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, 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 January 12, 1996
Common stock 10,644,344
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, 1995 and May 31, 1995 2 - 3
Consolidated Statements of Earnings and 4
Retained Earnings for the three and
six-month periods ended November 30,
1995 and 1994
Consolidated Statements of Cash 5
Flows for the six-month periods
ended November 30, 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)
November 30, 1995 May 31, 1995
(Unaudited)
ASSETS
Current Assets:
Cash and temporary cash investments $ 6,495 $ 10,754
Treasury Bills, at cost plus accrued
interest, which approximates market 52,208 29,157
Accounts receivable, trade, less allowance
for doubtful accounts of $40 41,161 45,374
Inventories
Raw materials 6,161 6,751
Work in process 4,748 4,468
Finished goods 650 3,586
Total Inventories 11,559 14,805
Other current assets 8,748 7,246
TOTAL CURRENT ASSETS 120,171 107,336
Investment in U.S. Treasury Notes 59,912 59,917
Property, Plant and Equipment, at Cost:
Land 5,220 5,278
Buildings and improvements 57,546 57,502
Machinery and equipment 22,267 24,391
85,033 87,171
Less accumulated depreciation 40,451 41,915
Total Property, Plant and Equipment 44,582 45,256
Other Assets 2,967 2,955
$ 227,632 $ 215,464
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, 1995 May 31, 1995
(Unaudited)
Current Liabilities:
Accounts payable, trade $ 13,268 $ 9,962
Accrued salaries and wages 5,816 5,662
Accrued profit sharing 1,297 2,408
Accrued marketing programs 16,594 8,192
Other accrued liabilities 8,524 6,142
Income taxes 309 880
TOTAL CURRENT LIABILITIES 45,808 33,246
Other Deferred Liabilities 2,555 2,486
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 183,931 176,187
Treasury stock, at cost, 572,800 shares
at November 30, 1995 and 96,500 shares
at May 31, 1995 (9,902) (1,695)
TOTAL SHAREHOLDERS' EQUITY 179,269 179,732
$ 227,632 $ 215,464
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, 1995 and 1994
(Unaudited)
(Dollars in thousands except per share data)
Three-months Ended Six-months Ended
November 30, November 30,
1995 1994 1995 1994
Sales $ 172,469 $ 164,475 $ 336,324 $ 319,803
Cost of sales 141,853 138,798 276,699 269,664
Gross profit 30,616 25,677 59,625 50,139
Selling and administrative
expenses 22,612 20,453 45,409 39,687
Operating earnings 8,004 5,224 14,216 10,452
Interest income 1,576 1,523 3,126 3,011
Earnings before income taxes 9,580 6,747 17,342 13,463
Provision for income taxes:
Federal 3,135 2,190 5,685 4,370
State 719 510 1,299 1,020
3,854 2,700 6,984 5,390
Net earnings 5,726 4,047 10,358 8,073
Retained earnings,
beginning of period 179,485 168,883 176,187 166,196
185,211 172,930 186,545 174,269
Less, cash dividends paid 1,280 1,339 2,614 2,678
Retained earnings,
end of period $ 183,931 $ 171,591 $ 183,931 $ 171,591
Net earnings per share $ .54 $ .36 $ .96 $ .72
Cash dividends per share $ .12 $ .12 $ .24 $ .24
Weighted average common
shares outstanding 10,655,689 11,157,244 10,828,196 11,157,244
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, 1995 and 1994
Increase (Decrease) in Cash
(Unaudited)
(Dollars in thousands)
1995 1994
Cash Flows From Operating Activities:
Net earnings $ 10,358 $ 8,073
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Interest income earned on U.S. Treasury
Bills and Notes (3,006) (2,867)
Depreciation 1,636 1,569
Amortization of discount or premium on
U.S. Treasury Notes 5 (5)
Working capital items:
Accounts receivable 4,213 4,233
Inventories 3,246 (7,910)
Other current assets (1,502) (1,328)
Accounts payable, trade 3,306 (31)
Accrued liabilities 9,827 5,935
Income taxes payable (571) (1,923)
Other assets (12) (13)
Other deferred liabilities 69 87
Total adjustments 17,211 (2,253)
Net cash provided by operating activities 27,569 5,820
Cash Flows From Investing Activities:
Proceeds from sale or maturity of
U.S. Treasury Bills 84,492 18,879
Purchase of U.S. Treasury Bills (106,336) (18,556)
Interest received from U.S. Treasury Notes 1,799 2,604
Proceeds from sale of property, plant
and equipment 555 38
Purchase of property, plant and equipment (1,517) (9,067)
Net cash used in investing activities (21,007) (6,102)
Cash Flows From Financing Activities:
Cash dividends paid (2,614) (2,678)
Purchase of treasury stock (8,207) -
Net cash used in financing activities (10,821) (2,678)
Net decrease in cash (4,259) (2,960)
Cash at beginning of year 10,754 9,232
Cash at end of quarter $ 6,495 $ 6,272
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, 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
November 30, 1995 and the consolidated results of operations and changes
in cash for the three and six-month periods ended November 30, 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
November 30, 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
December 15, 1995
To The Board of Directors and
Shareholders of Skyline Corporation
We have reviewed the accompanying consolidated balance sheet as of
November 30, 1995 and the related consolidated statements of earnings
and retained earnings for the three-month and six-month periods ended
November 30, 1995 and 1994 and the consolidated statements of cash flows
for the six-month periods ended November 30, 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.
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, 1995 cash and investments in U.S. Treasury Bills totaled
$58,703,000, an increase of $18,792,000 from $39,911,000 at May 31, 1995.
Current assets exclusive of cash and investments in U.S. Treasury Bills
totaled $61,468,000 at November 30, 1995, a decrease of $5,957,000 from
the balance at May 31, 1995 of $67,425,000. Reductions in trade accounts
receivable ($4,213,000) and finished goods inventories ($2,936,000)
contributed to this decrease. Current liabilities increased $12,562,000
from May 31, 1995 to $45,808,000 at November 30, 1995. This increase in
current liabilities can mainly be attributed to increased trade accounts
payable due to increased production ($3,306,000) and increased marketing
program accruals ($8,402,000). Working capital at November 30, 1995
amounted to $74,363,000 compared to $74,090,000 at May 31, 1995. Capital
expenditures totaled $1,517,000 in 1995 compared to $9,067,000 in the
first half of the prior year. Capital expenditures during the current
fiscal year were made primarily to increase manufacturing capacity, adopt
new manufacturing processes and increase manufacturing efficiencies. Cash
was also used to purchase $8,207,000 of Company stock in fiscal 1996. The
cash provided by operating activities in fiscal 1996 is expected to be
adequate to fund any capital expenditures and treasury stock purchases
which may be deemed necessary during the year. Historically, the
Corporation's financing needs have been met through funds generated
internally.
Results of Operations for the Quarter and Six-months Ended November 30,
1995
Sales in the quarter ended November 30, 1995 amounted to $172,469,000, a
4.9 percent increase from $164,475,000 in the comparable quarter of the
prior year. Manufactured housing sales increased 13.6 percent to
$150,079,000 in 1995 compared to $132,113,000 in 1994. Manufactured
housing unit sales increased to 5,657 compared to 5,323 in 1994.
Recreational vehicle sales decreased 30.8 percent to $22,390,000 in the
second quarter of fiscal 1996 compared to $32,362,000 in fiscal 1995.
Recreational vehicle unit sales decreased to 1,776 compared to 2,544 in
fiscal 1995.
Sales during the first half of fiscal 1996 amounted to $336,324,000
a 5.2 percent increase from $319,803,000 in the comparable period of the
prior year. Manufactured housing sales increased 14.1 percent to
$291,377,000 in 1995 compared to $255,408,000 in 1994. Manufactured
housing unit sales increased to 11,027 compared to 10,398 in 1994.
Recreational vehicle sales decreased 30.2 percent to $44,947,000 in the
first half of fiscal 1996 compared to $64,395,000 in fiscal 1995.
Recreational vehicle unit sales decreased to 3,637 compared to 5,307 in
1994. Sales for the second quarter and the first half of fiscal 1996
reflect continuing strong demand for manufactured housing in most sections
of the country and an overall industry slowdown in the RV marketplace.
Cost of sales in the second quarter decreased to 82.2 percent of sales
compared with 84.4 percent in 1994, while the cost of sales for the first
half of the year was very comparable to the quarter (82.3 percent in
fiscal 1996 vs 84.3 percent in fiscal 1995). The decrease in costs is due
to efficiencies gained by increased sales volume, higher product selling
prices in the manufactured housing segment, and continued cost containment
efforts.
Selling and administrative expenses for the second quarter of fiscal 1996
increased as a percentage of sales to 13.1 percent from 12.4 percent last
year. Selling and administrative expenses for the first half of the
fiscal year also increased as a percentage of sales to 13.5 percent from
12.4 percent. Both increases were due primarily to the costs of increased
marketing efforts.
Interest income amounted to $1,576,000 in the second quarter of fiscal
1996 compared to $1,523,000 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 taxable 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, 1995, 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 second quarter of fiscal 1996.
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 12, 1996 /S/ Joseph B. Fanchi
Joseph B. Fanchi
V.P. Finance & Treasurer,
Chief Financial Officer
DATE: January 12, 1996 /S/ James R. Weigand
James R. Weigand
Corporate Controller