Item 1. Business
General Development of Business
Skyline Corporation was originally incorporated in Indiana in 1959, as successor to a business founded in 1951. Skyline Corporation and its consolidated subsidiaries (the "Company") design, produce and distribute manufactured housing (mobile homes and multi-sectional homes) and recreational vehicles (travel trailers, including park models and fifth wheels, and truck campers).
The Company, which is one of the largest producers of manufactured homes in the United States, produced 17,512 manufactured homes in fiscal year 1997.
The Company's manufactured homes are marketed under a number of trademarks. They are available in lengths ranging from 36' to 80' and in single wide widths from 12' to 18', double wide widths from 20' to 32', and triple wide widths from 36' to 42'.
The Company's recreational vehicles are sold under the "Nomad," "Layton," "Aljo" and "Mountain View" trademarks for travel trailers and fifth wheels and the "WeekEnder" trademark for truck campers.
In fiscal year 1997 manufactured homes represented 81% of total sales, while recreational vehicles accounted for the remaining 19%. In the prior year the sales dollars were 84% manufactured homes and 16% recreational vehicles. Additional financial data relating to these industry segments is included in Note 3, Industry Segment Information, in the Notes to Consolidated Financial Statements included in this document under Item 8.
Narrative Description of Business
Principal Markets
The principal markets for manufactured homes are the suburban and rural areas of the continental United States. The principal buyers continue to be young married couples and senior citizens, but the market tends to broaden when conventional housing becomes more difficult to purchase and finance.
The recreational vehicle market is made up of primarily vacationing middle income families, retired couples traveling around the country and sportsmen pursuing four-season hobbies.
Method of Distribution
The Company's manufactured homes are distributed by approximately 850 dealers at 1,460 locations throughout the United States and recreational vehicles are distributed by approximately 400 dealers at 460 locations throughout the United States. These are generally not exclusive dealerships and it is believed that most dealers also sell products of other manufacturers.
The Company provides the retail purchaser of its products with a full one-year warranty against defects in materials and workmanship. The warranties are backed by a corporate service department and an extensive field service system.
The Company's products are sold to dealers either through floor plan financing with various financial institutions or on a cash on delivery basis. Payments to the Company are made either directly by the dealer or by financial institutions which have agreed to finance dealer purchases of the Company's products. In accordance with industry practice, certain financial institutions which finance dealer purchases require the Company to execute repurchase agreements which provide that in the event a dealer defaults on its repayment of the financing, the Company will repurchase its products from the financing institution in accordance with a declining repurchase price schedule established by the Company. Any loss under these agreements is the difference between the repurchase cost and the resale value of the units repurchased. Further, the risk of loss is spread over numerous dealers. There have been no material losses related to repurchases in past years.
Raw Materials and Supplies
The Company is basically an assembler of components purchased from outside sources. The major components used by the Company are lumber, plywood, shingles, vinyl and wood siding, steel, aluminum, insulation, home appliances, furnaces, plumbing fixtures, hardware, floor coverings and furniture. The suppliers are many and range in size from large national companies to very small local companies. At the present time, the Company is obtaining sufficient materials to fulfill its needs.
Patents, Trademarks, Licenses, Franchises and Concessions
The Company does not rely upon any terminable or nonrenewable rights such as patents or licenses or franchises under the trademarks or patents of others, in the conduct of any segment of its business.
Seasonal Fluctuations
While the Company maintains production of manufactured homes and recreational vehicles throughout the year, seasonal fluctuations in sales do occur. Sales and production of manufactured homes are affected by winter weather conditions at the Company's northern plants. Recreational vehicle sales are generally higher in the spring and summer months than in the fall and winter months.
Inventory
The Company does not build significant inventories of either finished goods or raw materials at any time. It does not deliver on consignment.
Dependence Upon Individual Customers
The Company does not rely upon any single dealer for a significant percentage of its business in any industry segment.
Backlog
The Company does not consider as significant in its business the existence and extent of backlog at any given date. Because the Company's production is based on dealers' orders, which continuously fluctuate, and a relatively short manufacturing cycle, the existence of a backlog does not provide a reliable indication of the status of the Company's business.
Government Contracts
Two divisions of the Company had government contracts that provided a small subsidy for making its electrically heated homes more energy efficient. These contracts expired July 26, 1995.
Competitive Conditions
The manufactured housing and recreational vehicle industries are highly competitive, with particular emphasis on price and features offered. The Company's competitors are numerous, ranging from multi-billion dollar corporations to relatively small and specialized manufacturers.
The Manufactured Housing Institute reported that the industry produced approximately 363,400 homes in calendar year 1996. In the same period, the Company produced 18,791 units for a 5.2% market share. In calendar year 1995, approximately 339,600 homes were manufactured by the industry. In that period the Company produced 20,709 homes for a 6.1% market share.
The recreational vehicle industry produced 466,800 units in calendar year 1996 compared to 475,200 units in calendar year 1995. The following table shows the Company's competitive position in the recreational vehicle product lines it sells.
Units Produced Units Produced Calendar Year 1996 Calendar Year 1995 Industry Skyline Industry Skyline
Travel Trailers 75,400 5,369 76,700 5,778
Fifth Wheels 48,500 2,660 47,000 2,498
Park Models 6,800 675 6,900 692
Truck Campers 11,000 402 12,100 426
Both the manufactured housing and recreational vehicle segments of the Company's business are dependent upon the availability of financing to dealers and retail financing. Consequently, increases in interest rates and/or tightening of credit through governmental action or otherwise have adversely affected the Company's business in the past and may do so in the future.
The Company considers it impossible to predict the future occurrence, duration or severity of cost or availability problems in financing either manufactured homes or recreational vehicles. To the extent that they recur, such public concerns will affect sales of the Company's products.
Regulation
The manufacture, distribution and sale of manufactured homes and recreational vehicles are subject to government regulations in both the United States and Canada, at federal, state or provincial and local levels.
Environmental Quality
The Company believes that compliance with federal, state and local requirements respecting environmental quality will not require any material capital expenditures for plant or equipment modifications which would adversely affect earnings.
Other Regulations
The U.S. Department of Housing and Urban Development (HUD) has set national manufactured home construction and safety standards and implemented recall and other regulations since 1976. The National Mobile Home Construction and Safety Standards Act of 1974, as amended, under which such standards and regulations are promulgated, prohibits states from establishing or continuing in effect any manufactured home standard that is not identical to the federal standards as to any covered aspect of performance. Implementation of these standards and regulations involves inspection agency approval of manufactured home designs, plant and home inspection by states or other HUD-approved third parties, manufacturer certification that the standards are met, and possible recalls if they are not or if homes contain safety hazards.
Some components of manufactured homes may also be subject to Consumer Product Safety Commission standards and recall requirements. In addition, the Company has voluntarily subjected itself to third party inspection of all of its products nationwide in order to further assure the Company, its dealers, and customers of compliance with established standards.
The Company's travel trailers continue to be subject to safety standards and recall and other regulations promulgated by the U.S. Department of Transportation under the National Traffic and Motor Vehicle Safety Act of 1966, as well as state laws and regulations.
The Company's operations are subject to the Federal Occupational Safety and Health Act, and are routinely inspected thereunder.
The transportation and placement (in the case of manufactured homes) of the Company's products are subject to state highway use regulations and local ordinances which control the size of units that may be transported, the roads to be used, speed limits, hours of travel, and allowable locations for manufactured homes and parks. The Company is also subject to many state manufacturer licensing and bonding requirements, and to dealer day in court requirements in some states.
Manufactured homes and recreational vehicles may be subject to the Magnuson-Moss Warranty - Federal Trade Commission Improvement Act, which regulates warranties on consumer products. The Company believes that its existing warranties meet all requirements of the Act.
HUD has promulgated rules requiring producers of manufactured homes to utilize wood products certified by their suppliers to meet HUD's established limits on formaldehyde emissions, and to place in each home written notice to prospective purchasers of possible adverse reaction from airborne formaldehyde in the homes. These rules are designated as preemptive of state regulation.
Number of Employees
The Company employs approximately 3,500 people at the present time.
Item 2.
Item 2. Properties
The Company owns its corporate offices and design facility, which are located in Elkhart, Indiana.
The Company's 25 manufacturing plants, all of which are owned, are as follows:
Location Products
California, Hemet Manufactured Housing/Park Models California, Hemet Recreational Vehicles California, Hemet Recreational Vehicles California, Woodland Manufactured Housing Florida, Ocala Manufactured Housing Florida, Ocala Manufactured Housing Florida, Ocala Manufactured Housing/Park Models Indiana, Bristol Manufactured Housing Indiana, Elkhart Manufactured Housing Indiana, Elkhart Recreational Vehicles Indiana, Goshen Manufactured Housing Indiana, Howe Manufactured Housing Kansas, Arkansas City Manufactured Housing Kansas, Halstead Manufactured Housing Louisiana, Bossier City Manufactured Housing North Carolina, Mocksville Manufactured Housing Ohio, Sugarcreek Manufactured Housing Oregon, McMinnville Manufactured Housing Oregon, McMinnville Recreational Vehicles Pennsylvania, Ephrata Manufactured Housing Pennsylvania, Leola Manufactured Housing Pennsylvania, Leola Recreational Vehicles Texas, Mansfield Recreational Vehicles Vermont, Fair Haven Manufactured Housing Wisconsin, Lancaster Manufactured Housing
The above facilities range in size from approximately 50,000 square feet to approximately 160,000 square feet.
It is extremely difficult to determine the unit productive capacity of the Company because of the ever-changing product mix.
The Company believes that its plant facilities and machinery and equipment are well maintained and are in good operating condition.
Item 3.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries is a party to any pending legal proceeding which could have a material effect on operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended May 31, 1997.
PART II
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
Skyline Corporation (SKY) is traded on the New York Stock Exchange. A quarterly cash dividend of 15 cents ($0.15) per share was paid during all quarters in fiscal 1997 and in the fourth quarter of fiscal 1996, and quarterly dividends of 12 cents ($0.12) per share were paid during all other quarters of fiscal 1996. At May 31, 1997, there were approximately 1,900 holders of record of Skyline Corporation common stock. A quarterly summary of the market price is listed for the fiscal years ended May 31, 1997 and 1996.
1997 1996
Quarter High Low High Low
First $26-3/4 $23-5/8 $18-11/16 $16-1/2
Second $28-5/8 $25 $19 $17-3/8
Third $27-1/8 $23-1/8 $23- 5/8 $18-1/4
Fourth $24-7/8 $21 $26- 5/8 $22-1/2
Item 6.
Item 6. Selected Financial Data
Dollars in thousands except per share data
1997 1996 1995 1994 1993
FOR THE YEAR Sales $613,191 $645,956 $642,118 $580,144 $491,716 Earnings before cumulative effect of accounting change $ 20,831 $ 19,683 $ 15,342 $ 14,991 $ 10,311 Net earnings $ 20,831 $ 19,683 $ 15,342 $ 14,991 $ 9,941 Cash dividends paid $ 6,098 $ 5,477 $ 5,351 $ 5,384 $ 5,384 Capital expenditures $ 3,285 $ 2,971 $ 16,385 $ 8,090 $ 4,134 Depreciation $ 3,745 $ 3,479 $ 3,404 $ 2,879 $ 2,685
AT YEAR END Working capital $133,942 $ 80,761 $ 74,090 $ 47,759 $ 43,412 Current ratio 4.5:1 2.9:1 3.2:1 2.3:1 2.8:1 U.S. Treasury Notes $ 29,949 $ 59,907 $ 59,917 $ 89,912 $ 90,197 Property, plant and equipment, net$ 41,952 $ 43,400 $ 45,256 $ 32,330 $ 27,132 Total assets $217,867 $230,336 $215,464 $208,531 $188,511 Shareholders' equity $176,221 $184,267 $179,732 $170,383 $161,829
PER SHARE Earnings before cumulative effect of accounting change $ 2.07 $ 1.84 $ 1.38 $ 1.34 $ .92 Net earnings $ 2.07 $ 1.84 $ 1.38 $ 1.34 $ .89 Cash dividends$ .60 $ .51 $ .48 $ .48 $ .48 Shareholders' equity $ 18.23 $ 17.43 $ 16.16 $ 15.27 $ 14.43
Note: The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting For Income Taxes," effective June 1, 1992. The cumulative effect of this change was $370,000, or $.03 per share.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)
Results of Operations - Fiscal 1997 Compared to Fiscal 1996
Sales in 1997 were $613,191,000, a decrease of $32,765,000 from $645,956,000 in 1996. Manufactured housing sales totaled $494,691,000 for 1997 compared to $542,519,000 in 1996. Manufactured housing unit sales decreased to 17,512 units compared to 20,301 units in 1996. Sales for 1997 were depressed by severe weather conditions in some parts of the country during the third quarter and by a decline in manufactured housing demand during some of the year. November 1996 marked the first month since November 1991 that industry shipments were below the same month of the prior year, and this trend continued through March 1997. In addition, many dealers were reducing inventories because of overstocked conditions relative to current end consumer demand. Recreational vehicle sales increased to $118,500,000 in 1997 compared to $103,437,000 in 1996. Recreational vehicle unit sales increased to 9,103 in 1997 compared to 8,341 in 1996. The recreational vehicle sales reflect a reversal of last year's overall industry slowdown in the RV marketplace, although sales have not yet recovered to 1995's level of $136,450,000 and 11,315 units.
Cost of sales in 1997 was 82.7% of sales compared to 82.6% in 1996. Manufactured housing cost of sales in 1997 increased to 81.8% of sales compared to 80.6% in 1996. The increase in costs as a percent of sales is due to the larger proportion of fixed and semi-fixed costs resulting from the decreased sales volume. Recreational vehicle cost of sales in 1997 decreased to 86.4% of sales compared to 87.0% in 1996. This decrease was due to efficiencies gained by increased sales volumes and continued cost containment efforts.
Selling and administrative expenses in 1997 decreased as a percentage of sales to 12.9% from 13.1% in 1996. The decrease is due primarily to the reduction in the costs of marketing programs which was partially offset by the impact of the reduced sales volume on the proportion of fixed and semi-fixed costs to total selling and administrative expenses.
Manufactured housing operating earnings as a percentage of sales were 5.5% in 1997 and 6.0% in 1996, the result of decreased gross margins. Recreational vehicle operating earnings as a percentage of sales increased to 3.8% of sales in 1997 from a small loss of less than 0.1% of sales in 1996. Recreational vehicle earnings benefitted from the decreased cost of sales discussed above and lower costs of marketing programs during 1997.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited), continued
Interest income amounted to $6,047,000 in 1997 compared to $6,192,000 in 1996. 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 slightly lower investment levels during the period which were partially offset by marginally higher yields.
The gain on sale of property, plant and equipment in 1997 includes $1,483,000 from the sale of two unused production facilities. These sales had an impact on net earnings for the year of $888,000, or $.09 per share. The loss on sale of property, plant and equipment in 1996 includes $492,000 of costs to raze an unused production facility. These costs had an impact on net earnings for 1996 of $295,000, or $.03 per share.
Results of Operations - Fiscal 1996 Compared to Fiscal 1995
Sales in 1996 were $645,956,000, an increase of $3,838,000 from $642,118,000 in 1995. Manufactured housing sales totaled $542,519,000 for 1996 compared to $505,668,000 in 1995. Manufactured housing unit sales increased to 20,301 units compared to 20,248 units in 1995. The sales increase in 1996 reflects favorable overall economic conditions during much of the year which contributed to an increase in industry-wide demand for manufactured housing. These favorable conditions were partially offset by severe weather conditions which negatively impacted housing sales in certain markets during the third and fourth quarters and by consumer uncertainty regarding interest rates. Recreational vehicle sales decreased to $103,437,000 in 1996 compared to $136,450,000 in 1995. Recreational vehicle unit sales decreased to 8,341 in 1996 compared to 11,315 in 1995. Sales of recreational vehicles were negatively affected by a continued industry slowdown in the RV marketplace due largely to consumer uncertainty regarding interest rates.
Cost of sales in 1996 was 82.6% of sales compared to 84.1% in 1995. Manufactured housing cost of sales in 1996 decreased to 80.6% of sales compared to 83.4% in 1995. The decrease in costs as a percent of sales was due to efficiencies gained by increased sales volume, higher product selling prices, and continued cost containment efforts. Recreational vehicle cost of sales in 1996 increased to 87.0% of sales compared to 85.4% in 1995. This increase was due mainly to the effects of the sharp sales decline from 1995.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited), continued
Selling and administrative expenses in 1996 increased as a percentage of sales to 13.1% from 12.8% in 1995. The increase was due primarily to the costs of increased marketing efforts.
Manufactured housing operating earnings as a percentage of sales were 6.0% in 1996 and 4.7% in 1995, the net result of increased margins and selling and administrative expenses discussed above. Recreational vehicle operating earnings as a percentage of sales decreased to a small loss of less than 0.1% of sales in 1996 from an earnings of 0.1% of sales in 1995. Operating earnings in 1996 for recreational vehicles were depressed largely due to the sales decrease discussed above.
Interest income amounted to $6,192,000 in 1996 compared to $5,827,000 in 1995. 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 higher investment levels during the period which were partially offset by slightly lower yields.
The loss on sale of property, plant and equipment in 1996 includes $492,000 of costs to raze an unused production facility. These costs had an impact on net earnings for the year of $295,000, or $.03 per share.
Liquidity and Capital Resources
At May 31, 1997 cash and short-term investments in U.S. Treasury Bills and Notes totaled $110,497,000, an increase of $55,404,000 from $55,093,000 at May 31, 1996. 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, and the reclassification of $29,949,000 of U.S. Treasury Notes due within one year as current assets. Current assets exclusive of cash and investments in U.S. Treasury Bills and Notes totaled $62,031,000 at the end of fiscal 1997, a decrease of $6,743,000 from the balance at May 31, 1996 of $68,774,000. Decreases in trade accounts receivable ($5,367,000) and inventories ($629,000) due to lower fiscal 1997 fourth quarter sales volumes were the main causes of this change. Current liabilities decreased $4,520,000 from May 31, 1996 to $38,586,000 at May 31, 1997. This decrease in current liabilities can mainly be attributed to decreased income taxes payable ($2,379,000) and the general decrease in other current liabilities due to lower fourth quarter fiscal 1997 sales volumes. Working capital at May 31, 1997 amounted to $133,942,000 compared to $80,761,000 at May 31, 1996.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited), continued
Capital expenditures totaled $3,285,000 in fiscal 1997 compared to $2,971,000 in the prior year. Capital expenditures during the current fiscal year were made primarily to adopt new manufacturing processes, increase manufacturing efficiencies, and replace worn-out equipment. Two unused production facilities were sold in fiscal 1997, resulting in a net of tax gain of $888,000. Cash was also used to purchase $22,779,000 of Company stock in fiscal 1997, compared to $9,671,000 in fiscal 1996. The cash provided by operating activities in fiscal 1998, along with current cash and short-term investments, is expected to be adequate to fund any capital expenditures and treasury stock purchases during the year. Historically, the Corporation's financing needs have been met through funds generated internally.
Other Matters
The provision for federal income taxes in each year approximates the statutory rate and for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities.
The consolidated financial statements included in this report reflect transactions in the dollar values in which they were incurred and, therefore, do not attempt to measure the impact of inflation. However, the Corporation believes that inflation has not had a material effect on its operations during the past three years. On a long-term basis the Corporation has demonstrated an ability to adjust the selling prices of its products in reaction to changing costs due to inflation.
Item 8.
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Financial Statements:
Report of Independent Accountants........... 19
Consolidated Balance Sheets................. 20
Consolidated Statements of Earnings and Retained Earnings....................... 22
Consolidated Statements of Cash Flows....... 23
Notes to Consolidated Financial Statements.. 25
Financial Summary by Quarter................ 29
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Skyline Corporation
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Skyline Corporation and its subsidiaries at May 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of Skyline Corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Chicago, Illinois June 16, 1997
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets May 31, 1997 and 1996 Dollars in thousands
ASSETS 1997 1996 Current Assets Cash $ 9,489 $ 10,712 Treasury Bills, at cost plus accrued interest 71,059 44,381 Investment in U.S. Treasury Notes 29,949 - Accounts receivable, trade, less allowance for doubtful accounts of $40 43,360 48,727 Inventories Raw materials 5,237 5,813 Work in process 4,756 4,809 Finished goods - -
Total Inventories 9,993 10,622
Deferred income tax benefits 5,407 5,601
Other current assets 3,271 3,824
Total Current Assets 172,528 123,867
Investment in U.S. Treasury Notes - 59,907
Property, Plant and Equipment, At Cost Land 5,336 5,217 Buildings and improvements 55,711 56,684 Machinery and equipment 22,996 22,222
84,043 84,123
Less accumulated depreciation 42,091 40,723 Total Property, Plant and Equipment 41,952 43,400
Other Assets 3,387 3,162
$217,867 $230,336
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets May 31, 1997 and 1996 Dollars in thousands except per share data
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
Current Liabilities Accounts payable, trade $ 9,742 $ 10,249 Accrued salaries and wages 5,194 5,614 Accrued profit sharing 2,659 2,644 Accrued marketing programs 8,068 8,737 Accrued warranty expense 7,368 6,540 Other accrued liabilities 4,906 6,294 Income taxes 649 3,028
Total Current Liabilities 38,586 43,106
Other Deferred Liabilities 3,060 2,963
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 205,126 190,393 Treasury stock, at cost, 1,551,000 shares in 1997 and 644,600 shares in 1996 (34,145) (11,366)
Total Shareholders' Equity 176,221 184,267
$217,867 $230,336
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 Years Ended May 31, 1997, 1996, and 1995 Dollars in thousands except per share data
1997 1996 1995
EARNINGS
Sales $613,191 $645,956 $642,118
Cost of sales 507,045 533,723 539,993
Gross profit 106,146 112,233 102,125
Selling and administrative expenses 79,023 84,680 82,240
Operating earnings 27,123 27,553 19,885
Interest income 6,047 6,192 5,827
Gain (loss) on sale of property, plant and equipment 1,532 (793) (12)
Earnings before income taxes 34,702 32,952 25,700
Provision for income taxes Federal 11,381 10,800 8,433 State 2,490 2,469 1,925
13,871 13,269 10,358
Net earnings $ 20,831 $ 19,683 $ 15,342
Net earnings per share $ 2.07 $ 1.84 $ 1.38
Weighted average common shares outstanding 10,070,383 10,710,511 11,146,515
RETAINED EARNINGS
Balance at beginning of year $190,393 $176,187 $166,196
Add net earnings 20,831 19,683 15,342
Less cash dividends paid ($.60 per share in 1997, $.51 per share in 1996 and $.48 per share in 1995) 6,098 5,477 5,351
Balance at end of year $205,126 $190,393 $176,187
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows For the Years Ended May 31, 1997, 1996, and 1995 Increase (Decrease) in Cash
Dollars in Thousands 1997 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 20,831 $ 19,683 $ 15,342
Adjustments to reconcile net earnings to net cash provided by operating activities: Interest income earned on U.S. Treasury Bills and Notes (6,047) (6,022) (5,474) Depreciation 3,745 3,479 3,404 Amortization of discount or premium on U.S. Treasury Notes (41) 10 (5) (Gain) loss on sale of property, plant and equipment (1,532) 793 12 Working capital items: Accounts receivable 5,367 (3,353) (860) Inventories 629 4,183 726 Other current assets 747 (2,179) (841) Accounts payable, trade (507) 287 (4,506) Accrued liabilities (1,634) 7,425 3,025 Income taxes (2,379) 2,148 (1,092) Other assets (225) (207) (244) Other deferred liabilities 97 477 157
Total Adjustments (1,780) 7,041 (5,698)
Net cash provided by operating activities 19,051 26,724 9,644
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows, continued For the Years Ended May 31, 1997, 1996, and 1995 Increase (Decrease) in Cash
Dollars in Thousands 1997 1996 1995 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale or maturity of U.S. Treasury Bills 499,845 252,486 62,357 Proceeds from maturity of U.S. Treasury Notes 30,000 - 30,000 Purchase of U.S. Treasury Bills (522,677) (265,162) (82,779) Interest received from U.S. Treasury Notes 2,200 3,474 4,635 Proceeds from sale of property, plant and equipment 2,520 555 43 Purchase of property, plant and equipment (3,285) (2,971) (16,385)
Net cash provided by (used in) investing activities 8,603 (11,618) (2,129)
CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid (6,098) (5,477) (5,351) Purchase of treasury stock (22,779) (9,671) (642)
Net cash used in financing activities (28,877) (15,148) (5,993)
Net (decrease) increase in cash (1,223) (42) 1,522 Cash at beginning of year 10,712 10,754 9,232
Cash at end of year $ 9,489 $ 10,712 $ 10,754
The accompanying notes are a part of the consolidated financial statements.
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies
Nature of operations -- Skyline Corporation designs, manufactures and sells at wholesale both a broad line of single and multi-sectional manufactured homes and a large selection of non-motorized recreational vehicle models. Both product lines are sold through numerous independent dealers throughout the United States who often utilize floor plan financing arrangements with lending institutions.
The following is a summary of the accounting policies which have a significant effect on the consolidated financial statements.
Basis of presentation -- The consolidated financial statements include the accounts of Skyline Corporation and all of its subsidiaries (Corporation), each of which is wholly-owned. All significant intercompany transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition -- Substantially all of the Corporation's products are made to order and are recorded as revenue upon shipment.
Consolidated statements of cash flows -- For purposes of the statements of cash flows, investments in treasury bills are included as investing activities. The Corporation's cash flows from operating activities were reduced by income taxes paid of $16.1 million, $13.0 million and $12.1 million in 1997, 1996 and 1995, respectively.
Inventory valuation -- Inventories are stated at cost, which includes the cost of raw materials, labor and overhead, determined under the first-in, first-out method, which is not in excess of market.
Long-lived assets -- In the fourth quarter of fiscal 1996, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires the review of long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The effects on the financial statements of adopting SFAS No. 121 were not material.
The Corporation has determined that the effects on the financial statements from any other recently issued accounting standards will not be material.
Depreciation -- Depreciation is computed over the estimated useful lives of the assets using the straight-line method for financial statement reporting and accelerated methods for income tax purposes.
Investments -- The Corporation invests in United States Government securities. These securities are typically held until maturity or reasonable proximity to maturity and are therefore classified as held- to-maturity and carried at amortized cost. The following is a summary of the securities (dollars in thousands):
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies, continued
			 Gross Gross Gross Fair 		 Amortized Unrealized Unrealized Market 			 Cost Gains Losses Value May 31, 1997 U.S. Treasury Bills 71,059 - - 71,059 U.S. Treasury Notes 29,949 - (108) 29,841
Total 101,008 - (108) 100,900
May 31, 1996 U.S. Treasury Bills 44,381 - - 44,381 U.S. Treasury Notes 59,907 - (483) 59,424
Total 104,288 - (483) 103,805
At May 31, 1997, the U.S. Treasury Bills mature within one year and the U.S. Treasury Notes mature on February 28, 1998. The Corporation does not have any other financial instruments which have market values differing from recorded values.
Warranty -- The Corporation provides a warranty on its products. Estimated warranty costs are accrued at the time of sale.
Income taxes -- The difference between the Corporation's statutory federal income tax rate and the effective income tax rate is due primarily to state income taxes.
The Corporation's deferred tax assets consist primarily of temporary differences in the basis of certain liabilities for financial statement and tax return purposes and its deferred tax liabilities are due to the use of accelerated depreciation methods for tax purposes. The amounts of such deferred tax items are not significant individually or in the aggregate.
Reclassification -- Certain prior year amounts have been reclassified to conform with the current year presentation.
NOTE 2 Contingencies
The Corporation was contingently liable at May 31, 1997, 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.
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 3 Industry Segment Information
Dollars in thousands
1997 1996 1995 SALES Manufactured housing $494,691 $542,519 $505,668 Recreational vehicles 118,500 103,437 136,450
Total sales $613,191 $645,956 $642,118
EARNINGS BEFORE INCOME TAXES OPERATING EARNINGS Manufactured housing $ 27,167 $ 32,297 $ 23,551 Recreational vehicles 4,550 (79) 123 General corporate expenses (4,594) (4,665) (3,789)
Total operating earnings 27,123 27,553 19,885 Interest income 6,047 6,192 5,827 Gain (loss) on sale of property, plant and equipment 1,532 (793) (12)
Earnings before income taxes $ 34,702 $ 32,952 $ 25,700
IDENTIFIABLE ASSETS OPERATING ASSETS Manufactured housing $ 96,100 $105,704 $101,245 Recreational vehicles 20,759 20,344 25,145
Total operating assets 116,859 126,048 126,390
U.S. TREASURY BILLS 71,059 44,381 29,157
U.S. TREASURY NOTES 29,949 59,907 59,917
Total assets $217,867 $230,336 $215,464
DEPRECIATION Manufactured housing $ 3,171 $ 2,995 $ 2,773 Recreational vehicles 574 484 631 Total Depreciation $ 3,745 $ 3,479 $ 3,404
CAPITAL EXPENDITURES Manufactured housing $ 3,003 $ 2,804 $ 15,285 Recreational vehicles 282 167 1,100
Total capital expenditures $ 3,285 $ 2,971 $ 16,385
Operating earnings represent earnings before interest income, gain (loss) on sale of property, plant and equipment and provision for income taxes with non-traceable operating expenses being allocated to industry segments based on percentage of sales.
Identifiable assets, depreciation and capital expenditures, by industry segment, are those items that are used in the operations in each industry segment, with jointly used items being allocated based on a percentage of sales.
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 4 Purchase of Treasury Stock
The Corporation's board of directors from time to time has authorized the repurchase of shares of the Corporation's common stock, in the open market or through negotiated transactions, at such times and at such prices as management may decide. In fiscal 1997 the Corporation acquired 906,400 shares of its common stock for $22,779,000, in fiscal 1996 it acquired 548,100 shares for $9,671,000, and in fiscal 1995 it acquired 36,600 shares for $642,000. The effect of the aggregate repurchases on net earnings per share was $.21 per share in 1997, $.08 per share in 1996 and $.01 per share in 1995. At May 31, 1997, the Corporation had authorization to repurchase an additional 666,144 shares of its common stock.
NOTE 5 Employee Benefits
A) PROFIT SHARING PLANS
The Corporation has two deferred profit sharing Plans which together cover substantially all of its employees. The Plans are defined contribution plans to which the Corporation has the right to modify, suspend or discontinue contributions. For the years ended May 31, 1997, 1996 and 1995, contributions to the Plans were $2,575,000, $2,594,000 and $2,425,000, respectively.
B) RETIREMENT AND DEATH BENEFIT PLANS
The Corporation has entered into arrangements with certain employees which provide for benefits to be paid to the employees' estates in the event of death during active employment or retirement benefits to be paid over 10 years beginning at the date of retirement. To fund all such arrangements, the Corporation purchased life insurance contracts on the covered employees. The present value of the principal cost of such arrangements is being accrued over the period from the date of such arrangements to full eligibility using a discount rate of 8.0% in 1997 and 7.5% in 1996 and 1995. The change in the discount rate did not have a significant impact on the financial statements. The amount charged to operations under these arrangements was $285,000 in fiscal 1997, 1996 and 1995, respectively.
Skyline Corporation and Subsidiary Companies
Financial Summary By Quarter
Unaudited Dollars in thousands except per share data
1997 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Sales $171,536 $164,378 $117,995 $159,282 $613,191 Gross profit 31,663 29,207 17,672 27,604 106,146 Net earnings 6,467 6,339 1,817 6,208 20,831 Earnings per share .62 .62 .18 .64 2.07
1996 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Sales $163,855 $172,469 $138,562 $171,070 $645,956 Gross profit 29,009 30,616 22,896 29,712 112,233 Net earnings 4,632 5,726 3,134 6,191 19,683 Earnings per share .42 .54 .30 .59 1.84
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10.
Item 10. Executive Officers of the Registrant (Officers are elected annually)
Name Age Position
Arthur J. Decio 66 Chairman of the Board and Chief Executive Officer
Ronald F. Kloska 63 Vice Chairman, Deputy Chief Executive Officer and Chief Administration Officer
William H. Murschel 52 President - Chief Operations Officer
Terrence M. Decio 45 Senior Executive Vice President
Joseph B. Fanchi 61 Vice President - Finance & Treasurer and Chief Financial Officer
Charles W. Chambliss, Jr 47 Vice President- Product Development and Engineering
James R. Weigand 42 Corporate Controller
Arthur J. Decio, Chairman of the Board and Chief Executive Officer, has been the Company's Chairman since its incorporation in 1959. Additionally, Mr. Decio was President and Chief Executive Officer of the Company from its incorporation until 1972.
Ronald F. Kloska, Vice Chairman, Deputy Chief Executive Officer and Chief Administration Officer, joined the Company in 1963 as Treasurer. He was elected Vice President and Treasurer in 1964, Executive Vice President in 1967, President in 1974, Vice Chairman and Chief Administration Officer in 1991, Secretary in 1994, and Deputy Chief Executive Officer in 1995.
William H. Murschel, President - Chief Operations Officer, joined the Company in 1969. He was elected Vice President in 1986, and President and Chief Operations Officer in 1991.
Terrence M. Decio, Senior Executive Vice President, joined the Company in 1973. He was elected Vice President in 1985, Senior Vice President in 1991, and Senior Executive Vice President in 1993.
Joseph B. Fanchi, Vice President - Finance & Treasurer and Chief Financial Officer, joined the Company in 1979 and was elected Vice President - Finance and Chief Financial Officer in 1979. He assumed the additional responsibility of Treasurer in 1984.
Charles W. Chambliss, Jr., Vice President-Product Development and Engineering, joined the Company in 1973 and was elected Vice President in 1996.
James R. Weigand, Corporate Controller, joined the Company in 1991 as Controller and was elected an officer in 1994.
Terrence M. Decio is the son of Arthur J. Decio. No other family relationship exists among any of the executive officers.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 	 8-K
(a)(1) Financial Statements
Financial statements for the Corporation are listed in the index under Item 8 of this document.
(a)(2) Index to Exhibits
Exhibits (Numbered according to Item 601 of Regulation S-K, Exhibit Table)
(3)(ii) By-Laws
(21) Subsidiaries of the Registrant
(27) Financial Data Schedules
(b) Reports on Form 8K
No reports on Form 8K were filed during the quarter ended May 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 Registrant
DATE: July 17, 1997 BY: Ronald F. Kloska, Vice Chairman, Chief Administration Officer, Deputy Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
DATE: July 17, 1997 BY: Arthur J. Decio, Chairman of the Board and Chief Executive Officer
DATE: July 17, 1997 BY: William H. Murschel, President and Chief Operations Officer and Director
DATE: July 17, 1997 BY: Terrence M. Decio, Senior Executive Vice President and Director
DATE: July 17, 1997 BY: Joseph B. Fanchi, Vice Presi- dent - Finance & Treasurer and Chief Financial Officer
DATE: July 17, 1997 BY: Jerry Hammes, Director
DATE: July 17, 1997 BY: William H. Lawson, Director
DATE: July 17, 1997 BY: David Link, Director
DATE: July 17, 1997 BY: Andrew J. McKenna, Director
DATE: July 17, 1997 BY: V. Dale Swikert, Director
DATE: July 17, 1997 BY: James R. Weigand, Corporate Controller
EXHIBIT (3)(ii)
By-Laws
BY-LAWS OF SKYLINE CORPORATION (as in existence on July 17, 1997)
ARTICLE 1 IDENTIFICATION
Section 1. Name. The name of the Corporation shall be Skyline Corporation (hereinafter referred to as the "Corporation").
Section 2. Seal. The Corporation shall have a corporate seal which shall be as follows: A circular disc, on the outer margin of which shall appear the corporate name and State of Incorporation, with the words "Corporate Seal" through the center, so mounted that it may be used to impress these words in raised letters upon paper. The seal shall be in charge of the Secretary.
Section 3. Fiscal Year. The fiscal year of the corporation shall begin at the beginning of the first day of June and end at the close of the last day of May next succeeding.
ARTICLE II CAPITAL STOCK
Section 1. Consideration of Shares. The board of directors shall cause the corporation to issue the capital stock of the corporation for such consideration as has been fixed by such board in accordance with the provisions of the Articles of Incorporation.
Section 2. Payment of Shares. Subject to the provisions of the Articles of Incorporation, the consideration for the issuance of shares of the capital stock of the corporation may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor actually performed for, or services actually rendered to, the corporation; provided, however that the part of the surplus of a corporation which is transferred to capital upon the issuance of shares as a share dividend shall be deemed to be the consideration for the issuance of such shares. When payment of the consideration for which a share was authorized to be issued shall have been received by the corporation, or when surplus shall have been transferred to capital upon the issuance of a share dividend, such share shall be declared and taken to be fully paid and not liable to any further call or assessment, and the holder thereof shall not be liable for any further payments thereon. In the absence of actual fraud in the transaction, the judgment of the board of directors as to the value of such property, labor or services received as consideration, or the value placed by the board of directors upon the corporate assets in the event of a share dividend shall be conclusive. Promissory notes or future services shall not be accepted in payment or part payment of any of the capital stock of the corporation.
Section 3. Certificates for Shares. Each shareholder shall be entitled to a certificate signed by the vice-chairman of the board of directors or the president or a vice president and the secretary or any assistant secretary of the corporation certifying the number of shares owned by him in the corporation. If such certificate is countersigned by the written signature of a transfer agent other
than the corporation or its employee or by the written signature of a registrar other than the corporation or its employee, the signatures of the officers of the corporation may be facsimiles. If such certificate is countersigned by the written signature of a registrar other than the corporation or its employee, the signatures of the transfer agent and the officers of the corporation may be facsimiles.
Every certificate shall state the name of the registered holder, the number of shares represented thereby, the par value of each share or a statement that such shares have no par value, and whether such shares have been fully paid up and are nonassessable. If such shares are not fully paid up, the certificate shall be legibly stamped to indicate the per centum which has been paid up, and as further payments are made thereon the certificate shall be stamped accordingly.
If the corporation is authorized to issue shares of more than one class, every certificate shall state the kind and class of shares represented thereby, and the relative rights, interests, preferences and restrictions of such class, or a summary thereof; provided that such statement may be omitted from the certificate if it shall be set forth upon the face or back of the certificate that such statement, in full, will be furnished by the corporation to any shareholder upon written request and without charge.
Section 4. Form of Certificates. The stock certificates to represent the shares of the capital stock of this corporation shall be in such form, not inconsistent with the laws of the State of Indiana, as may be adopted by the board of directors.
Section 5. Transfer of Stock. Title to a certificate and to the shares represented thereby can be transferred only:
(1) By delivery of the certificate endorsed either in blank or to a 	 specified person by the person appearing by the certificate to be 	 the owner of the shares represented thereby; or
(2) By delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person.
ARTICLE III MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of shareholders of the corporation shall be held at such place, within or without the State of Indiana, as may be specified in the respective notices or waivers of notice thereof, or proxies to represent shareholders thereat.
Section 2. Annual Meeting. The Annual Meeting of the Shareholders for the election of Directors, and for the transaction of such other business as may properly come before the meeting
shall be held at 9:00 a.m. local time, or at such other time as the Board of Directors may determine, on the fourth Monday in September of each year, if such day is not a legal holiday, and if a holiday, then on the next day that is not a holiday.
Section 3. Special Meetings. Special Meetings of the shareholders may be called by the chairman of the board of directors, the vice chairman of the board of directors, the president, or by the board of directors.
Section 4. Notice of Meetings. A written or printed notice, stating the place, day and hour of the meeting, and in case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered or mailed by the secretary or by the officers or persons calling the meetings, to each holder of the capital stock of the corporation at the time entitled to vote, at such address as appears upon the records of the corporation, at least ten days before the date of the meeting. Notice of any such meeting may be waived in writing by any shareholder if the waiver sets forth in reasonable detail the purpose or purposes for which the meeting is called, and the time and place thereof. Attendance at any meeting, in person or by proxy shall constitute a waiver of notice of such meeting.
Section 5. Voting at Meetings. Except as otherwise provided by law or by the provisions of the Articles of Incorporation, every holder of the capital stock of the corporation shall have the right at all meetings of the shareholders of the corporation to one vote for each share of stock standing in his name on the books of the corporation.
No share shall be voted at any meeting:
1. Upon which an installment is due and unpaid; or 2. Which shall have been transferred on the books of the corporation within ten days next preceding the date of the meeting; or 3. Which belongs to the corporation.
Section 6. Proxies. A shareholder may vote, either in person or by proxy executed in writing, by the shareholder, or a duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution, unless a longer time is expressly provided therein.
Section 7. Quorum. Unless otherwise provided by the Articles of Incorporation, at any meeting of shareholders, a majority of the shares of the capital stock outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum.
Section 8. Organization. The chairman of the board of directors, and in his absence, any director designated by the board of directors including the vice chairman and the president, shall call meetings of the shareholders to order and shall act as chairman of such meetings, and a secretary or the assistant secretary of the corporation shall act as secretary of all meetings of the shareholders. In the absence of the secretary and assistant secretary, the presiding officer may appoint a shareholder to act as secretary of the meeting.
ARTICLE IV BOARD OF DIRECTORS
Section 1. Board of Directors. The board of directors shall consist of nine (9) members, who shall be elected annually by a majority of the shares represented at the Annual Meeting of the shareholders. Such directors shall hold office until the next annual meeting of the shareholders and until their successors are elected and qualified. Directors need not be Shareholders of the Corporation. A majority of the Directors at any time shall be citizens of the United States. A member of the Board of Directors shall be elected by a vote of the majority of the Directors as Chairman of the Board, and such Chairman shall preside at all meetings of the Board of Directors.
Section 2. Duties. The corporate power of this corporation shall be vested in the board of directors, who shall have the management and control the business of the corporation. They shall employ such agents and servants as they deem advisable, and fix the rate of compensation of all agents, employees and officers.
Section 3. Resignation. A director may resign at any time by filing his written resignation with the secretary.
Section 4. Removal. Any director may be removed for cause at any time at any regular meeting or at such a special meeting of the shareholders of the corporation called for such purpose, by the affirmative vote of the holders of a majority of the shares outstanding.
Section 5. Vacancies. In case of any vacancy in the board of directors through death, resignation, removal or other cause, the remaining directors by the affirmative vote of a majority thereof may elect a successor to fill such vacancy until the next annual meeting and until his successor is elected and qualified. If the vote of the remaining members of the board shall result in a tie, the vacancy shall be filled by shareholders at the annual meeting or a special meeting.
Section 6. Annual Meetings. The board of directors shall meet each year immediately after the annual meeting of the shareholders, at the place where such meeting of the shareholders has been held, for the purpose of organization, election of officers, and consideration of any other business that may be brought before the meeting. No notice shall be necessary for the holding of this annual meeting. If such meeting is not held as above provided, the election of officers may be had at any subsequent meeting of the board specifically called in the manner provided in Article IV, Section 7 of these by-laws.
Section 7. Other Meetings.
Regular Meetings. Regular meetings of the board of directors may be held without notice at such time and place, either within or without the State of Indiana, as shall from time to time be determined by the board.
Special Meetings. Special meetings of the board of directors shall be held, either within or without the State of Indiana, whenever called by the chairman of the board of directors,
or the vice-chairman of the board of directors, or the president or by any three of the directors. Oral, telegraphic or written notice shall be given, sent or mailed not less than one day before the meeting and shall state the purposes of the meeting, and the date, place and hour of such meeting.
Waivers of Notice. Notice of a meeting need not be given to any director who submits a signed waiver of notice whether before or after the meeting, and attendance at the meeting by any director shall constitute waiver of notice by such director.
Section 8. Quorum. At any meeting of the board of directors, the presence of a majority of the members of the board then qualified and acting shall constitute a quorum for the transaction of any business except the filling of vacancies in the board of directors.
Section 9. Organization. The Chairman of the Board of Directors and in his absence, the Vice Chairman of the Board of Directors, and in their absence the President and in their absence any director chosen by the Directors present, shall call meetings of the Board of Directors to order, and shall act as Chairman of such meetings. The Secretary of the Corporation shall act as Secretary of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any director to act as Secretary of the meeting.
Section 10. Order of Business. The order of business at all meetings of the board of directors shall be as follows:
1. Roll call. 2. Reading of the Minutes of the preceding meeting and action thereon. 3. Reports of Officers. 4. Reports of Committees. 5. Unfinished business. 6. Miscellaneous business. 7. New business.
Section 11. Executive Committee of the Board of Directors. The Board of Directors may, whenever it sees fit, by a majority vote of the number of Directors elected and qualified from time to time, designate an Executive Committee of not less than three (3) persons from its members which Committee shall, except as to matters upon which the Board of Directors has acted, have and exercise the full power of the Board of Directors in the management of the business and affairs of the Corporation, including but not limited to the power to authorize dividend distributions according to a formula, method or limit, or within a range, prescribed by the Board of Directors; PROVIDED, always, that all business transacted by such Committee shall be submitted to and be approved by the Board of Directors at their next regular or special meeting. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve the Executive Committee.
Section 12. Governance and Compensation Committee. The Board of Directors, by resolution of a majority of the whole Board, shall appoint a Governance and Compensation Committee to consist of not less than three directors, none of whom shall be an officer or
employee of the Corporation or of any subsidiary or affiliated corporation. The functions of the Governance and Compensation Committee shall be (a) to identify and make recommendations to the Board of Directors regarding candidates for election to the Board, (b) to review and make recommendations to the Board of Directors regarding the renomination of incumbent directors, (c) to perform other related tasks, such as studying the size, committee structure or meeting frequency of the board, making studies or recommendations regarding management succession, or tasks of similar character as may be requested from time to time by the Board of Directors or the Chief Executive Officer, (d) to establish the compensation of the Chief Executive Officer of the Corporation, (e) to consult with the Chief Executive Officer with respect to the compensation of officers and executive employees of the corporation and its subsidiaries, and (f) to undertake such additional similar functions and activities as may be required by other compensation plans maintained by the Corporation or as may be requested from time to time by the Board of Directors.
The Board of Directors, by resolution of a majority of the whole Board, shall designate one member of the Governance and Compensation Committee to act as chairman of the Committee. The Committee member so designated shall (a) chair all meetings of the Committee, (b) chair meetings involving only non-employee directors, (c) coordinate an annual performance evaluation of the Corporation, (d) coordinate the evaluation of the performance of the Chief Executive Officer, and (e) perform such other activities as from time to time are requested by the other directors.
Section 13. Management Incentive Plan Committee. The Board of Directors may appoint a Management Incentive Plan Committee, consisting of not less than three (3) members, or former members of the Board. The Management Incentive Plan Committee shall administer and interpret the Skyline Corporation Management Incentive Plan dated January 8, 1968. No member of the Committee shall be eligible to receive an award pursuant to the Plan, or be eligible for selection as a person to whom stock may be allocated or stock options granted pursuant to any other plan of the Corporation or any of its affiliates at any time while he is serving on the Committee; and no member of the Committee shall have been so eligible at any time within one year prior to the time that he becomes a member of the Committee.
Section 14. Audit Committee. The Board of Directors may appoint an Audit Committee, consisting of not less than three (3) members of the Board. The Audit Committee shall, from time to time, meet with representatives of the independent certified public accountants then servicing the corporation, review the corporation's systems of internal controls and take necessary action to see that an adequate system of internal auditing is implemented. The Audit Committee may also nominate independent auditors and select and establish accounting policies. All business transacted by the Committee shall be submitted to the Board of Directors at their next regular or special meeting for their consideration and approval or rejection. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve the Audit Committee.
ARTICLE V OFFICERS OF THE CORPORATION
Section 1. Officers. The officers of the corporation shall consist of a chairman of the board of directors, a vice-chairman of the board of directors, a president, one or more vice presidents or senior vice-presidents, a secretary, an assistant secretary and a treasurer. Any two or more offices may be held by the same person, except that the duties of the president and secretary shall not be performed by the same person. The board of directors by resolution may create and define the duties of other offices in the corporation, and may elect or appoint persons to fill such offices.
Section 2. Vacancies. Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the corporation, or otherwise, the same shall be filled by the board of directors, and the officer so elected shall hold office until his successor is chosen and qualified.
Section 3. President. The president shall perform such duties as this code of by-laws provides, or the board of directors may prescribe.
Section 4. Executive Vice-President. The executive vice-president shall perform all duties incumbent upon the president during the absence or disability of the president, and perform such other duties as this code of by-laws may require or the board of directors may prescribe.
Section 5. Secretary. The secretary shall have the custody and care of the corporate seal, records, minutes and stock books of the corporation. He shall attend all meetings of the shareholders and of the board of directors, and shall keep, or cause to be kept in a book provided for the purpose, a true and complete record of the proceedings of such meetings, and shall perform a like duty for all standing committees appointed by the board of directors, when required. He shall attend to the giving and serving of all notices of the corporation, shall file and take charge of all papers and documents belonging to the corporation and shall perform such other duties as this code of by-laws may require or the board of directors may prescribe.
Section 6. Treasurer. The treasurer shall keep correct and complete records of account, showing accurately at all times the financial condition of the corporation. He shall be the legal custodian of all moneys, notes, securities and other valuables which may from time to time come into the possession of the corporation. He shall immediately deposit all funds of the corporation coming into his hands in some reliable bank or other depositary to be designated by the board of directors, and shall keep such bank account in the name of the corporation. He shall furnish at meetings of the board of directors, or whenever requested, a statement of the financial condition of the corporation, and shall perform such other duties as this code of by-laws may require or the board of directors may prescribe. The treasurer may be required to furnish bond in such amount as shall be determined by the board of directors.
Section 7. Delegation of Authority. In case of the absence of any officer of the corporation, or for any other reason that the board of directors may deem sufficient, the board of
directors may delegate the powers or duties of such officer to any other officer or to any director, for the time being, provided a majority of the entire board of directors concurs therein.
Section 8. Execution of Documents. Unless otherwise provided by the board of directors, all contracts, leases, commercial paper, bonds, deeds, mortgages, and all other legal instruments or documents shall be signed by the vice-chairman of the board of directors or the president and, if required, shall be attested by the secretary or assistant secretary. All certificates of stock shall be signed by the vice-chairman of the board of directors or the president or a vice-president and the secretary or assistant secretary.
Section 9. Loans to Officers. No loan of money or property or any advance on account of services to be performed in the future shall be made to any officer or director of the corporation.
Section 10. Chairman of the Board of Directors and Chief Executive Officer. The chairman of the board of directors shall be the chief executive officer of the corporation and shall generally supervise the business of the Corporation, subject to the control of the board of directors. He shall also perform such other duties as this code of by-laws provide or the board of directors may prescribe.
Section 11. Vice-Chairman of the Board of Directors. The vice-chairman of the board of directors shall perform such duties as this code of by-laws provides, or the board of directors may prescribe.
The vice-chairman of the board of directors shall have full authority to execute proxies in behalf of the corporation, to vote stock owned by it in any other corporation, and to execute, with the secretary, powers of attorney appointing other corporations, partnerships, or individuals the agent of the corporation, all subject to the provisions of The Indiana Business Corporation Law, as amended, the Articles of Incorporation and this code of by-laws.
Section 12. Corporate Controller. The Corporate Controller shall cause to be kept full and accurate books and accounts of all assets, liabilities and transactions of the corporation. The Corporate Controller shall establish and administer an adequate plan for the control of operations, including systems and procedures required to properly maintain internal controls on all financial transactions of the corporation. The Corporate Controller shall prepare, or cause to be prepared, statements of the financial condition of the corporation and proper profit and loss statements covering the operations of the corporation and such other and additional financial statements, if any, as the Chairman of the Board of Directors, Vice-Chairman of the Board of Directors, President or Chief Financial Officer from time to time shall require. The Corporate Controller also shall perform such other duties as may be assigned by the Chairman of the Board of Directors, Vice-Chairman of the Board of Directors, President or Chief Financial Officer, from time to time.
ARTICLE VI CORPORATE BOOKS
Section 1. Place of Keeping, In General. Except as otherwise provided by the laws of the State of Indiana, by the Articles of Incorporation of the corporation or by these by-laws, the books and records of the corporation may be kept at such place or places, within or without the State of Indiana, as the board of directors may from time to time by resolution determine.
Section 2. Transfer Agent and Registrar, and Closing of Transfer Books. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers, and the principal transfer agent shall keep a stock transfer book for the transfer of all shares of the capital stock of the Corporation.
The Board of Directors may fix the time, not exceeding fifty days preceding the date of any meeting of stockholders or any dividend payment date or any date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, during which the books of the Corporation shall be closed against transfers of stock. In lieu of providing for the closing of the books against transfers of stock as aforesaid, the Board of Directors from time to time may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for any allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of and to vote at such meeting and any adjournment thereof, or entitled to receive such dividends or allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, as the case may be; and only stockholders of record on such date shall be entitled to notice of or to vote at such meeting or to receive such dividends or allotment of rights, or to exercise such rights in respect of any such change, conversion or exchange of capital stock, as the case may be.
ARTICLE VII AMENDMENTS
Section 1. Amendments. By-laws may be adopted, amended or repealed at any meeting of the Board of Directors by the vote of a majority thereof, unless the Articles of Incorporation provide for the adoption, amendment or repeal by the shareholders, in which event, action thereon may be taken at any meeting of the shareholders by the vote of a majority of the voting shares outstanding.
EXHIBIT (21)
Subsidiaries of the Registrant
Parent (Registrant) - Skyline Corporation (an Indiana Corporation)
Subsidiaries - Skyline Homes, Inc. (a California Corporation)
- Homette Corporation (an Indiana Corporation)
- Layton Homes Corp. (an Indiana Corporation)
These wholly-owned subsidiaries are included in the consolidated financial statements.
EXHIBIT (27)
Financial Data Schedules
A copy of the Company's Financial Data Schedules filed electronically with the Securities and Exchange Commission with Form 10-K will be furnished to shareholders without charge upon written request to Ronald F. Kloska, Vice Chairman, Chief Administration Officer and Deputy Chief Executive Officer, Skyline Corporation, Post Office Box 743, Elkhart, Indiana 46515.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 	 8-K
(a)(1) Financial Statements
Financial statements for the Corporation are listed in the index under Item 8 of this document.
(a)(2) Index to Exhibits
Exhibits (Numbered according to Item 601 of Regulation S-K, Exhibit Table)
(3)(ii) By-Laws
(21) Subsidiaries of the Registrant
(27) Financial Data Schedules
(b) Reports on Form 8K
No reports on Form 8K were filed during the quarter ended May 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 Registrant
DATE: July 17, 1997 BY: Ronald F. Kloska, Vice Chairman, Chief Administration Officer, Deputy Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
DATE: July 17, 1997 BY: Arthur J. Decio, Chairman of the Board and Chief Executive Officer
DATE: July 17, 1997 BY: William H. Murschel, President and Chief Operations Officer and Director
DATE: July 17, 1997 BY: Terrence M. Decio, Senior Executive Vice President and Director
DATE: July 17, 1997 BY: Joseph B. Fanchi, Vice Presi- dent - Finance & Treasurer and Chief Financial Officer
DATE: July 17, 1997 BY: Jerry Hammes, Director
DATE: July 17, 1997 BY: William H. Lawson, Director
DATE: July 17, 1997 BY: David Link, Director
DATE: July 17, 1997 BY: Andrew J. McKenna, Director
DATE: July 17, 1997 BY: V. Dale Swikert, Director
DATE: July 17, 1997 BY: James R. Weigand, Corporate Controller
EXHIBIT (3)(ii)
By-Laws
BY-LAWS OF SKYLINE CORPORATION (as in existence on July 17, 1997)
ARTICLE 1 IDENTIFICATION
Section 1. Name. The name of the Corporation shall be Skyline Corporation (hereinafter referred to as the "Corporation").
Section 2. Seal. The Corporation shall have a corporate seal which shall be as follows: A circular disc, on the outer margin of which shall appear the corporate name and State of Incorporation, with the words "Corporate Seal" through the center, so mounted that it may be used to impress these words in raised letters upon paper. The seal shall be in charge of the Secretary.
Section 3. Fiscal Year. The fiscal year of the corporation shall begin at the beginning of the first day of June and end at the close of the last day of May next succeeding.
ARTICLE II CAPITAL STOCK
Section 1. Consideration of Shares. The board of directors shall cause the corporation to issue the capital stock of the corporation for such consideration as has been fixed by such board in accordance with the provisions of the Articles of Incorporation.
Section 2. Payment of Shares. Subject to the provisions of the Articles of Incorporation, the consideration for the issuance of shares of the capital stock of the corporation may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor actually performed for, or services actually rendered to, the corporation; provided, however that the part of the surplus of a corporation which is transferred to capital upon the issuance of shares as a share dividend shall be deemed to be the consideration for the issuance of such shares. When payment of the consideration for which a share was authorized to be issued shall have been received by the corporation, or when surplus shall have been transferred to capital upon the issuance of a share dividend, such share shall be declared and taken to be fully paid and not liable to any further call or assessment, and the holder thereof shall not be liable for any further payments thereon. In the absence of actual fraud in the transaction, the judgment of the board of directors as to the value of such property, labor or services received as consideration, or the value placed by the board of directors upon the corporate assets in the event of a share dividend shall be conclusive. Promissory notes or future services shall not be accepted in payment or part payment of any of the capital stock of the corporation.
Section 3. Certificates for Shares. Each shareholder shall be entitled to a certificate signed by the vice-chairman of the board of directors or the president or a vice president and the secretary or any assistant secretary of the corporation certifying the number of shares owned by him in the corporation. If such certificate is countersigned by the written signature of a transfer agent other
than the corporation or its employee or by the written signature of a registrar other than the corporation or its employee, the signatures of the officers of the corporation may be facsimiles. If such certificate is countersigned by the written signature of a registrar other than the corporation or its employee, the signatures of the transfer agent and the officers of the corporation may be facsimiles.
Every certificate shall state the name of the registered holder, the number of shares represented thereby, the par value of each share or a statement that such shares have no par value, and whether such shares have been fully paid up and are nonassessable. If such shares are not fully paid up, the certificate shall be legibly stamped to indicate the per centum which has been paid up, and as further payments are made thereon the certificate shall be stamped accordingly.
If the corporation is authorized to issue shares of more than one class, every certificate shall state the kind and class of shares represented thereby, and the relative rights, interests, preferences and restrictions of such class, or a summary thereof; provided that such statement may be omitted from the certificate if it shall be set forth upon the face or back of the certificate that such statement, in full, will be furnished by the corporation to any shareholder upon written request and without charge.
Section 4. Form of Certificates. The stock certificates to represent the shares of the capital stock of this corporation shall be in such form, not inconsistent with the laws of the State of Indiana, as may be adopted by the board of directors.
Section 5. Transfer of Stock. Title to a certificate and to the shares represented thereby can be transferred only:
(1) By delivery of the certificate endorsed either in blank or to a 	 specified person by the person appearing by the certificate to be 	 the owner of the shares represented thereby; or
(2) By delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person.
ARTICLE III MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of shareholders of the corporation shall be held at such place, within or without the State of Indiana, as may be specified in the respective notices or waivers of notice thereof, or proxies to represent shareholders thereat.
Section 2. Annual Meeting. The Annual Meeting of the Shareholders for the election of Directors, and for the transaction of such other business as may properly come before the meeting
shall be held at 9:00 a.m. local time, or at such other time as the Board of Directors may determine, on the fourth Monday in September of each year, if such day is not a legal holiday, and if a holiday, then on the next day that is not a holiday.
Section 3. Special Meetings. Special Meetings of the shareholders may be called by the chairman of the board of directors, the vice chairman of the board of directors, the president, or by the board of directors.
Section 4. Notice of Meetings. A written or printed notice, stating the place, day and hour of the meeting, and in case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered or mailed by the secretary or by the officers or persons calling the meetings, to each holder of the capital stock of the corporation at the time entitled to vote, at such address as appears upon the records of the corporation, at least ten days before the date of the meeting. Notice of any such meeting may be waived in writing by any shareholder if the waiver sets forth in reasonable detail the purpose or purposes for which the meeting is called, and the time and place thereof. Attendance at any meeting, in person or by proxy shall constitute a waiver of notice of such meeting.
Section 5. Voting at Meetings. Except as otherwise provided by law or by the provisions of the Articles of Incorporation, every holder of the capital stock of the corporation shall have the right at all meetings of the shareholders of the corporation to one vote for each share of stock standing in his name on the books of the corporation.
No share shall be voted at any meeting:
1. Upon which an installment is due and unpaid; or 2. Which shall have been transferred on the books of the corporation within ten days next preceding the date of the meeting; or 3. Which belongs to the corporation.
Section 6. Proxies. A shareholder may vote, either in person or by proxy executed in writing, by the shareholder, or a duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution, unless a longer time is expressly provided therein.
Section 7. Quorum. Unless otherwise provided by the Articles of Incorporation, at any meeting of shareholders, a majority of the shares of the capital stock outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum.
Section 8. Organization. The chairman of the board of directors, and in his absence, any director designated by the board of directors including the vice chairman and the president, shall call meetings of the shareholders to order and shall act as chairman of such meetings, and a secretary or the assistant secretary of the corporation shall act as secretary of all meetings of the shareholders. In the absence of the secretary and assistant secretary, the presiding officer may appoint a shareholder to act as secretary of the meeting.
ARTICLE IV BOARD OF DIRECTORS
Section 1. Board of Directors. The board of directors shall consist of nine (9) members, who shall be elected annually by a majority of the shares represented at the Annual Meeting of the shareholders. Such directors shall hold office until the next annual meeting of the shareholders and until their successors are elected and qualified. Directors need not be Shareholders of the Corporation. A majority of the Directors at any time shall be citizens of the United States. A member of the Board of Directors shall be elected by a vote of the majority of the Directors as Chairman of the Board, and such Chairman shall preside at all meetings of the Board of Directors.
Section 2. Duties. The corporate power of this corporation shall be vested in the board of directors, who shall have the management and control the business of the corporation. They shall employ such agents and servants as they deem advisable, and fix the rate of compensation of all agents, employees and officers.
Section 3. Resignation. A director may resign at any time by filing his written resignation with the secretary.
Section 4. Removal. Any director may be removed for cause at any time at any regular meeting or at such a special meeting of the shareholders of the corporation called for such purpose, by the affirmative vote of the holders of a majority of the shares outstanding.
Section 5. Vacancies. In case of any vacancy in the board of directors through death, resignation, removal or other cause, the remaining directors by the affirmative vote of a majority thereof may elect a successor to fill such vacancy until the next annual meeting and until his successor is elected and qualified. If the vote of the remaining members of the board shall result in a tie, the vacancy shall be filled by shareholders at the annual meeting or a special meeting.
Section 6. Annual Meetings. The board of directors shall meet each year immediately after the annual meeting of the shareholders, at the place where such meeting of the shareholders has been held, for the purpose of organization, election of officers, and consideration of any other business that may be brought before the meeting. No notice shall be necessary for the holding of this annual meeting. If such meeting is not held as above provided, the election of officers may be had at any subsequent meeting of the board specifically called in the manner provided in Article IV, Section 7 of these by-laws.
Section 7. Other Meetings.
Regular Meetings. Regular meetings of the board of directors may be held without notice at such time and place, either within or without the State of Indiana, as shall from time to time be determined by the board.
Special Meetings. Special meetings of the board of directors shall be held, either within or without the State of Indiana, whenever called by the chairman of the board of directors,
or the vice-chairman of the board of directors, or the president or by any three of the directors. Oral, telegraphic or written notice shall be given, sent or mailed not less than one day before the meeting and shall state the purposes of the meeting, and the date, place and hour of such meeting.
Waivers of Notice. Notice of a meeting need not be given to any director who submits a signed waiver of notice whether before or after the meeting, and attendance at the meeting by any director shall constitute waiver of notice by such director.
Section 8. Quorum. At any meeting of the board of directors, the presence of a majority of the members of the board then qualified and acting shall constitute a quorum for the transaction of any business except the filling of vacancies in the board of directors.
Section 9. Organization. The Chairman of the Board of Directors and in his absence, the Vice Chairman of the Board of Directors, and in their absence the President and in their absence any director chosen by the Directors present, shall call meetings of the Board of Directors to order, and shall act as Chairman of such meetings. The Secretary of the Corporation shall act as Secretary of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any director to act as Secretary of the meeting.
Section 10. Order of Business. The order of business at all meetings of the board of directors shall be as follows:
1. Roll call. 2. Reading of the Minutes of the preceding meeting and action thereon. 3. Reports of Officers. 4. Reports of Committees. 5. Unfinished business. 6. Miscellaneous business. 7. New business.
Section 11. Executive Committee of the Board of Directors. The Board of Directors may, whenever it sees fit, by a majority vote of the number of Directors elected and qualified from time to time, designate an Executive Committee of not less than three (3) persons from its members which Committee shall, except as to matters upon which the Board of Directors has acted, have and exercise the full power of the Board of Directors in the management of the business and affairs of the Corporation, including but not limited to the power to authorize dividend distributions according to a formula, method or limit, or within a range, prescribed by the Board of Directors; PROVIDED, always, that all business transacted by such Committee shall be submitted to and be approved by the Board of Directors at their next regular or special meeting. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve the Executive Committee.
Section 12. Governance and Compensation Committee. The Board of Directors, by resolution of a majority of the whole Board, shall appoint a Governance and Compensation Committee to consist of not less than three directors, none of whom shall be an officer or
employee of the Corporation or of any subsidiary or affiliated corporation. The functions of the Governance and Compensation Committee shall be (a) to identify and make recommendations to the Board of Directors regarding candidates for election to the Board, (b) to review and make recommendations to the Board of Directors regarding the renomination of incumbent directors, (c) to perform other related tasks, such as studying the size, committee structure or meeting frequency of the board, making studies or recommendations regarding management succession, or tasks of similar character as may be requested from time to time by the Board of Directors or the Chief Executive Officer, (d) to establish the compensation of the Chief Executive Officer of the Corporation, (e) to consult with the Chief Executive Officer with respect to the compensation of officers and executive employees of the corporation and its subsidiaries, and (f) to undertake such additional similar functions and activities as may be required by other compensation plans maintained by the Corporation or as may be requested from time to time by the Board of Directors.
The Board of Directors, by resolution of a majority of the whole Board, shall designate one member of the Governance and Compensation Committee to act as chairman of the Committee. The Committee member so designated shall (a) chair all meetings of the Committee, (b) chair meetings involving only non-employee directors, (c) coordinate an annual performance evaluation of the Corporation, (d) coordinate the evaluation of the performance of the Chief Executive Officer, and (e) perform such other activities as from time to time are requested by the other directors.
Section 13. Management Incentive Plan Committee. The Board of Directors may appoint a Management Incentive Plan Committee, consisting of not less than three (3) members, or former members of the Board. The Management Incentive Plan Committee shall administer and interpret the Skyline Corporation Management Incentive Plan dated January 8, 1968. No member of the Committee shall be eligible to receive an award pursuant to the Plan, or be eligible for selection as a person to whom stock may be allocated or stock options granted pursuant to any other plan of the Corporation or any of its affiliates at any time while he is serving on the Committee; and no member of the Committee shall have been so eligible at any time within one year prior to the time that he becomes a member of the Committee.
Section 14. Audit Committee. The Board of Directors may appoint an Audit Committee, consisting of not less than three (3) members of the Board. The Audit Committee shall, from time to time, meet with representatives of the independent certified public accountants then servicing the corporation, review the corporation's systems of internal controls and take necessary action to see that an adequate system of internal auditing is implemented. The Audit Committee may also nominate independent auditors and select and establish accounting policies. All business transacted by the Committee shall be submitted to the Board of Directors at their next regular or special meeting for their consideration and approval or rejection. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve the Audit Committee.
ARTICLE V OFFICERS OF THE CORPORATION
Section 1. Officers. The officers of the corporation shall consist of a chairman of the board of directors, a vice-chairman of the board of directors, a president, one or more vice presidents or senior vice-presidents, a secretary, an assistant secretary and a treasurer. Any two or more offices may be held by the same person, except that the duties of the president and secretary shall not be performed by the same person. The board of directors by resolution may create and define the duties of other offices in the corporation, and may elect or appoint persons to fill such offices.
Section 2. Vacancies. Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the corporation, or otherwise, the same shall be filled by the board of directors, and the officer so elected shall hold office until his successor is chosen and qualified.
Section 3. President. The president shall perform such duties as this code of by-laws provides, or the board of directors may prescribe.
Section 4. Executive Vice-President. The executive vice-president shall perform all duties incumbent upon the president during the absence or disability of the president, and perform such other duties as this code of by-laws may require or the board of directors may prescribe.
Section 5. Secretary. The secretary shall have the custody and care of the corporate seal, records, minutes and stock books of the corporation. He shall attend all meetings of the shareholders and of the board of directors, and shall keep, or cause to be kept in a book provided for the purpose, a true and complete record of the proceedings of such meetings, and shall perform a like duty for all standing committees appointed by the board of directors, when required. He shall attend to the giving and serving of all notices of the corporation, shall file and take charge of all papers and documents belonging to the corporation and shall perform such other duties as this code of by-laws may require or the board of directors may prescribe.
Section 6. Treasurer. The treasurer shall keep correct and complete records of account, showing accurately at all times the financial condition of the corporation. He shall be the legal custodian of all moneys, notes, securities and other valuables which may from time to time come into the possession of the corporation. He shall immediately deposit all funds of the corporation coming into his hands in some reliable bank or other depositary to be designated by the board of directors, and shall keep such bank account in the name of the corporation. He shall furnish at meetings of the board of directors, or whenever requested, a statement of the financial condition of the corporation, and shall perform such other duties as this code of by-laws may require or the board of directors may prescribe. The treasurer may be required to furnish bond in such amount as shall be determined by the board of directors.
Section 7. Delegation of Authority. In case of the absence of any officer of the corporation, or for any other reason that the board of directors may deem sufficient, the board of
directors may delegate the powers or duties of such officer to any other officer or to any director, for the time being, provided a majority of the entire board of directors concurs therein.
Section 8. Execution of Documents. Unless otherwise provided by the board of directors, all contracts, leases, commercial paper, bonds, deeds, mortgages, and all other legal instruments or documents shall be signed by the vice-chairman of the board of directors or the president and, if required, shall be attested by the secretary or assistant secretary. All certificates of stock shall be signed by the vice-chairman of the board of directors or the president or a vice-president and the secretary or assistant secretary.
Section 9. Loans to Officers. No loan of money or property or any advance on account of services to be performed in the future shall be made to any officer or director of the corporation.
Section 10. Chairman of the Board of Directors and Chief Executive Officer. The chairman of the board of directors shall be the chief executive officer of the corporation and shall generally supervise the business of the Corporation, subject to the control of the board of directors. He shall also perform such other duties as this code of by-laws provide or the board of directors may prescribe.
Section 11. Vice-Chairman of the Board of Directors. The vice-chairman of the board of directors shall perform such duties as this code of by-laws provides, or the board of directors may prescribe.
The vice-chairman of the board of directors shall have full authority to execute proxies in behalf of the corporation, to vote stock owned by it in any other corporation, and to execute, with the secretary, powers of attorney appointing other corporations, partnerships, or individuals the agent of the corporation, all subject to the provisions of The Indiana Business Corporation Law, as amended, the Articles of Incorporation and this code of by-laws.
Section 12. Corporate Controller. The Corporate Controller shall cause to be kept full and accurate books and accounts of all assets, liabilities and transactions of the corporation. The Corporate Controller shall establish and administer an adequate plan for the control of operations, including systems and procedures required to properly maintain internal controls on all financial transactions of the corporation. The Corporate Controller shall prepare, or cause to be prepared, statements of the financial condition of the corporation and proper profit and loss statements covering the operations of the corporation and such other and additional financial statements, if any, as the Chairman of the Board of Directors, Vice-Chairman of the Board of Directors, President or Chief Financial Officer from time to time shall require. The Corporate Controller also shall perform such other duties as may be assigned by the Chairman of the Board of Directors, Vice-Chairman of the Board of Directors, President or Chief Financial Officer, from time to time.
ARTICLE VI CORPORATE BOOKS
Section 1. Place of Keeping, In General. Except as otherwise provided by the laws of the State of Indiana, by the Articles of Incorporation of the corporation or by these by-laws, the books and records of the corporation may be kept at such place or places, within or without the State of Indiana, as the board of directors may from time to time by resolution determine.
Section 2. Transfer Agent and Registrar, and Closing of Transfer Books. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers, and the principal transfer agent shall keep a stock transfer book for the transfer of all shares of the capital stock of the Corporation.
The Board of Directors may fix the time, not exceeding fifty days preceding the date of any meeting of stockholders or any dividend payment date or any date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, during which the books of the Corporation shall be closed against transfers of stock. In lieu of providing for the closing of the books against transfers of stock as aforesaid, the Board of Directors from time to time may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for any allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of and to vote at such meeting and any adjournment thereof, or entitled to receive such dividends or allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, as the case may be; and only stockholders of record on such date shall be entitled to notice of or to vote at such meeting or to receive such dividends or allotment of rights, or to exercise such rights in respect of any such change, conversion or exchange of capital stock, as the case may be.
ARTICLE VII AMENDMENTS
Section 1. Amendments. By-laws may be adopted, amended or repealed at any meeting of the Board of Directors by the vote of a majority thereof, unless the Articles of Incorporation provide for the adoption, amendment or repeal by the shareholders, in which event, action thereon may be taken at any meeting of the shareholders by the vote of a majority of the voting shares outstanding.
EXHIBIT (21)
Subsidiaries of the Registrant
Parent (Registrant) - Skyline Corporation (an Indiana Corporation)
Subsidiaries - Skyline Homes, Inc. (a California Corporation)
- Homette Corporation (an Indiana Corporation)
- Layton Homes Corp. (an Indiana Corporation)
These wholly-owned subsidiaries are included in the consolidated financial statements.
EXHIBIT (27)
Financial Data Schedules
A copy of the Company's Financial Data Schedules filed electronically with the Securities and Exchange Commission with Form 10-K will be furnished to shareholders without charge upon written request to Ronald F. Kloska, Vice Chairman, Chief Administration Officer and Deputy Chief Executive Officer, Skyline Corporation, Post Office Box 743, Elkhart, Indiana 46515.