36 $ .36
Weighted average common
shares outstanding 11,151,144 11,217,144 11,155,233 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 nine-month periods ended February 28, 1995 and 1994
Increase (decrease) in Cash
(Unaudited)
(Dollars in thousands)
1995 1994
Cash Flows From Operating Activities:
Net earnings $ 10,654 $ 9,714
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Interest income earned on U.S. Treasury
Bills and Notes (4,216) (4,142)
Depreciation 2,481 2,103
Amortization of discount or premium on
U.S. Treasury Notes (7) 16
Working Capital Items:
Accounts receivable 363 (2,810)
Inventories (9,129) (12,114)
Other current assets 719 (2,191)
Accounts payable, trade (805) 4,798
Accrued liabilities 7,763 7,583
Income taxes payable (1,868) (890)
Other assets (111) 442
Other deferred liabilities 118 394
Total Adjustments (4,692) (6,811)
Net cash provided by operating activities 5,962 2,903
Cash Flows From Investing Activities:
Proceeds from sale or maturity of
U.S. Treasury Bills 26,776 11,866
Proceeds from maturity of U.S. Treasury Notes 30,000 30,000
Purchase of U.S. Treasury Bills (50,646) (8,700)
Purchase of U.S. Treasury Notes - (29,728)
Interest received from U.S. Treasury Notes 3,828 3,872
Proceeds from sale of property, plant
and equipment 38 -
Purchase of property, plant and equipment (12,885) (4,337)
Net cash provided by (used in) investing
activities (2,889) 2,973
Cash Flows From Financing Activities:
Cash dividends paid (4,017) (4,038)
Purchase of treasury stock (642) -
Net cash used in financing activities (4,659) (4,038)
Net increase (decrease) in cash (1,586) 1,838
Cash at beginning of year 9,232 8,787
Cash at end of quarter $ 7,646 $ 10,625
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 nine-month periods ended February 28, 1995 and 1994
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
February 28, 1995 and the consolidated results of operations and changes
in cash for the three and nine-month periods ended February 28, 1995 and
1994.
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 February
28, 1995 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
March 15, 1995
To The Board of Directors and
Shareholders of Skyline Corporation
We have reviewed the accompanying consolidated balance sheet as of
February 28, 1995 and 1994 and the related consolidated statements of
earnings and retained earnings for the three-month and nine-month periods
ended February 28, 1995 and 1994 and the consolidated statements of cash
flows for the nine-month periods ended February 28, 1995 and 1994 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 February 28, 1995 cash and investments in U.S. Treasury Bills totaled
$39,800,000 an increase of $22,672,000 from $17,128,000 at May 31, 1994.
This increase was due primarily to the maturity of $30,000,000 in U.S.
Treasury Notes, which were used to purchase U. S. Treasury Bills, offset
by an increase in inventories and capital additions. Working capital at
February 28, 1995 amounted to $73,388,000 compared to $47,759,000 at May
31, 1994, an increase which also was due to the purchase of U. S. Treasury
Bills. Capital expenditures amounted to $12,885,000 in 1995 compared to
$4,337,000 for the first nine months 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 Corporation's
initial cash balance and the additional 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 Nine-months Ended
February 28, 1995
Sales in the quarter ended February 28, 1995 amounted to $150,657,000 a
15.2 percent increase from $130,732,000 in the comparable quarter of the
prior year. Manufactured housing sales increased 17.2 percent to
$117,011,000 in 1995 compared to $ 99,870,000 in 1994. Manufactured
housing unit sales increased to 4,583 compared to 4,364 in 1994.
Recreational vehicle sales increased 9.0 percent to $33,646,000 in the
third quarter of fiscal 1995 compared to $30,862,000 in fiscal 1994.
Recreational vehicle unit sales increased to 2,785 compared to 2,535 in
fiscal 1994.
Sales during the first nine months of fiscal 1995 amounted to $470,460,000
a 14.1 percent increase from $412,210,000 in the comparable period of the
prior year. Manufactured housing sales increased 16.0 percent to
$372,419,000 in 1995 compared to $321,143,000 in 1994. Manufactured
housing unit sales increased to 14,981 compared to 14,369 in 1994.
Recreational vehicle sales increased 7.7 percent to $98,041,000 in the
first nine months of fiscal 1995 compared to $91,067,000 in fiscal 1994.
Recreational vehicle unit sales increased to 8,092 compared to 7,839 in
1994.
Sales for the quarter and the first nine months 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 third quarter decreased slightly to 84.9 percent of
sales compared with 85.2 percent in 1994, while the cost of sales for the
first nine months of the year was very comparable to the prior year (84.5
percent in fiscal 1995 and 84.7 percent in fiscal 1994). The decrease in
costs as a percent of sales was caused by increased manufacturing
efficiencies which were partially offset 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 third quarter were 13.2
percent of sales compared with 12.8 percent in 1994. Selling and
administrative expenses in the first nine months of fiscal 1995 increased
slightly as a percentage of sales to 12.7 percent from 12.5 percent in
fiscal 1994. Both increases are due primarily to the costs of increased
marketing efforts.
Interest income amounted to $1,343,000 in the third quarter of fiscal 1995
compared to $ 1,438,000 one year earlier. Interest income is directly
related to the amount available for investment and the prevailing yields
of U.S. Government securities. The decrease in interest income was due to
lower investment levels during the period.
During the third quarter of 1995 the Corporation closed a high-end
recreational vehicle plant. This plant is being converted to add
production capacity to the popular Nomad/Layton towable recreational
vehicle brands.
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
No reports on Form 8K were filed during the third quarter of 1995. 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: March 29, 1995 /S/ Joseph B. Fanchi
Joseph B. Fanchi
V.P. Finance & Treasurer,
Chief Financial Officer
DATE: March 29, 1995 /S/ James R. Weigand
James R. Weigand
Corporate Controller